South City Square in Woolloongabba

A new apartment development in Woolloongabba has been launched, called South City Square.  It is located on Logan Road.

Over 1,000 apartments, across 7 towers, are planned.  Pellicano are involved in this development.

See article here.

Top Yields

Today's paper had a chart with the top rental yields for inner-city Brisbane.  All were apartments.  A summary of some of the data:

• Spring Hill - based on 170 sales, median sale is $380,000, median asking rent is $485, so indicative gross yield is 6.6%
• Brisbane city - based on 666 sales, median sale of $500,000, rent $600, so a yield of 6.2%
• Woolloongabba - 86 sales, sale price of $400,000, rent $465 so yield of 6%
• The Valley had an indicative yield of 5.6%
• South Brisbane had an indicative yield of 5.4%

These figures are a little rubbery.  The apartments being sold may not be the same apartments listed for rent.  The rent is the asking rent, not the rent achieved.  The figures do not take into account vacancy.  And the sales price does not include stamp duty.

Take the following example, of an apartment sold for $431,000 and then rented furnished for $550 a week.  On a simple calculation using these numbers, the yield is 6.63%.  If stamp duty of $13,510 is added, the real sales price is $444,510, so the yield changes to 6.43%.  Once letting agents fees, body corporate fees and rates are taken into account, the yield drops to 4.5%.  And this does not include vacancies and repairs.

I recommend focusing on net yield, after expenses.  For a one bedroom apartment, you should aim for a net yield of 5%.  For a two bedroom, aim for a net yield of 4.5%.  For a three bedroom, 4%.

Urban Construct

South Australian based Urban Construct has acquired more than $100 million in development sites in Brisbane.  They have development applications in train for 2,200 apartments in South Brisbane, Newstead and Wooloongabba.  This includes:

• 611 Coronation Drive - 275 apartments
• 142 Montague Road, West End - 400 apartments
• Vulture Street, Wooloongabba - 240 apartments
• Ella & Chester Streets, Newstead
• Hope St, South Brisbane

Radius Apartments

The developers of Radius Apartments at Woolloongabba recently announced that they have sold the management rights to Oaks Hotels and Resorts.  In my opinion, this is a good reason of itself to avoid Radius.  Two bedrooms including furniture from $465,000.  Settlement expected in about 18 months.  The Radius website has floor plans, but does not give the size of any of the apartments, so I am guessing that they are tiny.

Woolloongabba Doubt

Plans to sell and redevelop 10 hectares of prime Brisbane government-owned real estate have stalled in anticipation of a firm announcement about the Cross River Rail project. The Newman government has rejected the previous Labor government's plan to sell the valuable Goprint site at Woolloongabba to make way for a massive inner-suburb development. The site's future is now in limbo, with no decision on its redevelopment expected until the viability of Brisbane's proposed underground rail project is determined. See Brisbane Times

Gabba Central

A reader sent me this comment, that I post without editing:

GABBA CENTRAL APARTMENTS IN WOOLLOONGABBA BRISBANE

Don't buy these apartments. In August 2008 there were about 50 unsold apartments, out of 154 apartments in Stage 2 (i.e. Towers 3 & 4). Developer went 'broke' because they wanted to wash all the problems here off their hands. Now the developer's company is still under receivership, and there are still about 30 apartments unsold.

I am an owner (first hand) and have been living here for more than a year. Body Corporate has spent heaps of money fixing building defect (including external walls cracking, plumbing failure resulting in apartments flooded - thank god not mine).

Today the glass of a glass door between my bedroom and the balcony shattered by itself suddenly and without any prior warning! Had to get a glazier in to do urgent replacement and I don't know whether the cost would be covered by Body Corporate's building insurance."

Gabba Central Apartments Bowled Out

"Gabba Central's 270 luxury apartments, retail space and 300 underground carparks were slow to sell and value plunged as a result of Brisbane's stagnant property market and the global credit crunch."
"The Brisbane property is now in the hands of financiers UCIS, which is responsible for selling the remaining space at Gabba Central for market rate in order to recover the $31 million.

If the sales fail to cover the total debt, PKW is liable to hand over up to $10 million in cash or assets. Potentially this will involve Taranaki land and buildings held by the dairy giant."

Full story is here.

My view was that this was a poor property.

Lemon Apartments in Woolloongabba, Brisbane

Here is an interesting blog entry, from an unhappy person who purchased off-the-plan.