Australand’s Watermarque

From an email from a PR consultant for a developer:

I thought you might be interested in this sales update for Australand’s Watermarque precinct within its $500 million Hamilton Reach development.

More than $120 million in sales have been achieved to date and only three two bedroom apartments remain for sale in the boutique precinct.  The apartments have proven popular with downsizers looking to sell their existing homes and relocate to an inner city, riverside luxury address.  The trend has been backed by Place Advisory’s Market Report on Inner Brisbane Apartments, which reported downsizers were beginning to influence the off-the-plan market for the first time since the GFC, demanding larger and higher quality stock.

The report showed two bedroom apartments accounted for the highest amount of inner Brisbane apartment sales in the June 2013 Quarter, with 48 per cent of unconditional sales registered.  Place Advisory’s Lachlan Walker said the highest number of sales was recorded in the Inner North, which includes the suburbs of Hamilton, Fortitude Valley, Kelvin Grove, Bowen Hills, Newstead, Albion, Milton, Toowong, Bowen Hills, Tenerife and New Farm, which was a positive indication local confidence is returning to the Brisbane off-the-plan market.

“The Inner North, which includes the suburb of Hamilton has again performed well in the latest quarter,” Mr Walker said.  “It’s a popular choice for inner Brisbane locals who are looking to downsize their homes but not compromise on a connected, inner-city lifestyle.  The sales results reflect there are a lot of good buying opportunities in the area but smart buyers know this stock is limited and are taking advantage.”

Watermarque will feature 78 apartments across two medium-rise five-storey buildings. The three remaining apartments are priced from $635,000 - $710,000.

Abian Apartments on Alice Street

Sunland has cleared their site on the corner of Alice Street and Albert Street.  The old apartment building there has been demolished.  Sunland is now building a fancy display suite, for Abian Apartments.  Rumours are that there will be few apartments in this building, with no one bedroom apartments.  Most apartments will be aimed at owner occupiers, and will be large.  The building is in a great location.  It will impact the two bedroom apartments in Quay West which overlook this site.

Photo from demolition

Recent photo of display suite being constructed, from same position.

Off the Plan Valuations Not Holding Up

An article about Sydney off-the-plan apartments valuations coming in at settlement at 85% of the contract price.

See Property Observer

Oracle Gold Coast Losses

Virtually every purchaser off-the-plan at The Oracle development (now branded Peppers) on the Gold Coast has lost money when reselling.  See article here.

Apartments as smart choice

RP Data has published a report comparing apartment prices to house prices in certain suburbs.  In my view, it is not particularly helpful.  For example, it compares houses in Chelmer (which are generally high quality houses on large blocks) with units in Chelmer (which are all 6 pack developments, mostly on a main road -- in fact, there are hardly any units in Chelmer).  Not a like for like comparison in my view, even in respect of location.

Prices Up, Rents Down?

Some real estate agents are telling me that sale prices for Brisbane apartments are increasing, with apartments selling faster, particularly those that suit owner/occupiers.  On the other hand, agents are having trouble renting apartments -- rents are decreasing and days vacant are increasing.  Thus, for investors, rental yields are getting worse, not better.

Casino Towers Large Apartment

Apartment 3501 in Casino Towers is for sale.  It looks like two apartments were combined, as this apartment has two kitchens.  This apartment is somewhat unique.

RP Data Weekly Report

RP Data has a weekly property report, that can be interesting reading.  Note that some of the information for Brisbane includes the Gold Coast.  This weeks report is here.

Impact of election

At least one person is saying that the change of government will trigger a housing boom.  I am not sure if I agree that Queensland will feel any positive signs, at least for a year.

I just don't understand

It seems to me that newer apartments are overpriced.  One example.
You can buy a year old apartment in Meriton's Soleil as follows:

• 93 sqm internal
• No balconey
• Air conditioning not ducted
• 2 bedrooms, 2 bathrooms
• Facing West, so hot in the summer
• General views of an ugly part of Brisbane
• Large, impersonal building, used as a hotel
• Your neighbour may be an Eastern European hooker or a football team on tour
• Price = $629,000 (apartment 4403) - $6,763 a sqm

Or you could buy an apartment in River Place:

• 113 sqm total
• Massive balconey
• Riverfront
• 2 bedrooms, 2 bathrooms
• Outdoor pool overlooking the river
• Price - $659,000 (apartment 54) - $5,831 a sqm

Or you could buy an apartment in Quay West:

• 130 sqm total
• Two balconies
• Ducted air-conditioning
• About 130 apartments in building
• Views of botanical gardens
• 2 bedrooms, 2 bathrooms
• Price - about $600,000 - $4,615 a sqm

It will be interesting to see what this apartment sells for in Admiralty One:

• 130 sqm in total
• Balconey
• Direct riverfront
• Ducted air-conditioning
• 2 bedrooms, 2 bathrooms, separate laundry room
• North Eastern view
• About 120 apartments in the building
• Auction -- there has not been a similar apartment sold in this building for years.

Why would you buy in Soleil?  Or in some of the currently marketed off-the-plan developments, when some of the "older" apartments are cheaper on the price per sqm basis, and in better locations?

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Kelvin Grove Apartments

Another new apartment development in the Kelvin Grove Urban Village area.  It is Victoria Park Residences.  Currently in pre-sales.

Great Books about Brisbane Apartments

Try these great Kindle books (also available on iTunes store):

Investing in Brisbane Apartments - A Guide for Successful Investing (2nd Edition)

Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying

If you don't have a Kindle, you can download a free Kindle reader program, or:

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RP Data sales report

Over the 2012/13 financial year, RP Data estimates that there were 328,903 houses and 122,282 units sold across the country. Based on these figures, sales volumes over the year were 13.1% higher for houses and 6.4% higher for units. The data indicates that at a national level the vast majority of transactions were for detached houses, at 72.9% of all sales.

Brisbane – house sales rose 20.9% over the year with Brisbane recording 14.8% of all capital city house sales. The lift in unit sales was more moderate at just 7.4% and unit sales across the city accounted for 13.5% of all capital city sales.

Full Report Here

REIQ Unit Report - June quarter 2013

The lobby group for Queensland Real Estate agents, the REIQ, issued the following press report and data today:

The sales of units and townhouses across Queensland have risen dramatically compared to last year, according to the latest data.  The Real Estate Institute of Queensland (REIQ) June quarter median unit and townhouse price report, released today, found the preliminary volume of sales increased nearly 40 per cent between the June quarter this year and the same period last year.  Sales of units and townhouses across the State have also grown by 15 per cent compared to the March quarter this year.

REIQ CEO Anton Kardash said the Queensland unit market was mirroring the burgeoning strength of the housing market.  “Both the unit and house markets are gathering steam with sales volumes much improved on the same periods in 2012,” he said.  “What is also interesting to note is that the preliminary numbers of unit sales this quarter were only marginally lower than during the strong spring selling season last year. That is, there were only 66 fewer sales this quarter than in the September quarter last year.  In fact, the June quarter is usually the weakest of the four quarters throughout the year. Over the last 12-month period, however, this quarter was actually the second strongest and very nearly wore the crown as the stand-out three-month period of unit sales activity.”

In Brisbane, the numbers of unit and townhouse sales increased 26 per cent compared to the June quarter last year and were up 21 per cent compared to the March quarter this year.  In Brisbane, the median price dipped by 1.3 per cent to $395,000, which is a result that can be classed as steady. Over the year ending June, its median price was down by 0.8 per cent.  Top Brisbane performers which posted median price growth over the quarter and the year included Kangaroo Point, Nundah and West End.

On the Sunshine Coast, there was a significant shift in demand for lower priced properties over the quarter which resulted in the region’s median unit price decreasing. The numbers of unit sales, however, increased significantly compared to the same period last year." 

[click chart to make bigger]

Hilton Gold Coast Capital Losses

"According to RP Data, since January last year 66 apartments have sold in the Boulevard Tower, with resales making up a small proportion of the total.  

Unit 10504 was bought off the plan for $850,000 in February 2008 and sold on May 30 this year for just $505,000, a 40.5 per cent drop in value.  In July this year, unit 10607 sold for $435,000, a 32 per cent dip in price from January 2011 when a buyer paid $647,000.  A unit on the 21st floor was purchased for $910,000 in January 2008 and sold in November last year for just $525,000."

See Courier Mail

An agent is quoted as saying losses of 30% on the Gold Coast are not unusual.  Take care when buying!

Zero Rental Growth in Brisbane

According to RP Data, Brisbane rents have remained flat for the past 12 months, and have fallen slightly in the past quarter.

Brisbane doing poorly

Despite what the newspapers may report, and what real estate agents may tell you, overall the Brisbane property market is doing poorly.  Have a look at these charts published this week by RP Data.  Brisbane is second-last on both charts.  If you purchased at the last peak, like many people did, and sold today, you will have lost about 10% (not including stamp duty and real estate agent selling fees).

Brisbane improves in August?

Brisbane median sales prices increased in August, but are still down looking back one year.

From RP Data:

According to Mr Lawless, the most significant turnaround in market conditions can be found in Brisbane where the monthly rate of growth jumped to 1.5 per cent.

“Brisbane’s housing market has been underperforming since the onset of the GFC with home values still almost 10 per cent lower than their previous peak which was back in November 2009. The strong result for August was evident across both the detached housing and the unit markets and may potentially mark a positive turning point for Brisbane’s housing market.”

Brisbane apartment prices (to 31 August 2013):

August 2013 - up 1.2%

Quarter - down 0.6%
Year on Year - down 1.2%
Year to Date - up 0.5%
Median price based on settled sales of Brisbane apartments over the quarter - $369,250.

Finally, an Apple Store for downtown Brisbane?

There have been a number of reports that Apple will open an Apple store in MacArthur Chambers (corner of Queen St and Edward St) in Brisbane City.  About time!  Rumours that Apple will have a store in the Valley appear to be incorrect.

Targeting the Chinese

You know when a developer is targeting foreign buyers when they produce a brochure in Chinese.  Here is a very nice brochure for Botanica, a development by Aria, in South Brisbane.  It will be located on the corner of Boundary Street and Edmondstone Street.  One and two bedroom apartments.

Infinity Part Opened

The tall Infinity building has partly opened, even though it is still under construction with a crane on top.  Meriton has opened its serviced apartment section, on the lower floors.  There are 10 apartments per floor.  I looked at a one bedroom.  It has good storage space, and a reasonable finish.  No balcony.  But strange design, because the living room is triangular in shape.  With the kitchen space in the living room, you have a nice view of your kitchen sink when trying to watch TV.  I felt like I was in a prison cell for white collar criminals.

The Brisbane Market

There is a lot of talk about how well the Sydney property market is doing, and also the property market in general.  But this does not appear to apply to Brisbane.  From what I can tell, the Brisbane market is holding steady, and not rising, and definitely not booming.  Have a look at the charts here, and the information below.  Despite what is happening in Sydney, there is no property boom in Brisbane.

Cheapest Units within 10 km of Brisbane downtown

RP Data released a report today, showing the suburbs with the lowest median price for units within 10km of Brisbane's city centre.  The results are here and here.  The three cheapest suburbs were:

• Chelmer
• Zillmere
• Kedron

Different ways to measure size of apartments

"Apartment buyers in Victoria are routinely being led to believe by developers and agents that their purchases are more than 5 per cent larger than the same place is anywhere else in Australia, according to industry experts.

Different ways of measuring and allowing inclusion of balconies, car parks and storage cages has allowed marketing material to claim bigger sizes than appear on property titles, they claim.

"It creates a big risk for valuers that report to banks who use the information about how much to lend," warned Angela Schooneman, head of real estate for law company Minter Ellison. "In tough times valuations can be looked at quite closely – and these are tough times."

Concern that measurements are confusing the industry and misleading buyers has caused the Australian Property Institute to try and bring the state in line with the rest of the nation by urging the introduction of uniform standards within the next 12 months.

"When valuers check measurements of apartments the outcomes are often different to what buyers think they are getting," said David Way, API apartments spokesman and joint management director of Knight Frank Valuations."

Full Story in AFR

I have seem developers and real estate agents in Brisbane, when giving apartment sizes in sqm, include storage cages and even car parks.  So take care!

Foreign Investors

Foreign buyers snapped up one in every eight new properties built this year - up from one in 20 properties in 2011, National Australia Bank research reveals.

Australia's foreign investment rules ban foreigners from buying established homes, and developers can sell half their properties to foreign investors before they are built.

Colliers International's managing director of residential property in Australia, Peter Chittenden, yesterday said Asian buyers were purchasing 60 per cent of units being sold off-the-plan in big developments.

He said overseas buyers had snapped up two in every three of the 588 luxury apartments in the Singaporean-owned Tower Melbourne development - being constructed as the city's tallest building.

Foreign investors have bought 15 to 20 per cent of the 710 apartments being built by Pearls Australasia and Metro Property Development in three towers in the inner-Brisbane suburbs of Bowen Hills and Fortitude Valley.  Pearls Australasia executive director David Higgins said Asian buyers were more likely to buy the more expensive apartments - costing more than $600,000 - with extra space or views.

Source:  Courier Mail

"According to research from LandMark White, of the 27 apartment projects completed in the inner-city precinct between 2011 and 2012, the vast majority were rental properties.  "Anecdotal evidence reports circa 40% to 50% of these investors are Asian buyers," it reports.  "Current conditions indicate investment in the inner apartment market remains robust due to strong rental growth and tight vacancy."

Source:  Courier Mail, Saturday August 24, 2013, p.33

See also: Property Observer: Trends

Apartment Body Corporate Fees

"Apartment buyers should avoid paying for lifestyle amenities already on their doorstep.  Minimising strata fees is increasingly a priority for apartment buyers eager to make sure the quarterly payments for the upkeep of their buildings don't take too much of a chunk out of their income.  So where there's a public gym or pool near a block, developers will often avoid including them in their plans for the complex to keep costs down."
Source:  Domain Advertorial

Here are some example body corporate levies for a random selection of apartments in Brisbane and the Sunshine Coast:

• City, one bed - $5,200 a year
• South Bank, two bed - $6,000 a year
• City, two bed - $7,000 a year
• City, two bed - $5,800 a year
• Suburbs, one bed - $4,400 a year
• Suburbs, two bed - $4,000 a year
• Suburbs, two bed - $4,900 a year
• Noosa, one bed - $5,129 a year
• Mooloolaba, two bed - $11,820 a year

Rents and Vacancies

A number of onsite managers have reported to me that they are taking much longer than expected to fill vacancies, and that rents are going down, even when a tenant renews.

Property Owl

A new property website:  Property Owl.   This is aimed at buyers.

Guaranteed Losses if you pay too much

If you pay too much to a developer when buying off the plan, no matter how good the location, and how good the development, you will loose money.  Often, developers will show you beautiful brochures of the facilities in the location (all true) and tell you rents are higher in this location than others (again true) and that it is a popular, closely held area (true again), and then try to sell you an apartment that is 20% above market value.  If this happens, you will likely suffer a capital loss.  See this story for example about capital losses in a bullet proof area.  Investors looking at SouthPoint at SouthBank, which is a brilliant location and looks to be a quality development, should take notice of this warning, particularly when prices are more than $10,000 a square metre.

Rental Increases

In Australia, rental yields for apartments are 4.9%, according to RP Data.

Barangaroo Sydney receiving great interest

New harbour-side apartments in downtown Sydney, at Barangaroo, are generating great interest.  Lend Lease must be happy.

Alex Perry Residential Struggling?

Alex Perry Residential in the Valley launched with great hype, and, according to hits on this blog, was of great interest to people looking to buy an apartment.  The dreams and promises of 2011 may not come true.  According to Property Observer:

"... the much touted Alex Perry Residential development, which hit the market more than two years ago complete with supermodels and paparazzi, continues to struggle with developer Chrome Property providing no update on off-the-plan sales to Colliers International.  Colliers International records 40 apartments sold to date out of 143 for a project which was first marketed in May 2011 and is now being managed by property development services group Xede, after being re-jigged with three-bedroom apartments replaced with one bedroom apartments and more than half of the 143 apartments to be sold to investors as serviced apartments.

Xede managing director Rod Fiddler told Property Observer the project had received development approval with a builder appointed.

“Sales are continuing and we are progressing towards financiers’ pre-sales targets.  We are not in the business of publicly declaring sales results as these are too often manipulated or misinterpreted," he said.  “Construction is targeted to commence this side of Christmas with demolition as early as September 2013,” he said.

Metro Property Group - A remarkable marketing machine

Last week, Ken Woodley, marketing director of Metro Property Group, zoomed past me in his Jaguar.  He was leaving his Mirvac penthouse and heading in the direction of the Valley.  He must be super happy with the sales of Metro's off-the-plan apartments in the Valley.  As reported today in Property Observer, Metro has been hugely successful in its Valley developments.  Although they are marketed as luxury apartments, in my view, they are small, basic apartments, targeted at foreign investors who cannot buy existing apartments due to FIRB rules.

"Devine’s Metro Property Development group recorded 67 off-the-plan sales over the March quarter for Cambridge Towers, the first stage of its $450 million Central Village development in Fortitude Valley making it the top seller by some margin, according to the latest inner Brisbane apartment update from Colliers International.  Now under construction, Metro had sold 92 out of 165 units in the development as of the end of the March quarter.  In a release earlier this month, Metro said it had sold 80% of the 160 apartments in Oxford Towers, stage two of the project, with one and two bedroom apartments ranging from $275,000 to $575,000.  On completion Central Village will comprise five towers and approximately 970 apartments. The project is expected to take approximately five years to complete."

Vendor activity steady

Property owners in Australia do not appear to be rushing to sell, according to RP Data.

Comparison: Apartments and Houses

According to RP Data, when looking at the median price of properties sold in the 3 months to July 2013, apartments in Brisbane are $75,000 more affordable than houses.