West End Unit Owners are Concerned

"WEST END: Riverside apartment dwellers are banding together in a bid to give their direction on the future shape of the community. More than 30 residents from the Flow, Koko, Leftbank and Tempo complexes have met to discuss the need to build a sense of community in the area. Regatta Apartments body corporate chairman Paul Rees said they hoped to build a liveable community, not only for apartment dwellers but the whole of West End.

“We’re planning a series of regular events to build community in our area and the first event will be a breakfast in Riverside Park on Sunday, December 7 at 9am,” Mr Rees said.

He said they invited local, state and federal representatives as well as community groups and property developers to attend the breakfast to hear their ideas. Among residents’ concerns are building heights, closing Riverside Drive to public traffic and fast-tracking plans for a CityCat terminal. And Mr Rees said residents felt they were not consulted about increasing building heights.

“We are appalled at the suggestions of 15, 20 and 30-storey highrises being built here,” he said.

“We moved into this area believing the height limit would be seven storeys and we don’t want to see our area turned into a concrete jungle,” Mr Rees said.

He said a CityCat terminal and a reliable bus service on Montague Rd were important to give residents adequate public transport. Mr Rees said they supported redevelopment of the old riverside industrial areas as long as it was on a “human scale” and integrated with the established community of West End, “rather than creating a concrete barrier between West End and the river”."

See City South News

Predictions and Guesses

A lot of people seem to think that it is the end of the world as far as property investment is concerned. These are my thoughts.

Facts:

• Interest rates are going down
• There is low unemployment in Queensland
  
• There are few vacant rental properties, and rents are still increasing in Brisbane
  
• According to REIQ and RP Data, medium prices have fallen less than 3% in the past 6 months, and over the past year prices have still increased
  
• Property is still selling. For example, a three bedroom apartment is Admiralty One sold in less than a week. At auctions in Mooloolaba this weekend, which has been a tough market, there were 2 two bedroom apartments that had bids of more than $1 million: Oceans 503 had a highest bid of $1,200,000; and Sirocco 604 had a highest bid of $1M.
• Banks are still lending money, but they have tighter lending requirements
• For most of Brisbane, there are very few delinquencies.
  
• In outlying areas (such as Forest Lakes and Springfield) and low quality bulk highrise marketed to investors (e.g., Charlotte Towers, and other recent Devine buildings), there are distressed sellers who are selling for less than they paid.
  

Assumptions:

• Matusik, who is a very bullish property consultant, has the following assumptions in most of his presentations, but I am not sure how many of them will turn out to be correct (and some from his September 2008 presentation are already wrong):
• interest rates to drop by 0.5% in fiscal 2009
• $A remains high – above 85 US cents
• migration to oz remains high US economy has a mild recession, mild recovery in 2009
• demand for our resources continues
• share market settles down unemployment remains below 5% and wages growth remains constrained

Opinion and Predictions (Guesses?)

• Property in inner Brisbane will take longer to sell than over the past 3 years (e.g., time on market will return to a more normal period of time, from 15 days to 30 or 40 days).
• Prices for poor quality apartments will fall by 25%
• Prices for apartments that have their views destroyed (e.g., Charlotte Towers, 212 Margaret, River City, and some in South Brisbane) will fall by 25%
• Prices for apartments without carparks will fall
• Some new apartments for off-the-plan developments) are priced too high for what they are, and will have difficulties selling in the short term (e.g. Waters Edge, Empire Square, Vision)
• Anything priced over $6,000 per sqm will struggle to sell, unless it is really special
• Off the plan developments will not sell well until completion -- in uncertain times, people do not want to make bets on the future, especially where the product being sold is intangible -- people want to touch and feel in uncertain times.
  
• Really good stuff will sell, and will not reduce in price by more than 5% (if at all)
• In February 2009, the market will pick up, but will not have growth of more than 10% per year for at least two years
• Due to lack of building today, things will get better for investors in good locations in the short term
• This year, my property portfolio looks better than may stock portfolio.

Future Brisbane Apartment Developments

There is likely to be a shortage of apartments in Brisbane in the near future. (This statement assumes that that is not massive unemployment in Brisbane.) There are few developments under construction, and so very little new stock will come onto the market in the next three years. What new stock remains unsold is either overpriced or poor quality.

Downtown Apartments

• M on Mary - completed - mostly poor quality 1 bedroom apartments, mostly unsold. Developer has ceased sales campaign and is running this building as short term accommodation
• Evolution - completed - about 20 apartments unsold - small and overpriced
• Skyline - completed - about 20 apartments unsold - building surrounded by other buildings, and generally overpriced
• Aurora - completed
  
• Empire Square - cancelled
• Trilogy Tower - status uncertain - in presales, with planned completion in 2012 - both hotel rooms and expensive apartments
• Vision - status uncertain - in presales, with completion not before 2012
  
• Soleil Tower - soon to start presales - 403 apartments, with completion about 2011
• French Quarter - early days, no planning approval
  

Inner City

• Flow (West End) - completed - about 5 remain unsold, will negotiate on price to sell
  
• Koko (West End) - completed - about 5 remain unsold, will negotiate on price to sell
• Tempo (West End) - completed - about 5 remain unsold, will negotiate on price to sell
• IceWorks (Paddington) - almost complete - about 6 apartments remain unsold
  
• SL8 (West End) - under construction, with completion expected in April 2009, poor location
• Waters Edge (West End) - off-the-plan selling, overpriced and selling poorly, completion in 2010
• Ciana (Indooroopilly) - almost complete - about 25 out of 130 apartments remain unsold - good value
  
• Tennyson Reach - 2 buildings nearing completion, 1 building not far behind, 3 more buildings planned
• Newstead Waterfront - 2 buildings selling well off-the-plan
• The Mill at Albion - almost sold out, relatively expensive
• El Dorado Village - to be launched to the marketing in October 2008, completion likely in 2011
• Milton Union - received planning approval

Water's Edge at West End - Traffic Concerns

Brisbane apartment project dismisses transport concerns

The company behind a new apartment complex in Brisbane's West End says it does not think the project will worsen local traffic flow. The old box cardboard factory near the Brisbane River will be replaced by 220 apartments. There will be two eight-storey towers built on the site.

Ross Higgins from Pradella Developments says it should attract more transport infrastructure to the area.

"West End's undergoing a major infrastructure redevelopment from a traffic point of view now," he said.

"And really what we're doing is replacing a lot of people that were working in the area anyway.

"I don't believe it'll have a negative effect on transport in fact I think that it'll bring more transport infrastructure to the area."

Source: ABC News

In fact, there are plans for more than two buildings on the site -- with two or three buildings planned for the other side of Duncan Street as well, as shown on the map on the project website.

See also Brisbane Times

Trilogy and Water's Edge Video

See this video.

A similar story from the Brisbane Times, which is a little misleading because presales have been going on for months:

Brisbane skyscraper nets $50 million in first week
Shannon Molloy | September 19, 2008 - 10:23AM

Investors have swooped on a new mixed-use CBD skyscraper development and snapped up more than 70 hotel suites in less than a week, resulting in a $50 million sales success.

Standing at 265m and boasting residential, hotel and office space, the Trilogy Tower project on Queen Street will be one the city's tallest buildings when complete.

Developer APH Capital caused a stir last weekend when it officially opened sales for its luxury hotel suites, which represent the first new five-star product to be released to the local market in more than a decade.

More than 30 per cent of the hotel component has sold since last weekend, generating at least $50 million.

Brisbane has one of the highest hotel occupancy rates in the world and the hotel market has been bustling with investor activity in recent years.

APH managing director John Wilson said the success at Trilogy highlighted the continuing strength in the market.

"It shows there's a huge awareness of the demand for new hotel room stock and a particular need for five-star rooms in the Brisbane CBD," Mr Wilson said.

"The response to the product has been nothing less than sensational."

Trilogy Hotel, to be managed by Mirvac Hotels and Resorts, will comprise 192 fully-furnished one- and two-bedroom apartment suites.

The rest of the tower will also be home to a luxury residents and an office component featuring 31,000 square metres of space over 28 levels.

Construction is expected to be complete in 2012.

Water's Edge Sales Update

I have tried to ascertain how many Water's Edge apartments at West End have sold. From my calculation, between 30 and 35 have sold, out of about 220 apartments in total. That is not a huge number of pre-sales. Is West End overpriced for what it delivers today?

Water's Edge at West End - Now Released

Pradella's Water End development (Stage 1) at West End has been released. Pricing is aggressive.

1 bedroom (Apartment Type G - 61 sqm internal). High floors will likely have river views.
Facing South/West - $475,000 to $625,000
Facing North - $495,000 to $695,000
Most of these sold out on the first day of pre-release.

2 bedrooms

Apartment Type L - 84 sqm internal
Facing North - $665,000 to $945,000
To get a river view, I think you need to pay at least $835,000 for this style apartment.
Plans below. Click on plan to enlarge. As you can see, one bedroom really has no windows.

Apartment Type C2 - 103 sqm internal
Facing North, and close to the river but not a direct river view
$1,055,000 to $1,295,000. Not all of these will have a river view.

Apartment Type D - 113 sqm internal
Facing North, and in the centre of the complex with a pool view and some higher floors will have a river view.
$1,095,000 to $1,320,000.

There are other 2 bedroom layouts, and facing different directions.

3 bedrooms

Apartment Type C1 - 115 sqm internal
3 Bedroom, 2 Bathroom (one bedroom does not have a window - see plan below)
Facing north, but not direct riverfront and some may be too low to have river views - $1,230,000 to $1,630,000

Direct riverfront 3 bedrooms - Types A1 and A2 (159 sqm internal), facing West
$1,945,000 to $2,245,000

Will Flow be Impacted by Waters Edge?

Flow, at West End, was developed by Pradella. Next door, Pradella is developing Waters Edge. It looks from this photo that Waters Edge will crowd out Flow and impact its views.

Water's Edge at West End - Release Date

According to an email from Colliers, Waters Edge at West End will be released for sale next week:

Prices from

· 1 bedroom from $495,000

· 2 bedroom from $575,000

· Large 2 bedroom from $815,000

· 3 bedroom from $1,085,000

· Large 3 bedroom from $1,945,000

Car parking

1 & 2 bedroom - one space
Large 2 bedroom, 3 bedroom - two spaces

Settlement - 2010

Water's Edge at West End

For a photo of the proposed development, see this Vox site.

Pradella's New West End Development

Soon, Flow will be complete. Next door, Pradella will launch a new West End riverside development. I suspect it will be worth considering.

It does not have a name, but it does have a website.

Pradella will have developed three West End riverside complexes:

• Flow (to be completed in 2007) which looked extremely overpriced, but now just looks expensive; some apartments will be excellent (riverside on high floor) and some are not great
  
• New and unnamed
• LeftBank which is still looking very good
  

Stockland has Koko, which didn't live up to expectations.

And there is Riverpoint, currently selling off-the-plan, which looks very mixed.

I suspect there will be more to come.