Alderley Square on hold

PCN's Alderley Square project is on-hold.  See Quest story.  PCN's El Dorado Indooroopilly project seems to have stalled.

There are a number of other projects where the developer is trying to off-load the whole project to another developer.  Buyers beware!

Brisbane Rentals

According to SQM Research, the Brisbane rental market is tightening, with less advertised vacancies than this time last year.  See note.

Grey Street, South Bank

Part of Grey Street at South Bank (South Brisbane) is getting a major and needed facelift.

• The new ABC headquarters are almost complete.
• The new entrance and shops at the Convention Centre are complete and have opened.
• The Queensland Conservatorium has done minor improvements to the streets cape -- more work is needed here.
• The Rydges Hotel is improving its street front.
• The South Brisbane train station landscaping and heritage features are being improved.

All of these improvements add value to the apartments on Grey Street (such as Saville and Arbour).

Hamilton Reach Press Release

Diversified property group Australand is poised to begin construction on one of Brisbane’s most anticipated new residential projects – the $400 million Hamilton Reach in the Northshore Riverside precinct. 
Following a successful sales run equating to more than 60 percent of available product, Australand is about to start work on The Green Quarter – the second release at Hamilton Reach since its launch in April 2011. 
The Green Quarter – comprising 12 unique terrace homes located just one street back from the Brisbane River is anticipated to be completed late 2012. 
“Hamilton Reach has generated a high level of interest due to its sought-after low to medium density masterplan, diverse and considered product and its unrivalled riverfront location,” he said.  “The project has been designed as a highly liveable community optimising views to the river and parklands.  Hamilton Reach will be intrinsically different to anything else in the area as it has been designed as a boutique enclave that is spaced out over a number of low rise buildings which have been extremely well received.” 
ULDA urban development director, Matt Leyshon, said Northshore Hamilton is currently undergoing the biggest urban renewal in Brisbane’s history and Australand’s Hamilton Reach is a significant part of the precinct’s transformation. 
“Northshore Hamilton is the most significant waterfront redevelopment in Brisbane since Expo 88 and Southbank,” he said. 
Watermarque features a stunning collection of 78 contemporary apartments across two five-storey buildings. There are a variety of floor plans with one, two and three-bedroom configurations on offer ranging in size from 56 sqm to 333 sqm.
The Green Quarter’s terrace homes will be built according to stringent design and construction standards in a bid to reduce the future energy costs for the end user.
Designed by Rothe Loweman White Architecture, the terrace homes will feature a 3 kilowatt solar power system, double glazing to windows and doors, cross ventilation, a 3000-litre rainwater tank plumbed to the toilets and laundry,  private courtyards and smart meters to monitor water and electricity usage. 
The terrace homes range in size from 193sqm to 280sqm and remaining homes are priced from $925,000 - $1.375 million. Watermarque apartments are selling from $535,000 - $950,000.

Project Marketing Blog

A new blog has recently been launched by Colliers Real Estate dealing with project marketing.  That is, marketing a real estate project, such as an off-the-plan apartment building.  See Project Blog

High-rise Dangers For Children

"Balconies are definitely a safety issue and no doubt the battle over how to make them safer hasn't finished yet. But at least with balconies, people know they are dangerous.

Windows, on the other hand, are a silent risk – as many people mistakenly assume that if a flyscreen is fitted, children are "contained".

It's not just an issue in Australia – see this story from the US where despite tough building codes in New York – there are thousands of falls across the rest of country, where legislation is lacking.

It's about time we all took some responsibility for some of the most vulnerable people in our society – our children. I mean "our" in the collective sense."

See Fairfax Media story

Renting Is the Gateway to Financial Success

“The bills were endless. There's the rates, the utilities and also the insurance for the property,” Klemencic said. The Klemencics sold up, investing the proceeds in shares, and returned to the rental market. “We save about $600 per month easily in renting rather than buying,” she said.
See Today Tonight story

Indooroopilly Shopping Centre Expansion

Indooroopilly shopping centre is set for a major facelift, with a $450 million expansion receiving the green light from planning authorities. Eureka Funds Management, which manages the superannuation trust that holds a 50 per cent stake in the centre, announced today that development approval had been obtained and work had started on the 30,000 square metre addition. Construction company Brookfield Multiplex is expected the finish the work by April 2014.
Full Story Here.

In addition, apartment buildings up to 20 storeys will be allowed near Indooroopilly shopping centre and Indooroopilly train station under a draft neighbourhood plan passed by Brisbane City Council in December.
Full Story Here.

These changes will probably have a negative impact on those apartments very close to the shopping centre, such as those on upper Station Road, on Belgrave Road and on Grosvenor Road.  But for those apartments a little further away from the shopping centre, it will be a positive addition and will add further value to those apartments.

Soleil Review

I recently visited an apartment in Soleil, which is in the Meriton pool.  Meriton is running a short term rental business out of Soleil, and so the ground floor lobby looked more like that of a cheap hotel than a residential apartment building.

I visited a one bedroom apartment.  It was very small.  Basically, two rooms.  A small bedroom, and a living room with a kitchen along the wall.  So really, a bedroom and a kitchen.  The kitchen/living room/dining room was very crowded even with the minimal hotel furniture.  You were sitting very close to the TV when on the sofa.

There are no balconies, and the windows only partly open.

No ducted airconditioning.  There is a split system, with an ugly head-end in the living room.

There were strange bangs and mysterious deep noises coming from the walls and the common hallway areas.  I could not determine what these noises were, but they were very annoying.

Overall, my opinion is not positive.  I was very unimpressed.

The building has a Facebook page, if you want to become friends with this apartment building.

Home Equity

A summary from the recent September 2011 Quarter RP Data home equity report.

The highlights of the report are:

• Over the five years to September 2011, capital city home values increased by around 28 per cent.
•  Australian housing markets recorded value declines recently with capital city home values down 3.3 per cent from their October 2010 peak to September 2011.
• Properties in Queensland and South Australia have higher turnover rates; therefore equity levels in these states tend to be lower than in other states.
• Far North Queensland & the Gold and Sunshine Coasts have the highest instances of negative equity at 20.2%, 14.0% and 13.5% respectively. 
• The highest proportion of homes that are now worth at least double their initial purchase price is typically either regional and non-coastal, or capital city markets. 
• Capital cities have enjoyed long-term value appreciation and have proven to be less susceptible to ongoing value falls than certain non-capital city markets.

Juniper's Soul

It is hard to tell, but it appears that only about a third of the apartments purchased off the plan in the first stage of the Soul tower at Surfers Paradise have settled.  Juniper, the developer, must not be happy about this.

Brisbane real estate transaction volumes below average

Brisbane home values continue to fall

Summary of Recent RP Data report

Housing values record their first monthly increase since December 2010 in November 2011

• Capital city dwelling values up 0.1% over the month of November, the first monthly increase since December 2010.  Dwelling values are down -3.5% over the twelve months to November 2011.
• Home values in Melbourne and Brisbane fell by the most significant amount over the quarter, both down by -1.7%, followed by Adelaide and Perth which both fell by -0.3%.

National sales volumes are tracking about 17% below the five year average.

·         In recent months the estimated number of dwelling transactions has remained quite stable. Based on our estimates of October transaction numbers, every capital city except Sydney (+8%) is recording lower than average home sale numbers.

·         The worst hit markets are Melbourne (-32% below average) and Darwin (-30% below average).

• Rents are starting to improve in certain areas and across certain product types while yields continue to improve.
• Capital city house rents have increased by 4.9% over the 12 months to November 2011, compared to average annual growth over the past five years of 5.8%.
• Capital city unit rents have increased by 5.4% over the 12 months to November 2011, compared to average annual growth over the past five years of 6.6%.
• Gross rental yields for houses have improved from 3.9% last November to 4.3% currently and for units they have increased to 5.0% from 4.7% last year.

Homes are taking longer to sell and vendors are providing large discounts on their price expectations however, conditions have shown improvement over recent months.

·         The average number of days it takes to sell a house has decreased over recent two months.  It currently takes 53 days on average to sell a capital city house compared with 46 days at the same time last year.

·         Vendors are now providing an average discount of -6.9% from their initial listings price, at the same time last year the average vendor discount across the capital cities was recorded at -5.9%.

Blue Sky Ahead?

John Edwards at Residex believes that there is blue sky ahead for the Australian residential property market.  A quote from a blog entry from today:

"Adverse comments and the position currently surrounding European economic problems have certainly had an impact on Australia’s economy; however it is important to recognise the position Australia holds, and that if things do go horribly wrong, Australia has the capacity to simulate its economy by increasing borrowings and decreasing interest rates.

Our housing markets ended 2011 in a better position to where they started and I am confident that the year ahead will be better for residential property owners compared to last year.  Most owners should see their assets hold value or increase and this year could in fact be a good time for investor activity provided the world economy doesn’t move into severe recession as a consequence of the problems in Europe. ...

The data suggests that we are exiting a period of negative adjustment however, in my view, we should not expect any rapid uplift in housing values because current economic conditions are not capable of supporting strong consumer activity. Retail activity during the Christmas period certainly suggests that consumers are cautious."

Busting Bubble?

According to contrarian economist Professor Steve Keen, it was accelerating debt that drove house prices up and it is decelerating debt that is causing the fall.

Keen has argued the significance of private debt in the economy - something which mainstream economists largely ignore. In a recent post on his blog, debtdeflation.com, Keen reveals the debt to disposable income ratio for Australian households has been rising until recently. Now Australians are saving and paying off debt rather than spending and this has a negative impact on house prices.

The end result, Keen argues, is that house prices will fall 40 per cent over the next 10 or so years, or 5 per cent to 10 per cent for 2012.

See Courier Mail and Property Observer

But see a contrary story here and story by Matusik.  Chris Joye from Rismark takes the opposite view.

Chinese Investors

"And buyers from China once again topped the list, according to new research by Colliers International.  The figures on buying patterns during the 2010-2011 financial year have shown 733 residential sales to foreign buyers.  In all, 506 of those sales were investments with 277 for owner-occupiers."

See Courier Mail

Gold Coast Still Oversupplied

"The high-rise market on the Gold Coast is nothing like any other Australian market.

"It's a unique market and it's driven by speculation and not necessarily the fundamentals. But we just don't need any more high-rise developments for the moment.''

Mr Morris said his latest research indicated there were 625 new high-rise apartments for sale on the Coast. That represented a 2 1/2-year supply based on the average sales rate over the past two years.

"But the figure is a bit camouflaged by a rather big project in Southport - Philip Usher Constructions' $200 million H20 on Broadwater development, which is completed, but has not yet been put to the market.

"So there's another 350 apartments just sitting there which, when they get released for sale will add another year to supply, increasing it to 3 1/2 years.''

In the wake of the GFC, the Gold Coast high-rise apartment market has been hit by spiralling valuations and two high-profile victims of receivership, Southport Central and the twin-tower The Oracle Broadbeach.

It has led to heavy discounting of stock, with prices of some luxury apartments slashed by as much as 30 per cent.

But Mr Morris believed prices could fall even further throughout 2012.

"Most of the stock on the Gold Coast is held by receivers and the prices are not being driven by the market.

They're being driven by what the receivers have to do to get rid of the debt,'' he said. ``So it's quite possible the average price of new apartments could sink below the average price of resale stock.''

Research by the Oliver Hume Real Estate Group shows the Coast's total supply of available apartments - low, medium and high-rise - has reached 1626, down from its peak of more than 2000 over the past couple of years.  And the figure is expected to continue to fall with predictions of the strongest summer sales since the GFC. 

See Full Story

Recent Brisbane City Apartment Sales

Here are the recent reported apartment sales in the larger Brisbane downtown buildings.  Most of these sales closed in the period from late October to early December 2011.

Charlotte Towers

• Apt 2110, 1 bed, 1 bath, 1 car - $382,000

Aurora

• Apt 393, 2 bed, 2 bath, 1 car - $665,000
• Apt 236, 2 bed, 2 bath, 1 car - $515,000
• Apt 512, 2 bed, 1 bath, 1 car - $582,000

Festival Towers

• Apt 3401, 2 bed, 2 bath, 1 car - $475,000
• Apt 1707, 2 bed, 2 bath, 1 car - $440,000
• Apt 2110, 1 bed, 1 bath, ? car - $350,000

Felix

• Apt 356, 2 bed, 2 bath, 1 car - $505,000
• Apt 276, 2 bed, 1 bath, 1 car - $492,000

River Place (82 Boundary Street)

• Apt 302, 2 bed, 2 bath, 1 car - $690,000
• Apt 326, 3 bed, 2 bath, 2 car - $1,497,000
• Apt 231, 2 bed, 1 bath, 1 car - $423,000
• Apt 110, 1 bed, 1 bath, 1 car - $410,000

Skyline

• Apt 55, 1 bed - $320,000
• Apt 131, 3 bed, 2 bath, 1 car - $700,000

Admiralty Quays

• Apt 9, 3 bed, 2 bath, 1 car - $900,000
• Apt 67, 1 bed, 1 bath, 1 car - $580,000
• Apt 135, 2 bed, 2 bath, 1 car - $780,000

Admiralty Towers Two

• Apt 57, 2 bed, 2 bath, 1 car (103 sqm) - $660,000

No reported recent sales (last October to early December) in Casino Towers, Quay West or Admiralty Towers One.

Brisbane Market Flat, and therefore good buying?

With the market remaining soft most of last year, Mr Lawless said Brisbane was again becoming more affordable compared to other capital cities.

There had not been such disparity between Brisbane and Sydney prices since 2007 and Melbourne since 2004.

"It just demonstrates that there is quite a strong value proposition opening up within the Brisbane marketplace,'' he said.  "Which should make the Brisbane market look much more attractive to investors and also interstate migrants.''
See Courier Mail

South Brisbane and Indooroopilly

A recent report by Urbis lists South Brisbane as being "trendy" and Indooroopilly as a "prime unit location".  Bowen Hills also gets a mention as an area undergoing redevelopment.
See Article

Why are Landlords Hostile to Pets?

Many landlords are hostile to pets.  My experience is that students are worse than pets.

"Brisbane vet Michael O'Donoghue has seen too many people have to give up, or put down, their pets because they could not find a rental property that welcomed animals.

"It's very heart-breaking, people euthanising their beloved pet because they can't find accommodation," he said."

See SMH

The Dunmore in the Valley

There is a new apartment development currently being marketed in Fortitude Valley.  It is called The Dunmore.  Management rights have been sold to Mantra, and the property will be managed under the Peppers brand as a small hotel.  For investors, the rental returns will be on a pooled basis based on lot entitlements, similar to many Mirvac properties.

According to the selling agent, The Dunmore will comprise of 78 apartments including:

-           42 One bedroom apartments, a number without car parking

-           18 One bedroom + study nook apartments

-           18 Two bedroom apartments (inc. flexibility of dual key access)

Product	Price Range
1 Bedroom	$376,000 - $462,000
1 Bedroom + study	$399,000 - $482,000
2 Bedroom	$572,000 - $632,000

Predictions for 2012

I am not going to make any major predictions for the Brisbane apartment market for 2012.  It is too uncertain what will happen next.

It is probably not a good time to sell.  If you can hold off selling, then that is probably wise.  (I guess that the market will, at worst, be flat.)  However, if you may be forced into selling sometime in 2012, such as due to loss of a job, divorce, financial difficulties, or a forced move, then it is probably best to sell as soon as possible so that you are not a distressed seller.

If you are buying, there is plenty of choice.  But only buy if you plan to hold for the long term.  I think it is better buying an established apartment than buying off-the-plan, at least in Brisbane.  (The Gold Coast is a different story.)

Rents are unlikely to fall.  Body corporate levies are unlike to decrease.  Who knows what interest rates will do.

I may buy in the next 6 months, but only if the price is extremely competitive or the property is extremely unique.  I doubt that I will buy off-the-plan this year.

Two books to assist you:

• Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying
• Investing in Brisbane Apartments

Finding A Great Apartment to Rent in Brisbane

Introduction


Finding a good apartment or home unit to rent in Brisbane is not easy, particularly in January and February when the demand for apartment rentals is high and many tenants are looking.


In the best buildings, the existing tenants do not often leave, and when they do move out, the apartment is often snapped up quickly. For the better buildings, a large percentage of the apartments are occupied by the owner, and so are not rented out.   Also, onsite managers often control the rental rolls, and don't often advertise on the usual property websites (as they don't need to do so).  Some have their own website.  Also, onsite managers may have a relationship with executive relocation services, and the better apartments may be provided to corporate tenants.  For the mid-quality buildings, many apartments are furnished and rented on a short term basis, sometimes even overnight.  Thus, there may be few apartments available for rent. 

At one time, a good specialist website for apartments was http://www.seqrents.com.au However, it seems that some buildings are not using this site anymore, or are not bothering to update their listing on this site. So, although useful, it is less useful.


A newer website that has a number of rental listings is CityApartmentSales, and is used by a number of the onsite managers to list apartments for rent.  The largest number of listings are located on RealEstate.com.au, but a number of onsite managers do not use this website.  Also, try Central Apartments for rentals in Pradella buildings.

You have to find out how each manager advertises his/her vacancy.

Generally, you want to avoid any buildings managed by Oaks, as they focus on short term hotel style rentals.

This website has a list of most city apartment buildings, with useful information and links about them. Also, try this customised search engine.

Downtown Brisbane:

If you want to live downtown, then I recommend the Admiralty Precinct. This comprises three first-tier buildings (Admiralty One, Admiralty Two and Admiralty Quays), plus River Place (good location, not as good quality) and Skyline (second tier).  Recently partially opened just behind these buildings is Meriton's Soleil (budget quality).

Admiralty One is good value, and has some of the largest two bedroom apartments in Brisbane, but is a smaller building.  It is direct river front - http://www.admiraltyone.com.au/

Admiralty Two also has good sized apartments, and the building has great facilities. http://www.admiraltytwo.com.au/

Admiralty Quays is newer, and has a great pool, but the apartments are smaller than the two Admiralty buildings listed above, and it is more expensive. http://www.admiraltyquays.com/

Nearby on the river in the city is River Place, that is not as good quality, but is likely to have availability as this is a large complex. Careful of Storey Bridge noise. Great views.  Great pool.

Soleil has only just opened.  It is currently the tallest building in Brisbane.  A large building with over 400 apartments, but less than half have been sold.  In late December, the Soleil website said that there were currently no apartments available for lease.
On Alice Street in the city, if you can get an apartment in Quay West, that is fantastic, as it has park and river views.  About half the apartments in this building are hotel managed, so it is easy to get short term accommodation in Quay West, but difficult to find an apartment for a long term lease.  All apartments are privately owned. You want to get above level 7.

For an inner city downtown building, Metro 21 is one of the better quality buildings. It has only 4 apartments per floor -- and tries to be more upmarket so is better than most buildings that aim at students -- it seems to have better availability, and some of the two bedroom apartments have three bathrooms. The baloneys are large:
http://www.realestate.com.au/realestate/agent/metro+21+brisbane/mlibri
and http://www.metro21apartments.com.au/

M on Mary has recently been taken over by new management, so it will be interesting to see what happens in this building.  It was not high on my list previously, but that may change with the new management.

Parklands at Roma Street also has some good apartments.

SouthBank


I recommend Arbour on Grey at SouthBank: http://arbour.com.au/cms/welcome.html

Also, Saville (Mantra) at SouthBank is one of the nicest buildings if you get a river facing apartment.  The apartments are level 8 and above.  Below level 8 is a hotel.  The best thing to do here is call to find out availability.  Telephone 07 3305 2559

West End


There is likely to be some availability in some of the riverside West End apartments.  These include Waters Edge, Flow, Koko and Left Bank.


Some of the better apartments not on the river road include SL8 and Tempo.


In my view, all of the above West End apartments are too isolated.

Apartments in Suburbs

The suburbs that I recommend, due to location, transport and large number of better quality apartments, are Toowong, St Lucia, Taringa, Indooroopilly and possibly Milton and Hamilton.  I don't recommend Chermside.

In Indooroopilly, there has been very little recent construction.  Two of the newer, quality buildings Riva and Ciana.

Riva has apartments with great river views. It is a quiet building, with a pool, and is close to the train station and Indooroopilly Shopping Centre.  It has good onsite managers, but apartments rarely become available here.

Ciana is a larger new complex, in a central location, with many large apartments. There is a pool and gym, plus a bowls club! 

The newest complex in the Toowong / Taringa area is Fresh.  This complex has two pools, a gym and great gardens, and a large number of apartments are owned by super funds and thus are rentals.  Try here.

Next door to Fresh is Encore, which is a relatively nice complex, with good pricing (but not as nice as Fresh, and some of the apartments are small).  This complex flooded in January 2010.  

St Lucia is harder to find quality -- there are few onsite managers. So you have to try local real estate agents.

If you want an apartment complex that feels more suburban, then Parklands at Sherwood is a great choice. Many apartments have park/rural views, and there is a great pool and bbq area.

Nearby is Tennyson Reach, where you can get a large new apartment on the river. This is a new complex, but (apart from river views) not a great location.  It was badly flooded.  You can rent a high quality apartment at a reasonable price here, if you don't mind the location.

Off-the-plan commissions

I have recently come across off-the-plan developments in Brisbane where the agent is being paid a flat 7% or 8% commission.  These agents are mostly selling to foreign buyers.  On a $600,000 apartment, that means $48,000 goes to the agent.  In other words, you are paying at least 8% too much!

Apartments in Teneriffe, Brisbane

Rents and apartment prices to face some stiff competition in Teneriffe?

The sky-high rentals and apartment sale prices being charged for apartments in Teneriffe may soon face some stiff competition when the several hundred brand new apartments being built by FKP at its new Gasworks complex combined with those already for sale at Mirvac’s Waterfront complex, both at neighbouring Newstead, come on stream.  There are some 600 units and apartments planned for construction in that area.

This may have been the trigger for the formation for the recently formed Teneriffe Apartment Managers Network. 

A recently released brochure, Renting in Teneriffe, is available around the area and promotes sales and renting of apartments through the on-site apartment managers listed and includes 19 apartment complexes that are let by on-site managers in Teneriffe.  Many of the apartments at Teneriffe are converted Woolstores while others such as Dalgety-Mercantile and Winchcombe-Carson complexes were built around 1994-96. 

Perhaps the Teneriffe apartment complex managers have already concluded that they can expect some fierce competition in terms of property prices and rents towards the end of 2012 when the FKP apartments come on stream, which start at $450,000 just a hundred metres down the road from Teneriffe. 

Woolworths is set to open a supermarket in the FKP complex, and boutique shops are planned along with office space and the 5 hectare Parklands area. It’s going to be interesting to see if rents and property prices hold up in Teneriffe when these complexes come on stream in late 2012 and early 2013.

Spotting a Bubble

An excellent article by Bill Moss, who was very senior at Macquarie Bank, has been published recently.

"I have always believed that no one should ever invest in anything unless the fundamentals are right. If the people who pay the rent or borrow the money to purchase a property cannot afford to keep up repayments, then a property investment fails. After a global financial crisis, the concept of keeping vacant real estate as an inventory item, as the sheiks of Dubai did or as the Chinese and Russians tried to do, is doomed to end in tears."
Read the full article at Property Observer.

Soul

A new Soul website, that shows actual interior photos of apartments, has been launched.  It appears that less than 100 apartments have actually settled to date.  A number of off-the-plan contracts have crashed.  The building is being managed by Mirvac, soon to be Accor, under contract.  Mirvac did not purchase the management rights.

Asian Developers

"Foreign developers have grabbed a 30 per cent share of Australia's apartment market, a trend not repeated since the Japanese office and hotel development boom in the late 1980s.

Overseas investors are behind 13,000 apartments in 37 projects in Australia. Based on the average number of apartments completed in 2011, that represents a market share of as much as 32 per cent, research by the property group CBRE finds.

About 40 per cent of projects are under construction; the rest are at the planning or marketing stage."

See Fairfax

So it appears that Asian developers are building small apartments in Australia for Asia buyers that are rented to Asian students.  When the tide goes out, will Australians want to buy or live in these boxes?

Not So Devine

"Home developer Devine warns deteriorating property market conditions will cut its full year pre-tax profit by 31 per cent.

Market conditions had continued to deteriorate across most Australian property markets, which had delayed Devine's ability to bring new projects to the market, the company said on Wednesday."

See Business Spectator

Housing Shortfall in Queensland?

"Australia's housing shortfall is expected to blow out to more than 640,000 in 20 years, prompting industry calls for tax cuts and other measures to stop prices going through the roof.

The gap between demand and supply increased by 28,200 to 186,800 housing units this year, a National Housing Supply Council (NHSC) report reveals.

The annual report on the state of supply shows NSW and Queensland had the largest shortfalls of 73,700 and 61,900, respectively."

See Business Spectator

Off-the-plan craziness at The Oracle

Here is an interesting but sad story about a teacher's aid, who signed an off-the-plan contract in 2006 to purchase an apartment in The Oracle at Broadbeach for $940,000, plus stamp duty.  Unsurprisingly, she was unable to settle and then unsuccessfully sued the developer (Niecon) to get out of the contract.

"She explained that she did not have the funds to settle and that the matter had cost her $7,500 in bank guarantee fees. She explained that she had a mortgage of around $100,000 on her $300,000 townhouse, was in her mid-50s and earned about $550 per week as a teacher’s aide. She asked to be let out of the contract and explained the difficulties that she had in meeting the required deposit of $94,000. She explained that she had brought up her children without maintenance from her former husband and saw the investment in The Oracle as a way of finally getting ahead by using the equity in her home as the deposit."

In early 2010, before completion of the development, she listed the property for sale at a price of $1.28 million. "This price was selected because it would enable her to cover the purchase price, stamp duty and agent’s commission. However, the price of $1.28 million was unrealistic in the light of the global financial crisis and its impact on property prices, even though Ms Ryan had the hope that such an iconic building would not be affected as other parts of the market had been."

What a crazy thing for this person to do.  Why would anyone in their right mind who was earning $550 a week sign a contract to purchase a Gold Coast apartment for about a million dollars?!

See Decision, at paragraph [326] and following.

The Oracle - Developer Wins Lawsuits

The developer of The Oracle at Broadbeach was sued by a number of people who purchased apartments off-the-plan and then, after the market dropped, did not want to settle.  The developer won the lawsuits, and the buyers have to pay significant damages to Niecon.

Interestingly, the judge's decision (which is long and complex) discussed issues about when a residential apartment building is and can be operated as a hotel or short stay letting operation.

"The contract provided that any authorisation of a person as a letting agent would be in the terms of the Caretaking and Letting Agreement annexed to the Disclosure Statement. That agreement provided for the entity appointed by the body corporate to operate a letting business, and to use certain common property for specified purposes. The letting business was not limited to long-term tenancies. Nothing in the Caretaking and Letting Agreement provided that the letting agent could not conduct its letting business so as to attract short-term tenants and holiday-makers. The letting business involved associated services commonly rendered in connection with letting lots in similar developments and “any other lawful activity.” This authorised the provision of services to guests occupying apartments, including guests staying for a short time who might require room service, a mini-bar and other “hotel-like services”."

"The fact that [the onsite manager] provides guests with certain “hotel-style services” does not mean that the tower has ceased to be a “residential tower” in the sense earlier described. The fact that some of the occupants are there for a short term does not mean that the tower is not a residential tower. The contractual promise of a lot in a residential tower relates to a tower used for residential purposes. The relevant provision distinguished the residential component from the retail component of the development. In its contractual context, a residential tower does not mean simply a tower for owners who are residents or long-term tenants."

Risks of Buying Off the Plan

Property commentator Michael Matusik published some articles recently about the risks of buying of the plan.  See:
Risks 1 to 3
Follow Up Comments

For a more detailed analysis, see the recently published Kindle Book: Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying.  
This book can be downloaded to a Kindle, iPhone, iPad or computer.  The cost is less than $10, so good value if you are planning on spending money on an apartment in Queensland.