West End - Montague - from agent's email

• BUZZING WEST END RIVERSIDE LOCATION
• INSPIRED DESIGN BY INTERNATIONALLY RESPECTED COTTEE PARKER ARCHITECTS
• RIVER, CITY AND PARK VIEWS
• LUSH, SUB-TROPICAL LANDSCAPED CENTRAL PLAZA
• LAP POOL, GYMNASIUM, RESIDENT REST & RELAXATION SPACES ON ALL ROOF TOPS

Bubble?

Is there a housing bubble in Australia?

See this article from The Trump and also this article.

See also comments on the RP Data blog and Domain.

Also:

"SQM Research founder Louis Christopher says vendors have "not yet woken up to the reality of the new market".

"There are fewer buyers out there. When houses are selling the best way to sell is at auction. But in a slower market, that's not the best way because you're not going to get as good a result."

"There are listings everywhere. We're in a situation now where buyers are backing away, but there are still people trying to sell. They're not going to get the prices they had hoped for, and it's going to be disappointing for them."

Christopher says that over the rest of the year, there will be an oversupply of stock in the market, which will put downward pressure on prices.

Additionally, he says property investors wanting to sell should have made their move in the first four months of the year. Now, he warns, they may have missed their chance."

See Property Market Has Cooled from SmartCompany

Waters Edge Update

There are some good photos of the construction of Waters Edge on the developer's website. The developer is currently advertising an X type apartment "from $645,000". This is a one bedroom apartment, with an internal study or second bedroom (no external windows).

Number of Unit Sales Decrease

Latest data from the Real Estate Institute of Queensland shows there were about 10,000 unit and townhouse sales in the six months ending March - 20 per cent less than those in the previous six months.

See Courier Mail

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

El Dorado Indooroopilly

The El Dorado Indooroopilly apartment development is still selling off the plan, and despite about 2 years of marketing, construction has not started. Some of the three bedroom apartments have been reconfigured as 1 bedroom apartments. The developer is now offering incentives for the smaller 1 bed apartments, which are small and the bedroom is fully internal (edited from an email from an agent):

Pretoria Property Group (developers of Indooroopilly’s ‘El Dorado Village Apartments’) has agreed to provide the following investment package.

Purchase as an investment property the A3 Type or A4 Type 1 bedroom apartments currently available for sale at El Dorado Village and Pretoria Property Group will provide to you from time of Settlement:

• Rental Guarantee @ 5% Gross rental yield paid for 2 years;

• Body Corporate fees paid for 2 years;

• Brisbane City Council Rates paid for 2 years;

• Supply and Installation of Door and Window coverings;

• Depreciation Schedule.

With the development earmarked to complete construction at the beginning of 2013, the above package will mean that the astute buyer will have nothing more to pay until approximately 2015.

So it begs the question, ‘if investors and upgraders are currently driving the residential property market then how much capital growth do you think residential property in Indooroopilly will achieve in the next 5 years’?

Recently in the ‘Matusik Market Update’ (dated March 2010) Michael Matusik stated that, “new apartments in both Toowong and Indooroopilly have seen consistent price growth in recent years. Last year the average annual gain was 5.9%, with owners making $102,000 in gross terms between sales. This compares well within just a 1% average growth rate for apartments across the Brisbane area during calendar 2009”.

In a recent article published by Investors Choice dated 1 June 2010 it was stated, “Brisbane will experience 10% per annum growth over the next 3 years” (click here to See Article).

With the suburb of Indooroopilly being a traditional high growth area the thought of purchasing a secure investment at today’s prices and watching that investment grow in value over the next 5 years is indeed very appealing.

El Dorado Village itself is a mixed-use development that comprises retail, cinema’s, commercial and residential tower. It has been identified that mixed-use developments such as El Dorado command higher growth due to greater demand to live in such complexes (click here to see extract from Michael Matusik).

This is a limited investor special and will only be provided to the first 10 buyers. One bedroom apartments at Eldorado Village start at $397,000.

RP Data April 2010 Index

In the month of April all cities recorded capital gains substantially less than the national average of one per cent per month in the previous 12 months, with Melbourne’s monthly growth rate halving from 1.6 per cent per month in the year to March to just 0.8 per cent in April.

Several cities recorded a dip in home values in April, with Brisbane values down 1.2 per cent, Perth values down 0.9 per cent and Darwin recording a 0.3 per cent fall. While both Brisbane and Perth have been consistently weak performers over the last year, Darwin dwellings have risen in value by 54 per cent since the start of 2007.

According to Tim Lawless, RP Data’s Director of Research, the April results are the lowest monthly capital gain since the end of the GFC-induced downturn in December 2008.

“A wide range of indicators have been hinting that a slowdown was on the cards. We are in a market now that has lower auction clearances, weaker home loan approvals, and lower consumer confidence. Combined with the six recent interest rate rises, and the fact that home values have recorded very large gains across key markets since the start of 2009, it is not surprising to see values start to track sideways,” Mr Lawless said.

Christopher Joye, CEO of Rismark International, added, “We have been forecasting a cooling in capital growth rates back down to single digit levels since October last year. Australian disposable household incomes rose by 11.5 per cent in 2009—unsurprisingly, the cost of housing increased by almost exactly the same amount. In 2010, disposable household income growth will be less than 5 per cent. Over the long-run, residential property values track purchasing power quite closely. We believe 2010 will be no different in this regard.”

Brisbane Apartments - medium prices

Month of April - down 1.2%

Quarter - down 0.4%

Year to Date - up 2.2%

Year on Year - up 6.8%

Medium price over quarter - settled sales - $375,000

Further Information Here and detailed information here

FKP's The Milton - in pre-release

The project is a mix of retail, commercial and residential development approved for 30 storeys above ground, at Milton Railway Station. It is approved for:

• 303 Residential Apartments in one and two bedroom configurations from level 2 to 30.
  
• First Floor Commercial.
  
• Ground Floor Retail outlets and Promenade.
  
• Almost every apartment has at least one Car Park.

One bedroom apartments with car parking start from $446,000.

Two bedroom apartments with car parking start from $640,000.

One bedroom apartments without car parking (there are only two of these available) start from $379,000.

Buy in the Bust?

"Mr. Sternlicht hopes to foreclose on many of Corus’s errant borrowers, restyle their buildings and sell units for a significant profit once the real estate market recovers. He says he and his investors can afford to wait until then because the F.D.I.C. has provided them with $1.4 billion in zero-coupon financing and an additional $1 billion in low-cost loans that can be used to complete unfinished projects."

See full article in NY Times: "Barry Sternlicht, the Real Estate Bargain Hunter"

Offsite Letting Agents

In a prior post, I warned against dealing with unlicensed or unusual offsite letting agents for holiday rentals. Recently, Accommodation One on the Gold Coast closed down -- leaving landlords and guests out of pocket. So guests of both Tailly (A1) and Accommodation 1 have recently lost their holiday bookings as well as their prepayments. Booking sites such as RoamFree and eBay should take some responsibility for dealing with these operators and helping them market their accommodation. ebay has set up a compensation fund for guests, but landlords miss out (and now have to find new tenants in competition with all of Accommodation One's other landlords, in a slow winter market.)

Recent Sales

• MacArthur Chambers - 2 beds, 2 bath, Apt 609, 229 Queen Street, sold for $790,000 and now listed for rent at $730 per week furnished.
• Aurora Towers - 2 beds, 1 bath, Apt 365, 420 Queen Street, sold for $490,500
• River Park Central, 2 bed, 2 bath, Apt 1102, 120 Mary Street, sold for $420,000

Property Investor Information

Two sites with useful information for property investors:

• negativegearedinvestmentproperty.com.au
• My Tax Zone

Devine Hamilton

The Australian Financial Review included an advertisement last week stating that Devine had received construction finance for Hamilton Harbour.

Devine has also started to market a new building on the same site, Riverside Hamilton.

Vue Apartments

The Vue Apartment complex on Coronation Drive has been impacted by its bad location and road construction activity. There is construction of the Hale Street link and GoBetween Bridge nearby, and the complex is located on the corner of a busy road and a highway. It was developed by FKP, who is now pushing a new development at Milton called The Milton. Example listings in Vue:

• Apt 1705, 2 bed with roof top terrace listed at $750,000 being sold by the original developer FKP
• Apt 3102, 2 bed, renting at $460, listed at $430,000 (sold for $350,000 in 2006)
• Apt 2303, 2 bed, 5th floor, listed at $470,000 (purchased off the plan for $440,000 in 2004)

Apt 2409 sold off-the-plan by FKP in 2006 for $535,000 and was resold in February 2009 for $445,000.

Apt 2001 sold off-the-plan for $445,000 and resold for $400,000 in October 2009.

Apt 2008 sold off-the-plan for more than $504,000 and resold in Sept 2009 for $479,000

Ray White Auction Results

Last Sunday, Ray White had a large scale auction at a Valley hotel, called an Urban Living Auction. There were a number of unique and prestige apartments and houses offered for sale. The results for the sellers were not good. More than 50 propeties were listed for auction, with only 17 selling on auction day (at the auction or shortly after).

"Ray White South Brisbane principal Dean Yesberg said 17 out of 54 properties sold on the day. “We had a large number of buyers and a positive response but the number of sales was down on previous years,” Mr Yesberg said. “Certainly the message we got out of the day is that owners need to bring their expectations back into line with the marketplace and what buyers are prepared to pay. People still want to buy but recent interest rate rises and current uncertainty in the world economy is starting to make people nervous. “It was a successful day but it was a tough day at the office.” Despite the lower than average number of sales on the day, Mr Yesberg expected more properties to be sold over the next week.

Press Release from Ray White

Some good apartments that did not sell include

• Quay West Sub Penthouse Apartment 2403
• Quay West Apartment 2006
• Admiralty Towers Apartment 123

Skyline

My favourite floorplan in Skyline (30 Macrossan Street) is the G2 floorplan. It is a 3 bed apartment, and most have 2 carparks. There is a big difference in views from lower floors (which have a good city street view towards the Marriott Hotel, and some river glimpses between Admiralty Quays and Admiralty One) and the higher floors, that have a river view over Admiralty One.

The downside with this apartment is that each of the 3 bedrooms will look into The Macrossan tower and the Soliel tower, both being built right next to Skyline.

Apt 401 in Skyline, which is this floorplan on one of the highest floors, is currently listed for sale for $899,000. The listing states: "This apartment has been priced for a quick sale at only $899,000+. It was independently valued at $990,000 in September 2009."

This apartment was sold off-the-plan in September 2004 for $770,000. The current owner paid $970,000 in November 2007.

The same apartment downstair, Apt 391, sold for $875,000 in October 2009, so my guess is that the independent valuer for 401 was wrong by $100,000! Also:

Apt 291 sold for $765,000 in October 2009.

Apt 281 sold for $755,000 in March 2009.

Apt 141 sold for $740,000 in February 2010.

Apt 91 sold for $707,500 in November 2009.

The developer has a number of this type of apartment still on his books, it seems.

Lateline Story on Building Approvals

See Lateline

Recent Apartment Sales in Brisbane City

Casino Towers (151 George Street)

• Apt 1205, 1 bed, 1 bath, no car - sold for $350,000
• Apt 1902, 2 bed, 2 bath, 1 car, river views - sold for $660,000
• Apt 3205, 2 bed, 1 bath, 1 car - sold for $520,000

The Gardens (204 Alice Street)

• 2 bed, 2 bath, 1 car - 7th floor, sold for $475,000
• 1 bed, 1 bath, 1 car - sold for $345,000

RiverCity (79 Albert Street)

• Apt 1903, 2 bed, 2 bath, 1 car - sold for $460,000

Charlotte Towers (128 Charlotte Street)

• Apt 2809, 1 bed, 1 bath, 1 car passed in at auction - auctioneer's bid of $395,000

Edenview at Kelvin Grove

Edenview Apartments at Kelvin Grove are currently being marketed by a number of agents. Due for completion in mid-2011, this complex includes 15 one bed apartments (all sold), 40 two bed apartments (about 1o sold), and 7 three bed apartments (1 sold).

The prices for the 2 bed apartments range from $519,000 to $605,000. The 3 bed apartments start at $749,000.

As an example, apartment 126 is located on level 6, with street views. It has 2 beds, 2 baths and 1 car park. It is 78 sqm internal and 18 sqm on the balcony, for a total area of 94 sqm. It is listed at $579,000, which is about $6,150 sqm. The lounge/dining area is 4m x 6.3m, which is a good size. The bedrooms are 3m x 3.2m, a little tight. The second bedroom has a window onto the apartment hallway, which I don't usually like.

The complex has a pool, and the apartments have split system deducted air conditioning.

The Studio, St Lucia

The Studio student apartment complex, "sold out" in less than a week just recently. About one third of the apartments were sold, with the remainder being kept by the developer, Aspect Property Group. The complex is located within the University of Queensland, and will be complete about July 2010.

Aspect is also in the planning stages of an apartment complex at the beginning of Fred Schonell Drive, to be called Linear.

Ferry Road, West End

On Wednesday, 5 May 2010, the Australian Financial Review had an advertisement of page 7 for 51 Ferry Road, West End. Jones Lang LaSalle is marketing the property for sale, as a 6,381 sqm riverfront site, with major development potential. Expressions of interest closing 3 June.

This would be a worry for purchasers in Waters Edge, because this is the neighbouring site, and many of the apartments look directly into this site. It may also impact the cheap apartments built on Ferry Road.

Riverbend Indooroopilly

Riverbend Towers in Indooroopilly are back on the market. They were offered for sale about 2 years ago, but then the developer decided not to proceed with selling any. Now some are on the market again. The building has 2 and 3 bedroom apartments, and they are a good size. Many have river views. Some road noise. Three bedrooms listed from $710,000

Real Estate Marketing Videos

I like the fact that some agents use YouTube videos to market their properties. Here are some examples:

Quay West, Alice Street, 2 bedrooms

Ciana, 2 bedrooms

Ciana, 2 bedroom listed at $530,000:

High Density Liveability Guide

A QUT academic has published a high density liveability guide.

See www.highdensityliveability.org.au

Alderley Square Update

"Alderley Square is a village-style, mixed-use community inspired development set to reinvigorate the heart of one of Brisbane's most established suburbs. It combines the finest of residential apartment living, a thriving retail centre and a bustling commercial precinct.

The 241 residential apartments comprise a mixture of studio, 1, 2 and 3 bedroom residences over two towers and a terrace homes complex.

Both owner-occupiers and investors alike will appreciate the open plan designed apartments with generous sized balconies to take advantage of the prevailing breezes. Breathtaking views to the CBD, North-East and over the mountain will significantly enhance the 'Queensland lifestyle' feel of Alderley Square."

103 Mary Street

A proposed new apartment at 103 Mary Street, between the Vision hole and River City. It will impact the views of River City and 212 Margaret Street.

Beware of unlicensed offsite operators

The results of the recent Circle on Cavill lawsuit is a warning both to renters and apartment owners who use unlicensed offsite operators.

Tailly leased about 40 apartments in Circle on Cavill from owners, on a long term basis, for example, on one year leases. He then advertised the apartments for rent on the Internet on a short term basis. The Federal Court found that his websites were illegal, and shut them down. Tailly then went into bankruptcy. The apartment owners were not paid rent. The renters and holidaymakers lost their money and had no booking -- Tailly collected the money upfront at the time of booking, and then spent the money. Tailly was not a licensed real estate agent or travel agent -- just a tenant illegally subletting his apartments.

So if you are an apartment owner, make sure that you are using a licensed real estate agent and that you prohibit your tenant from subletting. (In this case, many of the apartment owners used real estate agents that expressly allowed Tailly to sublet!) If you are a renter or holidaymaker, it is best to deal directly with the property or use a reputable website such as Wotif.

If you are getting a too-good-a-deal from eBay, Stayz or a website that is not operated by a real estate agent or travel agent, then watch out! Not all websites are legitimate.

Another example is Paul Whitehead and his company, WorldTourism. Take care when booking with WorldTourism, to make sure you understand who you are booking with. See story on A Current Affair, and these newspaper stories.

http://www.abc.net.au/news/stories/2010/04/09/2868246.htm

http://www.mygc.com.au/article/news/local-newsroom/28374-schoolies-ban-contested-in-court.php

Oaks Fined for Car Park Leasing

A newspaper reports that the Council fined Oaks $25,000 for renting our carparks to non residents, in breach of development conditions.

"BRISBANE: One of the largest building management agencies in the CBD has been fined $15,000 for illegally leasing out car parks to inner-city workers.

Brisbane City Council has fined The Oaks Group for unlawfully leasing residential carparks to commuters after an investigation which City News understands lasted several months.

According to its website, The Oaks Group arranges short-term bookings for eight unit blocks in the CBD. Car parking spaces meant for long-term residents have instead been leased to inner-city workers for up to $5000 a year. Councillor David Hinchliffe (Central) welcomed the penalty and said he believed the practice was widespread and was “potentially just the tip of the iceberg”.

He said he believed senior managers in both the private and public sectors had paid for carparks made available in contravention of the Council’s planning approvals. “If you’re operating a commercial carpark, then you need to be zoned and approved for a commercial carpark,” he said. “One carparking space can generate easily around $5000 a year in revenue for the company, 200 car spaces are worth $1 million in revenue.

“My understanding is that apartments are being rented out without carparks so that the company can lease out the carparks separately to commuters, encouraging more people to drive to work and park and adding to congestion.”

Brisbane City Council failed to answer several questions about the practice before City News’ deadline. When contacted for comment, an Oaks spokeswoman replied: “We are not at liberty to respond to that matter.”

M on Mary

M on Mary advertises itself as a hotel. It is not -- it is a poorly designed apartment building with a large number of 1 bedroom apartments, and some 3 bed apartments.

Interestingly, this article says that they only do 28 days as the minimum stay. However, Wotif will allow me to book a 2 day stay. How can they advertise this low grade apartment building as a hotel?

Here is a review from TripAdvisor:

i have been living here for about a year as i fly in and out of the country all the time this is the worst hotel i have ever stayed in nothing works and no one cares i have asked over the last year at least twenty times for my air con,tv reception,my shower,and my intercom to be fixed as i pay 500 dollars a week in rent to be told by the manager who is a real piece of work no we won't fix anything because that costs money,well so does the rent pal i have had clients stay here who have been shocked with the service and have commented that its like a rerun from faulty towers maybe they should rename the place shocking service terrible place to stay go somewhere else

Bad Onsite Agent

Office of Fair Trading - Minister's Statement:

10 year ban for real estate employee

An investigation by the Office of Fair Trading has resulted in a Kangaroo Point-based resident letting agent and his company being banned from holding licences under the Property Agents and Motor Dealers Act 2000 for ten years after ripping off unit owners.

Minister for Fair Trading Peter Lawlor said Leigh Gregory Craig, who was also fined $2500, was found guilty by the Queensland Civil and Administrative Tribunal of failing to follow his clients’ instructions and producing false invoices. His company Brass Properties No 1 Pty Ltd was also banned for 10 years and fined $3,000.

“Mr Craig first came to the attention of Fair Trading officers after they received a complaint from a unit owner who was falsely charged a $132 fee for the retrieval of a set of car keys accidentally dropped down a lift shaft,” Mr Lawlor said. “Following an investigation, Mr Craig was also found to have advertised Bridgeport Apartments for short-term letting which flies in the face of body corporate by-laws which impose a minimum period of six months.

“He deliberately misled unit owners by failing to disclose the higher than usual fees he was charging renters, which at times was double the normal amount. This additional income was not passed on to the unit owners. This type of behaviour has no place in Queensland’s real estate industry. Queenslanders deserve to know they are dealing with reputable and licensed agents,” he said.

"This decision is a clear reminder to the real estate industry to act responsibly. If an agent chooses to breach the law by deceiving their customers, they risk the loss of their licence, reputation and livelihood. The legislation is there to protect businesses and clients, and must be complied with. Licensees caught doing the wrong thing will be penalised."