BRISBANE Apartment Report

Inner Ring
Despite Market Sentiment, Brisbane Has Performed
The end of the 2010 financial year has seen
the Brisbane off-plan apartment market
resist wider market sentiment of softening
markets and general negativity to record a
level of unconditional sales not seen since
September 2007, before the Global Financial
Crisis reached Australian shores. A total of
308 unconditional transactions were recorded
during the three month period to June 2010, a
figure 19% above the March 2010 quarter and
realising a rolling annual sales figure of 1,051
apartments for Brisbane’s Inner Ring.
A weighted average unconditional sales
figure of $603,750 was recognised for the
unconditional transactions recorded within five
kilometres of Brisbane’s GPO, totalling almost
$186 million in sales for the June quarter.
The weighted average price is a figure 7% below
the March 2010 quarter prior and 7% above
the same period twelve months prior suggesting
that the Brisbane market has stabilised around
this point, balancing price pointed real estate
with a level of luxury product still transacting
in the market, albeit limited.
The top performing project during the June
2010 quarter was Leighton Properties’ Mosaic
Apartments in the Fortitude Valley. The 210
apartments were firstly soft launched to the
market in October 2009 and have recorded
unconditional sales for the first time in the
June 2010 quarter. The Hamilton Harbour
precinct, which has structured an investment
focussed master plan, has again continued its
dominance of the Brisbane market during
the June period. Now selling through its
third stage, the precinct saw a total of 67
unconditional over its three buildings. Harbour
Two recorded 36 unconditional sales whilst
Riverside Hamilton saw 24 unconditional
sales. A reasonable end price and targeted
investment consumers has helped establish
these continued results.
Other strong performers during the three
month period to the end of the financial
year were Universal, Code Apartments,
Mirvac’s Park at Waterfront and Soleil.
Roca Construction’s Universal (34 sales)
and Mirvac’s second stage at Newstead
Riverpark, Park at Waterfront (26 sales)
have recognised their first unconditional
sales. Code Apartments, again reported
solid transactions registering a further 26
unconditional sales to take the project to
75% sold whilst Soleil saw a further 19
unconditional sales during the June quarter.
Of the apartments which have been
transacting within the Inner Ring, the demand
has been focussed upon one and two
bedroom stock over the past twelve months,
totalling almost 95% of the transactions
through the calendar year to June 2010.
For the most recent June quarter specifically,
two bedroom transactions saw the majority
with 60% of the 308 unconditional sales,
followed by one bedroom configurations
which totalled 35% of the June 2010 quarter’s
sales. Three bedroom configurations totalled
4% of the quarter’s transactions whilst
penthouse and sub-penthouse configurations
made up the remaining 1%.
The sales made for the quarter aligns directly
with the apartments which remain for sale.
Currently, Brisbane real estate remains a
supply led market. As at the 30th of June
2010, a total of 1,312 new apartments
remain for sale, the majority of which are two
bedroom apartments (42%). One bedroom
variations closely follow with 35% of the
available apartments whilst three bedroom
configurations total 19% of the 1,312
apartments. Importantly, based upon the sales
rate realised during the June 2010 quarter,
these 1,312 apartments are likely to supply
the current market demand for just over
12 months.
An analysis of the existing real estate market
has shown a market which has suffered a
significant tightening in sales achieved through
recent months. Across all Inner City precincts
806 settled sales transacted during the March
2010 quarter, a 20% softening in the number
of transactions from the same period in 2009.
Although the market continues to be driven by
price pointed transactions with 67% of the 806
settled sales recorded during the three months
being under $500,000. The median price has
however strengthened over the past twelve
months despite the fact that the number of
registered transactions has softened, recording
an overall median of $437,500, a figure 9%
above the same period in 2009.
Colliers International Research is under no
illusions that the Brisbane residential market
is thriving. It is a tough market and those who
are actively marketing residential projects
have provided feedback that they must work
hard to secure unconditional transactions.
The off-plan market has fared better than
the softening general real estate market,
recognising a strengthening in sales rates
driven by factors such as supply and price
point. Consumers are pursuing projects which
will recognise strong yields and the potential
that capital growth will be recognised given
an ever expanding population.
Buyers remain scarce, given fears that interest
rates will rise and the market will follow
the US into a possible double dip recession.
Combined with the Federal election and the
surrounding controversy of indecision, has
left many potential purchasers sitting on their
hands. Positively however, those who are
seeking a residential purchase have generally
done their homework. They understand their
capacity to purchase, their limitations and
to some extent are prequalified in terms of
their financial capability prior to the initial
enquiry. They know what they are seeking in
their residential acquisition and have a broad
understanding of the underlying drivers which
are impacting the wider market.
The Brisbane apartment market will become
an ever competitive precinct. A recent analysis
has recognised that Inner Brisbane may see
over 3,000 new apartments enter the market
by December 2010. Large scale projects
competing for the same buyers and offering
similar value propositions. Projects which
have been restructured from encompassing a
majority of larger three bedroom apartments
to high density one and two bedroom stock.
Value propositions therefore must become
ever competitive. Price remains the most
important driver for residential transactions
however those projects which can provide
those factors which add long term capital
appreciation such as access to infrastructure,
amenity, view corridors, significant employment
nodes and efficient apartment design will
recognise superior results. Those who provide
a point of difference and therefore meet market
expectations on value will recognise sales.
Successful projects must be forward thinking
and counter cyclical in nature in order to
achieve sustainable results in the long term.
A full understanding of the new council
town plans, and therefore the future of each
individual region will become critical to
recognise the vision for each precinct and
the impacts new infrastructure, amenity and
growth will have on the areas. This will not
only fast track projects to the market but also
allow projects to recognise potential growth
areas, competition and understand the point
of difference that you can provide.
In Brief
➤ The June 2010 quarter
finished with 1,312 new
apartments available for
sale in Inner Brisbane
NEW
OFF-PLAN
APARTMENT
NEW APARTMENT
SALES BY QUARTER
SALES BY QUARTER
Sept Quarter 2009 to June Quarter 2010
Quarter Sep-09 Dec-09 Mar-10 Jun-10
Available Units 986 927 1,045 1,050
Added to market 214 349 301 570
Sold this quarter 273 226 244 308
Remaining units 927 1,050 1,102 1,312
Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey
INNER CITY NEW UNIT SALES AND SUPPLY
June Quarter 2005 to June Quarter 2010
Jun-05
Sold this Qtr
Sep-05
Dec-05
Mar-06
Available for Sale
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey
GENERAL
OFF-PLAN
MARKET
NEW APARTMENT
MEDIAN PRICE
SALES
PER
BY
PRECINCT
QUARTER
Prepared by Colliers International Research Source: RPData
➤ 308 unconditional sales
were made suggesting
a new unit supply of
13 months
Precinct Mar-10 Dec-10 Mar-10 Qtr change Annual change
CBD $407,500 $474,000 $445,000 -6.1% 9.2%
North $413,500 $472,000 $447,000 -5.2% 8.2%
South $388,625 $340,000 $413,500 -3.8% 6.4%
East $389,000 $445,000 $435,000 -2.2% 11.8%
West $388,750 $430,000 $439,000 2.1% 12.9%
Overall $400,000 $458,000 $435,000 -5.0% 8.7%
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Units
➤ The weighted average sales
price of new apartments
in Brisbane for the June
quarter was $603,750
NEW INNER CITY UNIT AVERAGE SALE PRICE
June Quarter 2005 to June Quarter 2010
$200,000
Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10
REMAINING STOCK INNER CITY BRISBANE
Percentages by Variation - June Quarter 2010
VACANCY RATE
Residential Rental Apartments – June Quarter 2010
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
Series 1 Linear (Series 1)
Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey
45%
40%
35%
25%
20%
15%
10%
5%
0%
One Bed Two Bed Three Bed Penthouse/Sub-penthouse Other
Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey
0.0%
Inner
Remainder
Brisbane
of Brisbane
Prepared by Colliers International Research Source: OESR
Brisbane
Surrounds
➤ The median price of units
in Inner Brisbane was
$435,000
Gold Coast
Rest of
Queensland
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
Average Price
4 Brisbane Apartment Report June Quarter 2010 5