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

Clouds Gathering

Extract from Courier Mail website (13 July 2008):

HOUSE prices are falling in the US, Britain, Spain and western Sydney. Could Brisbane be next? There is a precedent. In 1995 the median house price in Brisbane slipped 2 per cent. And in the first five months of this year it crept up a mere 1.8 per cent, according to property researcher RP Data. ...

Some Brisbane agents are eyeing the market with a hint of trepidation. John Johnston, chief executive of Toowong agency Johnston Dixon, says sentiment is very, very low. "Auction clearance rates this year have been only 30 per cent and that includes sales before the event. More sales are crashing during the (seven-day) cooling-off period than I have ever seen in 20 years in real estate in southeast Queensland."

Brisbane property analyst Michael Matusik said it would only take another quarter of a percentage point interest rate rise by the Reserve Bank next month to trigger a fall. "Prices would come back 5 per cent for a quarter or two and then start to rise again," he said. "And if interest rates went up more than once, there would be a 10 per cent correction."

Philip Parker, chief auctioneer for the state's biggest real estate firm Ray White, said that "what has to fall is people's expectations, not the value of properties. We've done sales of property for less than people were offered four or five months ago, but equally we've done them for more. In any market there will be people who buy a place for $500,000 and find that if they want to sell it a year later, they have to accept less."

Both Mr Johnston and Mr Parker fear the consequences if official interest rates were to reach 10 per cent, compared with the 7.25 per cent at present. ...

"If official rates reached 10 per cent that would be the equivalent of the high teens of the Keating era because people borrow so much these days," Mr Johnston said. "A repeat of 1995 is not out of the question, but the big difference is that then we had an incredible surplus of houses being built. Right now there is big deficit."

The Housing Industry Association estimates that there will be 43,700 housing starts in Queensland this year, 4900 below that required to meet demand.

RP Data's national research director Tim Lawless doesn't see prices falling in southeast Queensland but "we expect the market to remain relatively flat as long as there's a high-inflation environment. Any sign of inflation easing will be the cue for investors to become more active in the market. We think this is likely to happen during the first six months of next year."

Real Estate Institute of Queensland managing directors Dan Molloy said slowdowns in the market in the past 20 years had generally followed interest rate rises or economic uncertainty.

But the Queensland market was fundamentally strong.

"Elements such as our strong population and economic growth, as well as a burgeoning resources sector, have ensured its resilience," he said. "As with previous economic cycles, these elements combine to minimise any negative impacts." But barring further interest rate rises, Mr Matusik forecasts price growth of 8 per cent this financial year, although most of it will occur in 2009.

Any drop in prices would be welcomed by those trying to enter the market, but the benefit would probably be illusory if it came at the cost of higher interest rates. The most recent Real Estate Institute of Australia figures found that Queenslanders needed more than 40 per cent of median family income to service the average new home loan.

Valuer's Report

Herron Todd White's July Month In Review Report includes the following about South East Queensland:

Brisbane

"Our sunny market outlook has greyed somewhat after recent rate rises. The mixed signal from commentators has put a large percentage of investors on the back foot. A portion of those in the know continue to sing the South-East QLD song of praise, hitching their star to our increasing population and seemingly boundless potential, but other equally wizened souls note we are getting a bit big for our boots. Buyers do not have bottomless pockets, they venture, and the market is due to check itself. The confusion has also been noted by agents who are seeing different sectors performing at different speeds with no clear cut idea of how it will all pan out. ...

Historically, Brisbane has not been susceptible to dramatic market fluctuations, which means most punters are able to bear the brunt of change. This time may be different, however as the recent boom has been unprecedented for most and unless smart, developers may find the landing more bumpy than expected."

Brisbane apartments:

Rental Vacancy: severe shortage of available property relative to demand
Rental Vacancy Trend: Tightening
Demand for New Units: Fair
Volume of New Unit Sales: Declining
Stage of Cycle: Peak of Market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value: Frequently

Gold Coast

"Market conditions have slowed on the Gold Coast in the past 3 to 4 months, with agents generally reporting subdued levels of enquiry. Some agents have proposed that there has been as much as an arbituary 10% drop in market values which would almost cancel out gains achieved during 2007. It is difficult to ascertain the extent of the slowdown in the second hand property market with the reduced turnover of sales. Some sectors still continue to perform or hold their ground in light of the underlying economic issues. A good indicator of the market slowdown is the performance of new unit complexes, townhouses, and house/land packages. Marketing agents have reported a significant drop in buyer enquiry. Subsequently rates of sale have fallen. Developers are now in a position where they are offering incentives to “prop up” the fall in rates of sale.
...
Those that purchased off the plan in 2006/early 2007 to speculate on a new high-rise unit project, are now only realising that their purchase was in vain. Should they forego their deposit, the unit goes back into the sales pool further placing pressure on supply."

Gold Coast apartments:

Rental Vacancy: balanced market
Rental Vacancy Trend: Steady
Demand for New Units: Soft
Volume of New Unit Sales: Declining Significantly
Stage of Cycle: Declining Market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value: Frequently

Sunshine Coast

"We also are seeing incentives being offered and the return of ‘extraordinary marketing techniques’ to non-locals to help sell unit projects. Rentals for both houses and units remain strong and underpin demand with no suggestion that this is going to ease. Punters must also be concerned with the fluctuations in the stock market and some will transition back into property where there is strong rental support and long term potential for capital growth."

Sunshine Coast apartments:

Rental Vacancy: shortage of available property relative to demand
Rental Vacancy Trend: Tightening
Demand for New Units: Soft
Volume of New Unit Sales: Declining
Stage of Cycle: Bottom of Market
Are New Properties Sold at Prices Exceeding Their Potential Resale Value: Occassionally

Meriton on Adelaide Street

See Brisbane Times article

"...Meriton last week resubmitted plans for a new 250m building, to be constructed on the corner of Adelaide and Macrossan streets, which it describes as "tall, slim and elegant".

The tower's facade comprises grey-coloured glazed windows broken up by "continuous vertical elements" and horizontal perforated metal screens, according to Meriton's new development application.

Large expanses of clear glass on lower levels will create a colourful and active footpath space, the developer said. It plans to include street-level retail space for restaurants and cafes.

The highrise tower will combine a mixture of serviced and residential apartments, while a three-storey podium will include commercial space.

The building will also boast a 10-level basement car park that is tipped to require one of the biggest excavation efforts in the city's construction history...."

Photos

Colliers March 08 Apartment Report

Colliers has released its March Quarter 2008 Brisbane Apartment Report.
It is available from the Colliers Research page, updated here.
The introduction states:
"The Inner Brisbane unit market started the March 2008 quarter with one of the lowest supplies on record. Less than 500 new apartments were available for sale spread across 24 projects. Only 78 sales were made during the quarter. While this is the lowest figure on record, this is largely due to the very low number of apartments available for sale.
There were no new project releases during the quarter. Apartment prices continue to increase, showing demand is still present. Buyers seem to be holding off, waiting for something new to inspire a return to previous sales levels. And they don’t have long to wait, with a number of large, innovative projects currently in planning for the Inner Brisbane area. Meanwhile, the average cost of a new apartment continues to rise, showing demand is still strong for high quality inner city dwellings. New apartments selling in the March 08 quarter achieved an average sale price of $894,000, an impressive 23% higher than the December 07 quarter. Part of this can be attributed to the fact that most existing projects have seen the highly popular low-cost apartments sold in previous quarters, leaving the mid to high end apartments in the market. General market apartment sales were very buoyant during 2007. The inner city residential market now numbers around 48,000 apartments of different sizes, types and ages. There were 4,883 apartment sales in Inner Brisbane in 2007. Some 3,485 of these apartments were priced under $500,000 (71.3% of all sales), and 244 were over $1 million. There are 34 new projects pending which could possibly equate to over 6,000 apartments."
The Australian Financial Review had an article on Wednesday this week, titled: "Low Supply Powers Brisbane Prices."
The revamped Colliers Report focuses on new projects. So take care with the $894,000 figure and "low supply" reports, as this only relates to new stock. The medium price of "second hand" apartments is lower, and there are plenty of apartments for sale.
For new stock, what is left for sale is mostly apartments that are overpriced or the worst apartments in the building. So this is not selling. People are waiting for new releases, and there are a number of projects in presales - Trilogy Towers, Empire Square and Waters Edge for example. This is what people are buying, not the left overs.
Good apartments that are not too small, in good buildings, with never to be built out views, are selling at good prices for vendors. Apartments in buildings of more than 200 apartments or that are managed by Oaks are struggling.

Recent Sales in City

Casino Towers, Apartment 3702, Level 37, 2 bedrooms, 2 bath, study, 2 car spaces, 125 sqm, probably the best position in the building, sold at auction by Chris Hinds for $705,000

Aurora, Apartment 419, level 41, 2 bedrooms, 1 bathroom, 1 car, great views, sold for $485,000

Petrie Terrace Development

New website for Petrie Terrace redevelopment. Originally, this was to have apartments, but now just retail and cinema. See http://petriebarracks.com.au/

More Construction in Brisbane

Always be careful th at your view will not be blocked out! Some recent photos:

Three bedroom apartments in Skyline will be impacted by Macrossan being built next door:

Macrossan 1

Macrossan 2

Some apartments in Aurora will be impacted by the taller Trilogy :

Trilogy Aurora

Aurora Trilogy

Rents to Rise?

"... Meanwhile, Brisbane rents are predicted to increase by $45 per week in the next 18 months. This is due to a shortage of rental properties, the rise in interest rates and higher than expected rates increases.

Dan Molloy, managing director of the Real Estate Institute of Queensland, said that tenants in high-end units will pay the highest price following the rates increases handed down in the recently announced Brisbane City Council budget. “With vacancy rates at historical lows and tenant demand remaining high, further upward pressure on rentals is almost inevitable” he said.

The undersupply of new housing and rental accommodation is unlikely to be relieved in the near future and it is expected to be three to five years at least, if not longer before there is any substantial change to supply."

From ARPP June Newsletter.

Recent Sales

Casino Towers, Apartment 3702, Level 37, 2 bedrooms, 2 bath, study, 2 car spaces, 125 sqm, probably the best position in the building, sold at auction by Chris Hinds for $705,000

Aurora, Apartment 419, level 41, 2 bedrooms, 1 bathroom, 1 car, great views, sold for $485,000

The Mill at Albion Goes on Public Sale

The Mill development by FKP at Albion went on sale today in public release. There had been about 4 weeks of pre-release sales to people who had pre-registered or who were on the FKP database. It was reported that more than 70% of the 143 apartments had sold in pre-release.

The development consists of 4 new buildings -- 2 which are residential, and 2 are commercial. There is also an old flour mill on the site, which will be renovated. One residential building is 10 floors high, and apartments in this building look south to the city or east over Albion. This building has a lap pool on a podium deck. The second building has apartments that mostly look east, but some weird shaped apartments look north. (One line of apartments looks directly into two old silos, which will remain on site.) People living in the second building have access to the pool in the first building, but will have to cross a road to get to that building.

Most of the apartments have 2 bedrooms and 2 bathrooms. All the one bedroom apartments are reported to be sold. There are also some three bedroom apartments.

Most of the 2 bedroom apartments range in size from 85 sqm to about 92 sqm internal, plus a balcony. The pricing for 2 bedroom range from $660,000 to mid $700,000s.

The site is located on or adjacent to the Albion railway station.

I would be concerned that the views from the apartments could be built out. The current aspect is not attractive -- the views are of or over warehouses, a pub car park and an adult shop. The area is mostly light industrial.

The most common two bedroom design is called a 2F. It is 92 sqm internal, with a 15 sqm balcony. It is a good size overall, and the rooms all are a good size too. The front door of the apartment opens into an open "mud room". There are glass sliding doors from the "mud room" to the dining room. There is no separate kitchen -- a wall kitchen is located on the side of the dining room. The second bedroom is an "internal" room -- it has a high window onto the hallway and a window into a "mud room". The apartment has showers but no bath. I was offered one of these apartments, on a low floor looking east, for $685,000 (or about $6400 a sqm).

The Mill

Housing Market Flooded in Brisbane, but Few Buyers

From The Courier Mail, 5 July 2008:

"STRESSED home owners and investors are flooding the market with thousands of houses but agents say they can't find any serious buyers for some properties.

As home mortgage lending in Queensland dives for the second consecutive quarter, the number of houses for sale is up 150 per cent compared with the same time last year.

There were 4750 new listings added this week - 1842 in Brisbane.

Almost 40,000 residential properties are listed for sale across the state, compared with 15,900 last year.

Auction clearance rates are suffering in the slowdown.

At yesterday's Ray White's corporate auction, just one of 11 properties was sold under the hammer. The three-bedroom unit in Casino Towers sold for $705,000.

It was a similar story last week, when 12 properties were put to market, and only one - a Norman Park home - was sold for $840,500.

The marketing agent for a prime residential site near the Brisbane River said a recent auction of the property failed to get any bids.

And the one buyer who showed some interest had now gone cold.

"Just finding anyone interested has been a problem - last year there would have been a handful," the agent said.

At yesterday's auction chief auctioneer Philip Parker said he was surprised when just two early bids were heard for an inner-city house.

"It's good real estate - you'd think you'd have more (bids) than that," he said...."

River Plaza Auction Results

River Plaza, 21 Dock Street, South Brisbane
Auction, Saturday 29 June 2008

Apt 33
Three bedroom apartment, 8th floor, excellent views of river and city, apartment needed renovation
Reported as sold at auction for $685,000

Apt 26
Two bedroom apartment, reported as sold at action for $555,000

Meriton's Adelaide Street Tower

Meriton's large skyscraper for Adelaide Street in Brisbane has been redesigned. It is located next door to the Macrossan Apartments (under construction) and Skyline.

More details here.

Newstead Waterfront

Record-breaker rises from toxic wasteland

Fiona Cameron | June 27, 2008

The Australian

AN apartment to be built on formerly contaminated land in inner-city Brisbane has sold off the plan for $14.25 million, smashing the city's residential price record.

The buyer has not been identified but developer Mirvac said it was a Brisbane businessman who planned to make the riverfront luxury penthouse at Newstead his principal place of residence.

The contract, which will be settled when the building is completed in mid-2010, was signed two weeks ago and became unconditional on Tuesday.

Mirvac's proposed Waterfront project is on a site that is part of a larger land parcel that was home to a gasworks until 1968 and still contains the heritage-listed steel skeleton of a giant old gas tank dating from 1860.

The surrounding land became a toxic nightmare for various parties involved and was the subject of long-running litigation over its clean-up until the Environmental Protection Agency finally gave it a tick of approval in April. In the past five years, one million tonnes of soil had been removed from the 17.4ha site, some dug from as far as 9m below ground level, Mirvac said yesterday.

Mirvac said three other apartments in the Waterfront project had been sold for prices ranging between $5.95 million and $8.75million. In total, 60 apartments had been sold for a total $201 million before the project's public release this week.

The penthouse deal has overshot Brisbane's previous residential record by more than $3 million. That record had stood only since April last year when John and Susan George paid $11.2 million for a historic sandstone home on Hamilton hill that was owned by the Anglican Church and home to its archbishops for decades. Mr George is the founder of the Mrs Crocket's salad business.

The Newstead penthouse deal is a graphic indicator of where money is flowing at the market's top end: many of the biggest deals these days are in super-flash apartments rather than old-style mansions.

Developers have zoned in on the trend, and according to agency DTZ's project marketing director, Paul Barratt, another three apartment projects planned in inner Brisbane will have penthouses priced above $14 million.

SouthPoint at SouthBank

"The Queensland Government has given the nod for early works to start on a $650 million luxury hotel and residential development next to the South Bank railway station.

It will include restaurants and retail spaces as well as the hotel, cinema and 56 residential apartments."

See Brisbane Times

NorthBank

The tentative new proposed Northbank design for Brisbane includes a 30 floor building at the Elizabeth Street off-ramp. This will impact the views from Casino Tower and probably the Empire Square development.

Watch Video

News About Union, Albion and Northbank

Ten News Video

Indooroopilly El Dorado Development

From Brisbane Times

"While sales marketing has so far been low key, Dr Preller said there had been an overwhelming response from investors. "We have pre-sold more than 70 per cent of the residential component, so obviously there is a huge demand for this type of product."

My guess is that the presales have all been to South African's who put in the finance for this building. I haven't seen any pre-sales marketing at all. The building doesn't even have development approval, and objections were lodged with Council.

Rates Protest and Rates Analysis

[click on images to make bigger, then click again for full screen]

Rates analysis

Rates Protest in Brisbane

Rates Protest in Brisbane

[Click on image to make bigger]

Meriton Confident About Brisbane - AFR

Story from Thursday's AFR (19/-6/08, page 55) that despite drop in sales volumes for new city apartments, Meriton is still interested in Brisbane.

Waterfront at Newstead

Mirvac has released its top end apartments for its Waterfront Newstead project. Overall, this project will consist of a huge number of apartments. The first release was of the 99 best apartments, with river views. All apartments are large 3 or 4 bedroom apartments. Many have sold. Price range $2,150,000 to $4,500,000 for apartments and $6.4M to $8.9M for penthouses. These are all large apartments, but constructed on a highly contaminated (and hopefully cleaned) site.

Mirvac's Quay West

Mirvac built (and continues to manage) the Quay West apartment building in Brisbane's Alice Street, overlooking the botanical gardens. Large one and two bedroom apartments on the lower levels, with penthouse apartments on the top 5 levels. One of the residents is a senior person from Devine, who is constructing the French Quarter development next door. The French Quarter development will move the prices of Quay West even higher.

One bedroom on level 9, listed at $525,000
Two bedroom on level 16, listed at $850,000

Protest at Council Tax Increases

"More than 100 angry inner-city apartment dwellers attended a public meeting at City Hall today to protest "unfair" rate hikes in the order of 150 to 300 per cent."

Brisbane Times

No relief for Brisbane apartment renters

http://www.abc.net.au/news/stories/2008/06/20/2281399.htm

Brisbane Labor Councillor David Hinchcliffe says according to his calculations, which are based on the Council's budget figures, rates on some inner-city apartments will rise by up to 700 per cent.

But Lord Mayor Campbell Newman has rejected such figures.

"There have been some significant increases for a small number of properties around the CBD and CBD frame," he said.

"Typically the increase... for the hardest-hit people is around about 150 to 160 per cent."

"The worst increase for any unit in the whole of the city of Brisbane is 300 per cent."

Mirvac Downgrade

"Due to the sustained deterioration in market conditions including prolonged global financial market volatility, rising cost of capital and general slow down in global and Australian economic conditions, Mirvac has reassessed the value of residential and non-residential developments, intangible values and co-investments in managed listed funds. Accordingly, Mirvac has adjusted its asset carrying values of between $300 million and $400 million, a 3.8 per cent to 5.0 per cent decrease in total asset value."

"Current weakness in the NSW residential market will continue and will, to varying degrees, be experienced across other markets."

"Strong product positioning and premium brand continues to attract pre-sales in excess of $950 million1 of exchanged contracts due to settle from FY09 to FY11"

http://www.mirvac.com.au/investor/pdf/20080620_mirvac_group_market_update.pdf

Price Report

"The best performers during the three-month period were Hobart, where the median price was up 4.6 per cent, Brisbane (up 3.8 per cent) and Darwin (up 3.5 per cent)."

News.com.au

North Bank Dead?

"MULTIPLEX has given up on its controversial $1.7 billion design for the proposed North Bank redevelopment on the Brisbane River."
http://www.news.com.au/couriermail/story/0,23739,23879482-3102,00.html

http://www.news.com.au/couriermail/story/0,23739,23883742-3102,00.html

Brisbane Times

Construction Near Oaks Apartments in Brisbane

If you are buying or renting or doing a short stay in an Oaks apartment, make sure there is no construction nearby. This morning, walking down Albert Street, I past 3 construction sites, all next to apartments. It was before 8am, and there were jackhammers that I could hear more than a block away from Charlotte Towers.

Oaks Charlotte Towers

Charlotte

Oaks 212 Margaret Street

212Margaret

Oaks River City

Prediction from BIS Shrapnel

Interest rate rises to stall residential property price growth in most centres despite record net overseas migration and a rising deficiency of dwellings.

Independent economic forecaster and industry analyst, BIS Shrapnel, expects all Australian residential property markets will experience marginal price increases in 2008/09 as interest rate rises halt price growth rather than force a downturn.

BIS Shrapnel is forecasting another interest rate rise to come through in September quarter 2008. Despite a further rate increase, the average cost of renting is set to rise much more than the cost of buying in 2008/09 and 2009/10, due to the undersupply of new housing.

REIQ Apartment Price Report for Brisbane - First Q 2008

REIQ March Quarter Unit Report:

Downtown Brisbane:
Median March Quarter: $450,000
Median 12 months to end of March 08: $449,755
Change over 1 year - 6.5%

West End:
Median March Quarter: $625,000
Median 12 months to end of March 08: $518,500

St Lucia:
Median March Quarter: $510,000
Median 12 months to end of March 08: $401,500

Indooroopilly
Median March Quarter: $425,000
Median 12 months to end of March 08: $401,750

From the Brisbane Times:

"REIQ chairman Peter McGrath said current figures reflect historical averages for the year's first quarter.

"Brisbane is coming down off a high, so to speak ... the market is simply returning to normal," Mr McGrath said.

Yet Mr McGrath conceded investor demand has cooled recently as servicing increasing loan repayments becomes more difficult.

"Investors appear to be staying out of the market until rents reach a level where they match the increase in interest rates and they are confident that the market has definitely stabilised," he said.

The trend has been felt hardest within the CBD, where apartments in complexes on Charlotte Street have remained unsold for four months.

"It is taking 30 days longer to sell inner-city apartments because investors are bowing out," LJ Hooker Brisbane Central principal agent Alexandra Rutherford said.

Prices have been scaled back accordingly Ms Rutherford said.

"We have had apartments priced at $480,000 reduced to $460,000 and some reduced to $420,000."

However, Mr McGrath warned real estate agents against judging the current market against last year's anomoly.

"I don't think some agents realised how good it was last year, thinking. it could last forever. Now we are just moving back to a more traditional market," he said."

Rates and Rents to Increase

"TENANTS will be slugged with rent increases as council rates, high property demand, and interest rates take a hold on the industry, analysts say.

The Brisbane City Council's Budget imposed a rate increase of 8.76 per cent and extra tax for luxury innercity apartments, will sting renters already under pressure from a 55 per cent rise over the past five years...."

See Courier Mail article

"The rates increase for unit owners will rise from 7.9 per cent for a unit on land valued at less than $1 million, to 9 per cent for land valued between $1 million and $5 million, by 16 per cent for land between $5million and $10million and 60 per cent on land worth more than $10million.

These rates are higher for apartments that are investment properties."

See Brisbane Times article

See also Brisbane Times article

These increases will not only increase rents, but will make buyers think twice before buying an apartment in Brisbane.

Oaks and Aurora

This is what the Supreme Court of Queensland wrote in a judgment concerning management rights for Aurora. It appears that the original developer did not want the building managed by Oaks as that would hurt sales. Aurora is now managed by Oaks.

"Oaks is in the business of providing accommodation for travellers, holiday makers and semi-itinerant urban workers. The news that the plaintiff, the proposed letting agent for the Aurora complex, would become an Oaks subsidiary caused considerable anxiety in the minds of the defendants’ directors. Rightly or wrongly they associated Oaks with a distinctly plain, perhaps plebeian, approach to the provision of accommodation. To maximise profit from its development the first defendant asked high prices for Aurora’s residential lots and promoted the development as one suitable for those who enjoy wealth and its display. They thought that Oaks’ reputation and its method of operation would be inimical to achieving that result.

The first defendant had two concerns. The first was Oaks’ involvement as the letting agent. The second was the operation of ‘short term accommodation, serviced apartments or hotel style accommodation typically used as holiday and nightly business or corporate accommodation ...’ from the tower. Mr Morris anticipated that about one third of the buyers of residential lots would live in the units but the balance, about 320 owners, would let their apartments to tenants. Mr Morris believed that letting a large number of units on a short term basis would be inimical to the first defendant’s proposed marketing strategy. As he said:

‘... the operation of a short term accommodation business from the Aurora Tower, particularly of the kind which appears from the Oaks prospectus would be conducted by Oaks, would be completely inconsistent with the way the development had been promoted, advertised and marketed and inconsistent with the type of development that buyers were told it would be.’

Both Mr Potts and Mr Morris were disposed to deny that Oaks’ involvement in the letting of units in Aurora was a particular concern. They maintained that it was the prospect of frequent numerous changes of tenants in the building which would reduce its appeal to buyers, regardless of the identity of the letting agent. If it matters I express my satisfaction that Messrs Potts and Morris were particularly alarmed at the thought that Oaks would be the letting agent. Indications of this fear appear in the correspondence, and I thought their denials unconvincing.

...

The plaintiff’s solicitors’ file note records the discussion:

‘Having sold the units to owners on the basis of it being a high quality residential complex ... owners would have some claim against the developer and possibly some way of getting out of the contracts if it became branded as an Oaks hotel/resort. It was acknowledged that the sale of contract contemplated that ... owners could let out units for short term lettings but it was never promoted as a short term letting complex, hotel or resort.’

...

It should perhaps be noted briefly that the possibility of the plaintiff operating a hotel from Aurora Tower was so slight as to be disregarded by any sensible person. The building is not suitable for use as a hotel. It does not have sufficient lifts, storage space, staff quarters or vehicular access to function as a hotel. This was accepted by all parties. The first defendant cannot sensibly have thought that the plaintiff, or Oaks, would conduct a hotel from the tower.

It is possible to let a substantial number of the units as serviced apartments but to do so would require some physical alteration to the building. There would need to be a large storage room for bed linen and towels and probably facilities for the cleaning staff. These alterations could only occur with the approval of the body corporate. The consequence is that the letting agent could only let a large number of apartments as serviced ones with the approval of the body corporate which would have to effect the alterations on its common property. The first defendant could hardly complain about lots let as serviced apartments if the parties to the letting agreement agreed on that course and, if necessary, varied the letting agreement to effect it."
http://www.austlii.edu.au/au/cases/qld/QSC/2007/264.html
But Aurora is now a hotel: Brisbane Times

Parklands at Sherwood

Pradella's Parklands at Sherwood development, stages 1 and 2, are reported to be more than 50% sold, with settlement of Stage 1 planned for the end of this year.

Newsletter.

Admiralty One - New Listings for 2 bed apartments

A few days ago, I wrote about a good 2 bed apartment for sale in Admiralty Towers Two. I have recently become aware of two large two bedroom apartments for sale in the neighbouring building, Admiralty Towers. These apartments are large -- 130 sqm for a 2 bedroom apartment -- which is larger than many three bedroom apartments being built today. Absolute river views that can never be built out. End apartments, so windows on the side (for the kitchen and bathroom). Admiralty Towers has a well run body corporate and a large sinking fund.

Two bedrooms listed for sale at $880,000.

Two bedrooms listed for sale at $840,000.

It is unusual for these kind of 2 bedrooms to be offered for sale.

Admiralty Two - New Listing

An apartment design that I consider to be a very good design, in a good building, is now listed for sale. It is a two bedroom, two bathroom apartment in Admiralty Towers Two. It is large compared to newer apartments -- 116 sqm -- and has a quality feel. (There are other 2 bed designs in this building that are smaller, so take care when doing comparisons.) Good views and good location. The building has two pools, and apartment owners on the higher floor have exclusive access to the rooftop pool and gym. The balcony is not large, but this results in more internal space. Plenty of cupboards and a separate laundry room / storage room inside the apartment. Admiralty Towers Two has no short term rentals.

This apartment is on level 28, and is listed at $850,000.

Compare this renovated apartment in River Place, listed at $875,000. River Place is a lesser quality building, with many more apartments and vacation rentals. It has a great outdoor pool, overlooking the river, and the apartments have a larger usable balcony (but with the airconditioner compressor located on the balcony!)

Tennyson Reach video

Mirvac's Tennyson Reach video.

El Dorado Indooroopilly Redevelopment

There is a current proposal by a South African developer to redevelop the El Dorado cinema complex at Indooroopilly. It is proposed to keep 5 cinemas, but build a 14 storey tower over the top. The tower will include 100 apartments, with a mixture of 1, 2 and 3 bedroom apartments. The two bedroom apartments will be approximately 85 sqm internal, or slightly larger for one style that has a study.

Comment on Matusik

A reader comments on the Matusik post from earlier this week:

"I think the report misses some important trends, there are also quite a few factual errors.

For one, not ALL US houses mortgages are non-recourse, only a few states including California. MOST US houses mortgages are recourse. The biggest difference between the US and Australia is the commodity boom, but how long will that last?

Second, all the 0-down, interest-only mortgages are mushrooming in Australia as well. Australia also has stated-income loans which is no different from the US.

Second, he entirely misses the point of what commodity boom does to evolution of cities. If he concedes that the commodity (particularly energy) boom will go on for years, which argues for a booming property market, then it is the inner cities or places with good public transportation will benefit. However, he was presenting a sprawling suburban future that is completely impossible with oil price heading for the sky. He predicts that people will start commuting from Blue Mountains, it is just not going to happen if gas price is on the current track.

He is also completely off the mark in predicting a mild US recession. Many financial heavy weights including Warren Buffet, Jim Rogers, George Soros etc have come out to say that this is going to be the worst recession since the Great Depression, which is a euphemism of saying Great Depression Episode II.

The funniest of all is, if he thinks everything is rosy, US will recover in 2009, and Australia's commodity boom will go on forever, why will interest rate FALL in 2009? Shouldn't interest rate fall because the economy is NOT doing so well???

I can understand that Matusik is always arguing that property can only go up up up because he is sponsored by real estate developers, but this report just looks way to biased, to the extent that he cannot even get facts right."

Is Indigo embarrassed about Kelvin Grove?

In this weeks Brisbane News, there is a half page advertisement that has two apartments listed for sale. Strangely, the advertisement does not include the name of the developer or the suburb or the name of the development. It merely says "2km CBD". Internal photographs and floor plans are included, along with pricing (2 bedroom apartment for "only $559,000.")

The advertisement is for apartments in Indigo's Kelvin Grove Village Centre. See this realestate.com advertisement for the same apartment. ("And with 5.25% net rental return guarentee for 24 months, free legals and blinds, this property ticks all the boxes. Will rent unfurnished for $490 per week.")

The advertisement in the Brisbane News also puts the wrong floor plan against each apartment.

Why isn't Indigo identifying the apartment in the Brisbane News as being located in the Kelvin Grove Village Centre? Is it because this is considered to be a detriment, not a benefit?

Brisbane Empire Square Apartment Drawings

Drawings of apartments in the Brisbane Westin development at Empire Square.

Image of Council Plan for Milton

Matusik on Brisbane Property

Matusik, who is often engaged by developers to write reports that are provided to potential purchasers, states the following in a seminar given for Urban Pacific at Fernbrooke on 28 May 2008:

• one in three new apartment projects fell over in 2007. The attrition rate could be as high as 50% this year.
• the cost to provide new inner city apartments is much higher now than suburban detached housing. i.e. $575,000 for 2 bed apt (85sqm/1 car space) versus $385,000 for 3 bed house (225sqm/320 sqm allotment)
• overall today investors make up less than 30% of the market.
• 80% of detached houses are held by owner-residents as is 50% of our semi-detached product, whilst over 70% of attached product is owned by investors.
• nearly 70% of Australia’s attached dwellings is occupied by residents under 30 years of age

Brisbane Apartment Prices Still Increasing

"The RP Data/Rismark International end of month indices report released today confirmed that capital growth in the key markets of Sydney and Melbourne has flattened considerably during 2008. ...

RPData's Research Director, Tim Lawless, is confident that the supply side imbalance in the national housing market will see further property value increases over the next five years. “We expect low levels of housing supply to continue placing upwards pressure on housing prices over the long term. However in the short to medium term, demand side constraints are acting to slow the market. Most importantly, the current high inflationary environment is causing a high degree of uncertainty in the market which translates to low buyer and investor confidence. Cashed up buyers now have a large amount of leverage as a result of current market conditions especially now that properties are taking longer to sell and there are fewer buyers,” Mr Lawless said. “The best immediate opportunities can be found in Adelaide, Brisbane and Darwin, not to mention many of Queensland’s regional areas.”

Brisbane is also continuing to show solid growth in property values with overall growth of around 3 percent for houses and units during the first four months of 2008. The value gap between Brisbane and Melbourne is becoming wider as growth in the Melbourne market has slowed considerably. At the start of 2007 house values in the two cities were virtually on par, however the stronger value growth in the Brisbane market has seen Brisbane house values g g now 5 percent or $24,000 higher than Melbourne’s."

March 2008 Median Unit Price Brisbane = $344,247
April 2008 Median Unit Price Brisbane = $346,184
April year to date increase = 3.14%
April 12 month (year on year) increase = 18.12%
Days on Market April Quarter = 16 days
Yield - Brisbane apartments - March Quarter = 4.76%

See Rismark - RP Data report.