Gold Coast Auctions

It has been reported that settlements for the $700 million Oracle Broadbeach apartment project on the Gold Coast are likely to be delayed by the Queensland floods.

This is because Brisbane lawyers working on the contracts are unable to return to their flooded city offices, according to the receiver for the project. ... Since October, about 180 of those presales had settled after values of Gold Coast apartments typically fell by 30 per cent since the global financial crisis.

Source: The Australian

It will be interesting to see the auction results for these apartments:

• Q1, Apt 5307
• Soul, Apt 3805
• Soul, 2805
• Circle On Cavill, Penthouse

Some of the Oracle apartments for sale:

• Apt 2405, $2.4M (or over $9K a sqm, which is outrageous!)
• Apt 2605, 2 bedrooms, $1.5M (note the 2006 off-the-plan price for this apartment was $1,320,000)
• Apt 1404, $795,000
• Apt 1505, $680,000
• Apt 1907, 2 bedrooms
• Apt 3401, 3 bedrooms, $1.5M
• Apt 3801, 3 bedrooms, $2.5M (or over $13K a sqm -- the vendor is on another planet!)
• Two bedroom at rear, $1.6M
• Two bedroom, $1.3M
• Two bedroom 27th floor, tower one
• One bedroom on 6th floor, just over $600,000
• One bedroom, tower 2 $800,000
• List of resales

Note that there are two towers: Tower 1 is 50 storey's, comprising 274 luxury apartments (faces the ocean with ocean views) whilst Tower 2 is 40 Storeys, and comprises 241 apartments (faces North East (behind Tower One)).

See also RealEstate Buzz

Gold Coast Collapsing

Story from the AFR on Friday last week - "Banks judge Gold Coast apartments as vulnerable".

"Westpac Banking Corp has a particularly cautious view, especially of luxury properties worth more than $3M on the Gold Coast, which is described as a key area for 'additional risk management focus'. There are hundreds of apartments on the Gold Coast priced at more than $3M. At the Oracle development at Broadbeach, there are at least 50; at two other projects coming to completion - Juniper's Soul and Brookfield's Hilton - there are more than 100."

Story from The Australian today: "Gold Coast High Rise Stress Underestimated"

"MAJOR bank Suncorp estimates that less than 10 per cent of buyers are defaulting on several major apartment projects on the Gold Coast.

Gold Coast property agents have claimed the estimate was extremely optimistic. ...

"They'll be celebrating in the streets if it's only 10 per cent default," one Gold Coast agent said.

"There's a lot of rumours around about settlements, but it's all looking very slow."

Soul has been on the market for five years and, while the market boomed for the first three of those years, the global financial crisis cut the value of these units substantially."

Gold Coast

Although this blog focuses on Brisbane, a number of Brisbane investors also purchase on the Gold Coast. As the Brisbane market is flat, such investors are less likely to purchase on the Gold Coast at present. There are three big developments completing in the next year. First will be The Oracle at Broadbeach, then Hilton at Surfers Paradise, and then Soul. All are completing in two stages.

Here is a nice video showing The Oracle at Broadbeach. (Click here for full size video.)

Here is a link to photos showing Soul and the Hilton project, courtsey of defec8R of SkyscraperCity.

Close Up

Wide view

Gold Coast Oversupplied

Coast High Rise Demand Dries Up

The situation on the Gold Coast is not good. I wonder if everyone will be able to settle new apartment purchases in Soul and Oracle this year, when valuations are likely to come in under contract price. Note that Juniper's last project is SE Qld, Oceans, there have been no resales of apartments for more than the initial off-the-plan contract price -- with some owners selling at $200,000 or more loss. From the Gold Coast Bulletin:

"THE Gold Coast's high-rise market is at a standstill, with only 57 new apartments sold in the May quarter, the quarterly Midwood Report has revealed.This takes the total number of units sold since December last year to 115, the report shows.

Units in the city's biggest projects -- Oracle, Soul and Hilton -- are due to settle later this year. Settlement will depend on valuations, available finance and the circumstances of the owners.

Bill Morris, author of the report, said settlement of these projects would be the 'litmus test' for the market, with many buyers handing over deposits before the onset of the financial crisis, when unit values remained strong. He also said there was enough available stock for five years."

See also

http://www.goldcoast.com.au/article/2010/06/11/227041_gold-coast-real-estate.html

Talking Up A Dead Market on the Gold Coast

Real estate agents are always the optimists. Take this story in the April 3, 2010 Courier Mail (a newspaper that relies on real estate agent advertisements for its profits, so you will only read positive stories in the Courier Mail about real estate). The story is about the Gold Coast off-the-plan apartment market, and is titled "New apartments to dry up". In the story, Julian Sutherland, a director of Ray White Surfers Paradise, says "History will show that buyers who put their foot on product at today's prices will benefit significantly when the supply constraints diminish over the next year or two."

Compare this with a report from March 31, 2010 from Herron Todd White, who are independent registered valuers. In response to the indicator: "Are New Properties Sold at Prices Exceeding Their Potential Resale Value", HTW responds for the Gold Coast apartment market: "Very Frequently". See page 51 of the report.

So, if buying a new apartment on the Gold Coast off-the-plan or recently finished, take care with what real estate agents tell you, because despite Julian Sutherland's positive views, the real story may be otherwise. And Julian earns his commission from selling off-the-plan apartments on behalf of developers, so he is not in any way independent.

HTW also reminds us:

"Like anything in the current economy, when investing in a holiday home, you need to take a softly, softly approach. You need to take your time, look at the fundamentals and make sure that they all add up. With the level of choice out there, it is even more important to select well, remembering profit is most often built into the purchase rather than the future sale."

Raptis and Surfers Paradise

There are rumors that Raptis, who is developing the Hilton hotel and apartment complex at Surfers Paradise, is in significant trouble. I wonder if the Gold Coast Hilton will get off the ground?

http://www.news.com.au/heraldsun/story/0,21985,24252689-664,00.html

http://www.news.com.au/heraldsun/story/0,21985,24247597-664,00.html

The Gold Coast apartment market is not doing well at present. New apartment are not selling, as existing owners are cutting prices, and rental returns are not good.

"Mr Juniper said Soul would breathe new life into Surfers Paradise. "It's the transformation of the Gold Coast; a brand new Surfers Paradise is being delivered right now," he said. "To have the Hilton being built next door is fantastic. It reassures everyone that Surfers Paradise is still moving ahead in these times at the moment. "They have achieved fantastic sales. We have achieved fantastic sales and it just shows the strength of the Gold Coast market."

He said unlike the Hilton, where sales had been to predominantly offshore interests, Soul had attracted mostly local buyers.

http://www.goldcoast.com.au/article/2008/08/13/14912_gold-coast-business.html