Settlements Start At Soul

ANYONE who thinks Soul is heading for receivership because buyers won't settle will be "sadly disillusioned", veteran developer Graeme Juniper says.
The $850 million Surfers Paradise project has been 11 years in the making and Mr Juniper plans to see it through to the end.
"We have the complete support of our financiers and we are with this journey all the way through," the co-managing director of Juniper Group said.  "We will be delivering this building and Juniper will be there -- it's that simple."
Settlements of the first stage of the apartment project began on Tuesday, a process expected to take months to complete.

The family-owned Juniper Group has contracts on 173 apartments in the first stage, but Mr Juniper could not disclose how many had settled.

He confirmed Juniper Group was still finding buyers despite the dire Gold Coast apartment market and that he had secured an unconditional 30-day contract for an apartment yesterday.

See Gold Coast Bulliten

I am not sure why settlement will take months.  Usually, all settlements (even for a large building) are done in less than a week.

Soul to be branded as Sea Temple

The Juniper Soul building on the Gold Coast will be managed by Mirvac under the Sea Temple brand. With settlements due very soon, it will be interesting to see how many actually settle. Or will we have another Oracle problem? There are already dark shadows and issues about soul food. Even the development debt is for sale.

Soul and Mirvac and Oracle and Hilton

LISTED property trust Mirvac Group will operate a luxury hotel at Juniper Group's Soul apartment complex on the Gold Coast.

It is understood Juniper had been speaking to potential operators about incorporating a hotel/resort in the development which had originally been planned as purely top-end apartments.

Juniper and Mirvac are close to finalising an agreement, industry sources say.

Apartment values on the Gold Coast have fallen by up to 50 per cent due to oversupply of projects, many of which were started before the global financial crisis.

The resort in the Soul complex will compete with Mantra's five-star Peppers Hotel at the newly- built $700 million Oracle Broadbeach tower and also the Hilton Surfers Paradise Hotel and Residences, which was part of a development launched by failed Gold Coast developer Jim Raptis.

There is a total of 20,000 hotel rooms on the Gold Coast.

The Hilton hotel is on the market with price expectations of more than $60m on behalf of receivers acting for ANZ.

Oracle was also placed in voluntary receivership in December by Michael Nikiforides, a director of South Sky Investments, a Niecon-related company.

It was also suggested Mirvac briefly looked at takeover target Oaks Hotels and Resorts, for which Thai-based conglomerate Minor International is now a majority shareholder.

Mirvac was not available for comment yesterday.

It is understood that at least 200 apartments in the Juniper Group's Soul apartment project at Surfers Paradise are due to settle in stages from July.

Industry sources said Juniper had been marketing the Soul apartments in Asia with the promise of three-year rental guarantees on a $2m apartment, equating to $2000 a week. There are still 92 apartments remaining for sale at Soul, according to the Midwood Report, although the group provided no details on sales in the complex during the February quarter.

The yet-to-be-completed 77-level Soul tower fronts both the beach and Surfers' main retail strip, Cavill Mall, on the corner of The Esplanade and Cavill Avenue.

The Australian

INVESTORS who bought into the failed $700 million Oracle Broadbeach development on the Gold Coast have been trying to offload their apartments at auction, but are finding no buyers, according to real estate sources.

It bodes unfavourably for the 200-plus pre-sold apartments in the Juniper Group's Soul apartment project at Surfers Paradise, due to settle in stages from July.

It is understood Juniper has been marketing the Soul apartments in Asia with the promise of three-year rental guarantees on a $2m apartment -- equating to $2000 a week -- and has involved a corporate advisory firm.

Market sources said the apartments at Oracle, on Elizabeth Avenue, Broadbeach, had been put to auction after the investors had settled with the receivers. But the apartments had not sold, mainly because of an expectation receivers would put more stock on the market at steeply discounted prices.

Oracle was placed in voluntary receivership in December by Michael Nikiforides, a director of South Sky Investments, a Niecon-related company. Niecon, of which Con Nikiforides is the chief executive, developed Oracle.

One Oracle apartment owner said then he was aware of people who had bought apartments for $3.5m and had since sold them for $2.5m. As at January, it was believed the developer had secured about $160m from more than 400 pre-sales in the 505-apartment complex, and between October and January about 180 of those had settled.

The value of Gold Coast apartments has typically fallen by 30 per cent since the global financial crisis.

The Oracle project is believed to have cost about $700m, with up to $550m in loans from a syndicate including National Australia Bank, Westpac, Suncorp and Bank of Scotland.

Juniper's Soul, which unlike Oracle is not insolvent, has 92 apartments remaining for sale, according to the latest data from the Midwood Report, although the group provided no details on sales in the complex during the February quarter.

The Australian

Soul Settlements Coming Up

Soul off-the-plan purchasers in the low rise section are getting ready for settlement. Soul is located at Surfers Paradise, in a prime location. It is a very high end high rise. Photo from March showing progress.

Valuers and banks for purchasers are looking at contracts and doing valuations. I have heard of a situation where the apartment was valued at 70% of the contract price. That may not seem to bad, but if the contact price is $2M, then the purchaser needs to find an extra $600,000 to settle.

And there has been no announcement of who will manage this complex.

Will Juniper survive, or head the same way as Raptis and Niecon?

One purchaser is trying to resell his 2 bed apartment for more than a 3 bed apartment is being valued at: www.soul-apartment.com/

Gold Coast Sinking Under Apartments Glut

The front page of the AFR on Wednesday, 9 March 2011:

"Gold Coast Sinking in Units Glut"

Summary:

• 2000 apartments worth an estimated $2 billion listed for sale
• few buyers
• dire oversupply
• only 300 apartments are selling on average each year
• between 5 and 7 year supply of apartments
• high asking prices and a reluctance by banks to lend had compounded the oversupply problem
• NAB less likely to lend to the Gold Coast apartment market
• Mr Korda, receiver for The Oracle, estimates average apartment price for the past 10 years has been about $400,000, while the average price for an Oracle unit is $1.2M.
• Soul will add to the glut, where the average asking price for the top third of the 77 storey building is $3.87 million.
• "If you have a $1 million apartment, you could probably only get bank finance for $360,000" Mr Korda said.
• Its a price point and liquidity issue.

Gold Coast Auctions

It has been reported that settlements for the $700 million Oracle Broadbeach apartment project on the Gold Coast are likely to be delayed by the Queensland floods.

This is because Brisbane lawyers working on the contracts are unable to return to their flooded city offices, according to the receiver for the project. ... Since October, about 180 of those presales had settled after values of Gold Coast apartments typically fell by 30 per cent since the global financial crisis.

Source: The Australian

It will be interesting to see the auction results for these apartments:

• Q1, Apt 5307
• Soul, Apt 3805
• Soul, 2805
• Circle On Cavill, Penthouse

Some of the Oracle apartments for sale:

• Apt 2405, $2.4M (or over $9K a sqm, which is outrageous!)
• Apt 2605, 2 bedrooms, $1.5M (note the 2006 off-the-plan price for this apartment was $1,320,000)
• Apt 1404, $795,000
• Apt 1505, $680,000
• Apt 1907, 2 bedrooms
• Apt 3401, 3 bedrooms, $1.5M
• Apt 3801, 3 bedrooms, $2.5M (or over $13K a sqm -- the vendor is on another planet!)
• Two bedroom at rear, $1.6M
• Two bedroom, $1.3M
• Two bedroom 27th floor, tower one
• One bedroom on 6th floor, just over $600,000
• One bedroom, tower 2 $800,000
• List of resales

Note that there are two towers: Tower 1 is 50 storey's, comprising 274 luxury apartments (faces the ocean with ocean views) whilst Tower 2 is 40 Storeys, and comprises 241 apartments (faces North East (behind Tower One)).

See also RealEstate Buzz

Gold Coast Report

HTW October report says:

"Over the last 9 months, it would be of no surprise that the new apartment market has been one of the hardest hit. Scanning the Surfers Paradise and Broadbeach skyline, it would be fair to say that there is currently limited activity on the building front, with a lack of crane activity. Developers are still holding apartment stock from residential developments (predominantly medium and high rise projects) completed in 2008, purely because the resale market (of near new apartments) is too competitive on price.

A large proportion of new apartment product on the Gold Coast is sold to interstate and to a lessor extent, overseas investors at price levels which are considered to be in excess of local market values. The premium paid for new apartments is often not sustainable on resale, especially within a short holding term.

The sustained softening in values of new apartment product is not limited to Surfers Paradise and Broadbeach, but is also apparent in the northern and southern parts of the Gold Coast. The new and near new apartment market in Coolangatta has been underperforming for some 18 months now. The completion of a number of medium and high rise projects towards the end of 2007 and early 2008, in conjunction with the increase in supply of near new apartments coming back to the market at that time, has had a signficant negative effect on market values. Market conditions are in such a state at the moment, that a new apartment project nearing completion is likely to see a signficant settlement risk (ie. purchasers may forego their deposits and not settle because of the significant drop in market values). In this development, of the 43 contracts signed “off the plan”, 41 were signed in 2007, in much better market conditions.

From Southport to Hollywell, the new medium and high rise apartment market is also soft with similar prevailing factors as to those experienced in the central and southern parts of the Gold Coast. Stock levels are high and sales rates are low. The resale apartment market is considered an impediment to these stocks levels reducing. Developers however are utilising innovative marketing techniques, in conjunction with professional marketeers which entice potential buyers to purchase. Rental guarantees, cash backs, and fitout incentives are just some of these. These incentives are generally built into the price."

Hope Island, which is considered an established good to prestige quality residential house location, is really yet to prove itself for medium to high density apartment living. Over the past 5 years there have been a number of large apartment projects built in this area, achieving only modest sales performance with most projects retaining considerable developer stock, some in the hands of receivers. There is currently approximately 300 apartments (in new projects) for sale in the Hope Island locality."

Raptis Goes Bust

Gold Coast and Brisbane developer, Raptis, went into administration today. Also, the developer's $700 million Hilton Hotel redevelopment in Surfers Paradise was put into voluntary administration this week. See CM

Raptis and Surfers Paradise

There are rumors that Raptis, who is developing the Hilton hotel and apartment complex at Surfers Paradise, is in significant trouble. I wonder if the Gold Coast Hilton will get off the ground?

http://www.news.com.au/heraldsun/story/0,21985,24252689-664,00.html

http://www.news.com.au/heraldsun/story/0,21985,24247597-664,00.html

The Gold Coast apartment market is not doing well at present. New apartment are not selling, as existing owners are cutting prices, and rental returns are not good.

"Mr Juniper said Soul would breathe new life into Surfers Paradise. "It's the transformation of the Gold Coast; a brand new Surfers Paradise is being delivered right now," he said. "To have the Hilton being built next door is fantastic. It reassures everyone that Surfers Paradise is still moving ahead in these times at the moment. "They have achieved fantastic sales. We have achieved fantastic sales and it just shows the strength of the Gold Coast market."

He said unlike the Hilton, where sales had been to predominantly offshore interests, Soul had attracted mostly local buyers.

http://www.goldcoast.com.au/article/2008/08/13/14912_gold-coast-business.html