Matusik on Brisbane Apartments

Recent Matusik reprt on Brisbane apartments is here. Basically, it says that there are not enough apartments in inner Brisbane.

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?

Trilogy Sales

Demolition has started on the site for the Trilogy building in Brisbane.

The building will include a Mirvac managed hotel. Mirvac is not the developer and is not doing the construction. It is uncertain if a construction contract has been signed, and construction finance probably has not been obtained yet.

The hotel component includes 192 strata titled 1 and 2 bedroom suites. These are now in pre-release, with pricing starting at $480,000 and going up to $1M. According to my survey, between 60 and 70 have been sold. The public launch has been delayed, and is likely to be early September 2008. The developer is offering a 6% rent guarantee for 2 years, with settlement due in 2012.

The Compass Points North

See SMH

Look out Sydney and Melbourne, the exclusive apartments that are planned along the Brisbane River, the Gold Coast and further north are threatening to steal your limelight.

MONEY IN THE BANK

Roseville resident Rhonda Sear knows how to identify a prime apartment in a quality development. This full-time property investor bought a $1,175,000 penthouse in Queensland's South Bank development in 2004 and sold it 18 months later for $1.6 million. Sear has just listed for sale her three-bedroom, two-bathroom apartment in Norman Reach, a $108-million premium development on the Brisbane River at Norman Park.

Sear bought the apartment for $1,739,000 in 2006 and expects to make a profit despite the softer market. "It's an appealing city and it's a lot more affordable than Sydney," she says. "The key is actually buying the prestige product that has a uniqueness because it should still show strong growth in a soft market because it represents a certain lifestyle."

Sear has also spent $1.51 million on a unit on level 55 of Empire Square, Brisbane.

Look Beyond Headlines

I have always believed that medium price statistics are somewhat misleading. See this story...

"The difference in investor sentiment in the past few months has been extraordinary," Braxton Chase director Andrew Donnelly says. "The first thing many investors approaching us ask now is 'will the market implode?'. Many are clearly having difficulty understanding all the interpretations on where prices are heading."

Braxton Chase believes the reason is the frequent use of average and median price data, which creates a broad impression that prices are falling dramatically, but doesn't reflect localities that might be performing well in terms of capital growth.

See The Australian. 16 August 2008

Devine To Wait

HOUSING and apartment specialist Devine Ltd expects the residential market to fire once interest rates start sliding.

The housing and apartment specialist would pounce on apartment development sites in Sydney once market conditions turned, managing director David Devine said yesterday.

Since Leighton injected $95 million into Devine early last year to buy a 40 per cent stake in it -- since increased to 43.4 per cent -- Devine has been on a site acquisition spree, building a land bank to develop 10,000 homes in Melbourne, Adelaide and Brisbane. So far, it owns nothing in Sydney.

"Obviously, we'd be looking at the Sydney market for medium density and any opportunities that come up there," Mr Devine said. He did not think property values had any further to fall, and said residential markets nationally were "very much undersupplied". "Vacancy rates are below 1.5 per cent in most markets and according to BIS Shrapnel, we are very much undersupplying the market," he said.

"The stock deficiency is higher than it has ever been and with overseas migration at record levels, we see the residential market improving dramatically."

See The Australian, 15 August 2008

Google Insights

Google has an interesting service, that allows you to see what people are searching for on Google.

It is called Google Insights. It is helpful when making investment decisions.

For example, when looking at searches conducted in Australia over the past 12 months, the following are relative rankings of various searches:

trilogy brisbane	27
mill albion	38
empire square	44
westin brisbane	21
sl8	13

mirvac	59
pradella	1
devine	62
fkp	10
stockland	56

indooroopilly	62
new farm	40
west end	54
st lucia	19
toowong	44

Auction in Quay West

Apartment 905 in Quay West went to auction - 1 bedroom, 1 bathroom, 1 car, furnished. 72sqm, 9th floor with park and river views.
Highest bidder was $445,000.
Now listed for sale at $470,000.

Brisbane Rates Website

See www.brisbaneratesrort.com

Brace for the BOOM!

Monday, August 11, 2008

That’s the front cover headline of the September 2008 issue of Your Investment Property magazine. BIS Shrapnel predicts Brisbane will grow faster than any other capital city with the median house price to jump from the current $422,000 to $515,000 by June 2011. That’s a huge 22% increase in just 3 years!

Underpinning this strong growth forecast are several key factors:

• supply and demand – last year 90,000 people migrated to Queensland from interstate and overseas. Approximately 44,000 new dwellings need to be built next year to accommodate this rapid growth, however, only 33,000 are expected to be constructed, resulting in a shortfall of 11,000 new homes
• higher rental yields – rents have risen 15-20% during the past 12 months. Independent property analyst Michael Matusik predicts rents will rise by a further 17% in the next 18 months
• lower interest rates – we should see the first official rate cut in a month or two, with several more reductions to follow during the next two years

The bottom line is that regardless of whether you are buying as an Owner-Occupier or Investor, now is the time to secure your next property before prices take off again!

- Brian White, Senior Property Consultant, Prime Property Sales (Qld) Pty Ltd

What Brisbane Buyers Want

"Brisbane property buyers are willing to pay a premium to live closer to good schools, fancy restaurants and public transport nodes, according to one analyst.

Australian Property Investor magazine has identified the six ingredients of prime real estate, being an attractive view, proximity to water, heritage appeal, an inner-city location, lifestyle options and amenity."

See Brisbane Times

Stockland Results

http://www.stockland.com.au/

"Short term weakness in Residential; to rebound strongly in medium term"

In 2007/08 FY, Stockland sold 225 apartments Australia wide, for a total of $212M, at an operating profit of $11M or 5%.

RP Data Rismark Update

Property Value End of Month Index Release, 31 July 2008

"Most markets fall slightly in value through winter but U.S. experience won’t happen here. The RP Data/Rismark International end of month property indices report released today confirms what most people know to be true already; we are seeing modest declines in most property markets. However, RP Data National Research Director Tim Lawless said that the good news for buyers is that property is not a homogenous market and if you look at the flipside of this downturn, it may well prove to be the ideal buying window as speculation that interest rates may stay on hold and rents continue to surge.

Brisbane Property Market
• Brisbane house values have fallen on average 2% and 0.2% for units over the last six months, versus an average rise of 7.5% over the past 12 months.
• Prices of home units in the inner and south eastern suburbs have held and in many areas risen as prospective buyers choose a unit over a house due to affordability."

BIS prediction

Mr Mellor said home buyers should not expect a big decline in prices by the end of the year. "There may be a fall in prices before the end of the year, but it won't be more than 1 or 2 per cent," he said.

He added that it was a good time for buyers looking to upgrade to a bigger home.

"With a 10 per cent increase in the amount of people looking to rent, a figure that is expected to increase, it is a great time for investors." The financial markets are factoring in an interest rate cut, possibly as early as next month, but even without it, Mr Mellor predicted an upturn, so long as rates did not rise again.

"Common sense will win out in the end," he said. "Buyers will realise that all the fundamentals that make it a good time to buy are there."

See http://www.theaustralian.news.com.au/story/0,25197,24158947-25658,00.html

Will Empire Square Get Built?

There was an interesting story in The Australian last week, but states that the Empire Square development in Brisbane has not yet obtained construction finance. Also, no construction contract has been signed. The developer says:

"The worst possible scenario for Empire Square would be that if it didn't start by the end of the year, for whatever reason, we would be left with half an acre in the CBD that could be rented out for the next two or three years," Mr Chopard said.

Population Growth

The Australian had an interesting article by Bernard Salt on population issues and the impact on Australian housing.  Click here for article.

Lemon Apartments in Woolloongabba, Brisbane

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

Empire Square - presales

"Located from level 47 up, the 98 two-and three-bedroom apartments are priced from $1.3 million and marketed as having full access to the services of the building's Westin Hotel.

The residential component also includes six penthouses priced from $4.5 million.

Metacap Developments insists there has been no shortage of interest in the $500 million development, which also includes 306 hotel suites and 23,000 square metres of commercial space.

Expressions of interest were placed on 80 per cent of private apartments, before sales officially opened yesterday.

"We have already been inundated with enquiries... (this) is a great result, particularly given current market conditions," company director Jerome Chopard said.

Empire Square will also feature 306 hotel suites and a range of five-star facilities, including a gym, pool and restaurant.

Permanent residents will have access to the full services of the hotel, including the concierge, maid, doorman and personal assistant."

From Brisbane Times, 30 July

Is it the time to buy in Brisbane?

From the Brisbane Times:

"The sharemarket's loss might be the Brisbane property market's gain, as spooked investors return to the relative safety of bricks and mortar.

Experts are predicting a pick-up in real-estate activity following the sharemarket's recent dive during which overnight losses have cost investors in the millions of dollars."

Too Many Expensive Apartments in Brisbane

Brisbane is not Manhatten!

See http://www.qbr.com.au/index.cfm?storyid=35792&cp=displaystory&type=s

"Brisbane is facing an oversupply of luxury apartments in Brisbane’s CBD over the next three to four years, according to property analyst Resolution Research and Marketing Solutions."

Find Me A Home

Residex have launched a new service, FindMeAHome.

From my quick review, it is not very user friendly or accurate.

Using a map interface, it lists properties for sale. First, the list is not comprehensive. Second, it lists properties for sale that have been sold.

When selecting a property, it gives an indicative value. For the apartments that I looked at, the indicative value is not very accurate.

For example:

• A two bedroom apartment in Quay West - indicative value given as more than $1,348,000. This apartment would be, at best worth in the $800,000s.
• A one bedroom apartment in Charlotte Towers - indicative value given as more than $731,000 to $837,000. This apartment would be, at best worth $400,000 (most likely $360,000.)
• Casino Towers, Apt 3702, indicative value given as more than $1,166,000. This apartment recently sold at auction for $705,000.

There are many other examples, including for suburban houses. John Edwards has clearly got this wrong.

Regional Queensland - from RP Data Property Pulse

Queensland
Cairns – listings currently sit at a level 25% higher than the same period last year, this result represents the greatest annual increase in listings across the period 2005 to 2008.
Townsville - listings have increased by 34% during the last year, the greatest annual increase in listings during the last three years.
Sunshine Coast – listings have recorded an increase of 4% during the last 12 months, which represents the smallest annual increase in listings at any time between 2005 and 2008.
Gold Coast – listings have increased by 390 or 24% over the last 12 months which represents the greatest annual increase in listings during the last three years.

All highlighted Queensland regional areas except for the Sunshine Coast have recorded their greatest percentage increase in listings during the last year which suggests the level of stock on-the-market far outweighs the number of buyers currently in the market.

These results again highlight that Australia is in the midst of a buyers market. For those who have the capacity , there is a large amount of stock on the market and few buyers. It is felt that the best window of opportunity to buy will be during the next six to nine months with purchasers continuing to be in the best possible position to negotiate as supply in the market far outstrips current demand.

Waterfront Newstead Update

From a letter from Mirvac dated July 15, 2008:

46 of 99 apartments in Pier North and Pier South were under contract prior to public release on June 21, and 9 more sold since.

Prices achieved ranged from $1.98M to $14.25M.

Available apartments priced from $2.15M to $4.75M and penthouses from $6.4M to $8.9M.

"Park" apartments to be released in mid-2009. Prices expected to start from $800,000.

Update: Hamilton Harbour

From the developer, Devine, regarding Hamilton Harbour:

"The first stage of the exciting Hamilton Harbour mixed-use development in Brisbane's most prestigous postcode could be completed as early as mid 2010.

As Devine Limited and Leighton Properties continue their work on the $420 million project, plans are underway to commence marketing towards the end of this year.

The joint venture expect Hamilton Harbour, just 4.5km from the CBD, will provide a more affordable residential alternative to city and fringe areas.

It will offer an exclusive address close to Hamilton's renowned Racecourse Road café and boutique precinct, as well as Brisbane's Northshore - the city's largest single urban redevelopment project - the Portside development and to the city's cruise ship terminal.

When complete, Hamilton Harbour will consist of approximately 30,000m² of prime green office space, 4000m² of retail and showroom facilities and in excess of 300 apartments.

Vibrant commercial, residential, retail, outdoor and meeting place environments are all planned through quality product that has strong growth potential.

Luxury one, two and three bedroom apartments will meet todays residential demands while the commercial component will create landmark opportunities for a range of users who want the exposure and address advantages of Kingsford Smith Drive frontage.

Similar to other Devine Limited and Leighton Properties developments within the city, important emphasis is being placed on 'green smart' design techniques within the project.

Yours faithfully,

Ken Woodley
National Marketing Director
Devine Limited"

Charlotte Towers in Brisbane

Talking with agents in Brisbane City, it appears that apartments in some buildings are selling quickly and at good prices, while in other buildings the prices are not holding up. One building in distress appears to be Charlotte Towers.

This building has about 400 apartments, and was first sold off the plan by Devine in 2004. It now has become apparent that many of the original prices for Charlotte Tower apartments were too high.

For example, at present this appears to be the price range for apartments selling in Charlotte Towers:

• 1 bed, 1 bath, no car: $280,000 to $320,000
• 1 bed, 1 bath, 1 car: $330,000 to $380,000
• 2 bed, 1 bath, 1 car: $380,000 to $420,000
• 2 bed, 2 bath, 1 car: $400,000 to $460,000

See sales price history.

Just recently, apartment 1707 (2 bed, 2 bath, 1 car) sold for $400,000.

There are many apartments for sale in Charlotte Towers.

My advice is never to buy in a building with more than 200 apartments.

SouthBank 2026

Southbank2026-1

South Point at South Bank - prerelease

"The soon to be released Southpoint Residences will be the finest and most exclusive of Brisbane’s property market. Situated on South Bank’s last development site, the north-east aspect ensures that your views of the city and the river set you ahead of the rest.

With fifty-six palatial residences perched on top of the next acclaimed Emporium Hotel, you will not only live in the style that you deserve, you will receive six-star treatment morning, noon and night.

These truly unique ‘homes’ will provide spacious living with only the very best of fixtures and finishes. From the ‘his’ and ‘her’ robes to the classic fireplace and the private bar each element has been carefully selected with your comfort in mind.

Southpoint will be delivered by the Developers who brought you the Emporium Precinct; the Anthony John Groups’ attention to detail achieves quality and a lasting sense of style."
Renders here and here

River City - Oaks

Click on letter to read

Hale Street Bridge

The new Hale Street Bridge (or Link as the Council calls it) has a fly-over on Coronation Drive. Will it impact the views of Coronation Residences and Vue?

It will increase traffic on Merivale Streets and Cordelia Streets in South Brisbane. I would not buy an apartment on these streets.

Hale Street

"The revised plan, which was passed by Brisbane City Council at a special meeting today, includes an overpass from the Riverside Expressway to Coronation Drive at a cost of $55 million, and removes the need for outbound traffic to queue at an intersection.

"This will allow outbound traffic from the city to proceed to the west along Coronation Drive by going up and over southbound traffic," Cr Newman said.

Original projections found the construction of the bridge and link would add an additional 40 minutes to peak-hour commutes during 18 months' of work."

See Brisbane Times.

See also http://helenabrahams.com/media83.html

Beware!

Michael Yardney, who headlines the PropertyUpdate website and report, and is a director of Metropole Projects, has this to say:

Not all real estate markets in Australia are doing well, Yardney says. "We've got a very two-tiered market: inner suburban, or close to the water is doing well; and a lot of the high-rise isn't, off the plan isn't, and outer suburbs are not doing as well."

Yardney is talking to currently New Zealand property investor groups about strategies. "You're really early into what's probably going to be a three or four year slump," he says, but adds that the end of a boom doesn't necessarily mean a crash.

The "scary thing," Yardney says, is most current property investors haven't been in the market for more than four or five years, so they've never lived through a property cycle - they don't know what to expect. He says interest rates will drop, "but when market sentiment has been knocked by a number of things, people won't instantly come back - it's a herd mentality".

Smart investors will invest counter-cyclically, but ensure they have a buffer to see them through difficult times. "There's a huge oversupply of certain properties - you've got lots of apartments, developers have a lot of stock and houses aren't selling, so rents may not keep rising."

Yardney says people shouldn't get carried away by negativity - opportunities remain - and should stay positive.

See New Zealand Herald