BRISBANE Apartment Report

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City Precinct Consistent The most recent quarter ending June 2010 saw 20 unconditional sales recorded within Brisbane’s CBD, a number not disproportionate to every quarter since December 2007. For this three month period a weighted average sale price of $527,000 was recognised, the lowest weighted average new apartment price seen since the June quarter in 2004. When compared to the March quarter prior, this is a figure 17% below the weighted average recorded three months prior representing a $109,087 difference. This exemplifies the current consumer preference for price pointed real estate in today’s market. Weighted average sale prices and unconditional transactions within Brisbane’s CBD have remained very similar between quarters now for over two years. This however should be unsurprising given a market which has seen a limited change in the number of new residential projects entering the market, a softer than average consumer sentiment and a region whose land is scarce and as a result has a significantly more expensive land content than many Brisbane fringe sites. Given that the CBD precinct has seen significant commercial development in recent years, residential towers have been neglected. However, recent site sales, development applications and sites being actively marketed as potential residential development precincts indicates that the Brisbane CBD residential market may recognise significant change in coming years. The unconditional sales recorded during the three months to June 2010 was again heavily weighted by Soleil which recorded a phenomenal 19 of the 20 sales and therefore continuing the trend of the Meriton project’s governance within the Brisbane CBD marketplace. The Macrossan Residences recorded its first unconditional sale since the period ending June 2008. As the building approaches practical completion, predicted to be November 2010, Colliers International Research expect the sales rate within this luxury residential tower to again pick up, given a tangible product will be available for the prospective residential purchaser. The Brisbane CBD remains a supply led offplan market directly impacting the purchaser’s choice and as a result, the unconditional sales reported for the June period. Of the 20 sales which transacted for the quarter, the majority of activity reflects the predominance of apartment type available for sale within the precinct, that of one bedroom variations. Sixteen of the 20 unconditional sales transacted were one bedroom configurations equating to 80% of the total transactions. Two beds saw 15% of sales whilst the remaining 5% was in three bedroom configurations. As at the end of June 2010, a total of only 303 new residential apartments remain for sale within the Brisbane CBD apartment market. The overwhelming majority of apartments which remain available for sale exist as one bedroom stock 65%. Two bedroom apartments total 22% of the 303 remaining available apartments whilst three beds and penthouse/sub-penthouse configurations total the remaining 13%. Given that the residential market is currently being driven by a price sensitive purchaser, smaller, tighter, denser residential precincts will continue to be delivered targeting the younger inner city renters and more affluent owner occupiers. The majority of the current CBD residents spend little time at home and are therefore open to the prospect of a smaller residence if it ticks all the other boxes: amenity rich precincts with access to infrastructure and employment – the CBD. The limited developers who own A-Grade sites however, have the luxury of deciding what product they wish to deliver. Affordable or luxury, or preferably a mixture of both. It becomes impossible to deliver only luxury ‘top-end’ residential apartments to the Brisbane CBD. The depth of this market remains slim in the Brisbane CBD and only the best product can attract this purchaser. It must be remembered that the Brisbane CBD is a market which is dominated by young professionals, who seek the CBD residence due to the lifestyle associated. The amenity which the precinct naturally provides and its proximity to the residents place of employment. It may therefore be the case that new residential product would be widely accepted by the Brisbane market which offers a diversity of choice. Either way, the development process must begin with the end in mind. Understanding who the buyer will be is the first step. Designing residential product which specifically appeals to this target market must however be the goal. General Apartment Market • The Brisbane CBD recorded a median price of $445,000 for the three month period to March 2010. This is a figure 6% below the December quarter prior yet 10% above the same quarter in 2009. • The strengthening median price suggests that buyers are taking their time to make a purchase decision, preferring apartments suit their immediate needs rather than price pointed real estate alone. There does however remain a heavy weighting of transactions toward the lower end of the price spectrum as buyers continue to be focussed upon sub $500,000 stock, totalling 73% of the transactions. • The number of settled transactions within Brisbane’s CBD has softened slightly during the March 2010 quarter following the substantial increase recognised through the six months prior. • During the March 2010 quarter a total of 116 settled sales transacted, 22% less than the period prior and 33% below the same period in 2008. • The $300,000 to $399,999 price bracket saw the predominance of activity throughout the March 2010 quarter registering 27% of the 116 settled sales. • For those who sold their apartment during the three month period to March 2010, an average annual capital growth was attained of 5.1% over the period the assets were held. Properties sold during the March 2010 quarter were held for an average of just over 6 years. Planned Projects • Sunland has lodged a new development application for their acquisition of Devine’s Carrington site. The project is expected to span 44 stories and 223 apartments over a mix of one, two and three bedroom configurations. • The majority of planned projects remain heavily weighted toward smaller one and two bedroom product within the Brisbane CBD. • Meriton Construction’s Infinity, located at Herschel Street which began early works a number of months ago has been softly launched to the market. BRIEFLY... ➤ 20 new CBD apartments were sold during the June 2010 quarter New Apartment Sales New Projects Pending General Market Apartment Sales Prepared by Colliers International Research Source: RPData ➤ 303 new apartments remain for sale within the Brisbane CBD Development Suburb Status Project Name Project Status Total Proposed Apartments 400-410 Queen St Feasibility/Deferred 25 549 Queen st Feasibility/Deferred 206 (1,2,3 Beds) Meriton, Herschel St Development Approval 629 (1,2,3 Beds) Silverpoint Towers Development Approval/Deferred 36 (4 Beds) Trilogy Tower Development Approval/Deferred 277 (1,2,3,4 Beds) Vision Construction/Deferred 392 (1,2,3 Beds) Waterfront Palace Development Approval/Deferred 200 (1,2,3,4 Beds) Hogan Place Development Application 138 (1,2,3 Beds) 140 Alice Street Development Application 223 (1,2,3 Beds) Prepared by Colliers International Research Source: BCI Australia, BCC Sale Price Range Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Less than $300,000 22 34 37 19 19 $300,000 to $399,999 61 92 53 33 24 $400,000 to $499,999 46 53 57 29 32 $500,000 to $599,999 16 15 16 22 10 $600,000 to $699,999 3 13 21 14 13 $700,000 to $799,999 14 9 7 10 9 $800,000 to $899,999 3 3 5 6 4 At least $900,000 9 11 20 15 5 Grand Total 174 230 216 148 116 ➤ The weighted average price of a new CBD unit was $527,000 for the June quarter Evolution CBD Completed 178 173 0 5 Skyline Apartments CBD Completed 192 191 0 1 Soleil CBD Under Construction 414 128 19 286 The Macrossan CBD Under construction 42 31 1 11 Summary - 4 Projects 826 523 20 303 Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey Total Units ➤ The median price of the general CBD apartments was $445,000 Sold to Date Examples of Current Apartment Rents Project Beds Bath Car Furnished Rent $ Pw The Manhattan Apts 2 2 0 Yes $430 Gardens Apts 1 1 0 Yes $400 Metro 21 1 1 0 Yes $480 Mayfair Residences 2 2 1 No $520 San Domenica 2 2 1 No $450 Gardens Apts 2 2 1 Yes $610 Metro 21 2 2 1 Yes $660 Grosvenor Apts 2 2 1 No $800 San Domenica 3 2 2 No $600 Grosvenor Apartments 3 2 2 Yes $1,000 Prepared by Colliers International Research Source: SEQ Rents Sold June QTR Available for Sale 6 Brisbane Apartment Report June Quarter 2010 7
Inner North Precinct The Majority of Residential Transactions New Apartment Market Brisbane’s Inner North apartment market remains the shining light for residential offplan apartment transactions during the June 2010 quarter. Of the total 308 unconditional transactions recorded during the most recent three month period, 70% occurred within Brisbane’s densifying Inner North precinct. A total of 214 unconditional sales were registered within the precinct a figure 43% above the March quarter prior and the highest number of recorded sales since the June 2002 quarter. The three month period to June 2010 saw a weighted average sale price of $585,280, a figure in line with the March quarter prior of $583,333 and reflective of the markets continued propensity to purchase price pointed real estate over the past 18 months. As at the 30th of June 2010 a total of 636 apartments remain for sale in Brisbane’s Inner North. When this is translated into the current market supply in months, based upon the sales rate recognised during the June quarter, these 636 available apartments are likely to supply the Inner North for only nine months, suggesting that there is a definite undersupply of apartments currently for sale in the Inner North if sales rates recognised continue to be upheld. The most significant proportion of these available apartments remains as two bedroom configurations which total 47% of the available stock. One bedroom configurations total 29% of the 636 available apartments followed by three beds with a considerable 18% of the stock. The proportion of stock sold during the June 2010 quarter was indicative of the apartments available for sale. Of the 214 unconditional transactions which occurred during the quarter, two bedroom apartments featured with the greatest proportion of transactions, equating to 57% of the sales. One bedroom sales followed closely with 40% of the quarter’s sales whilst three and four bedroom transactions totalled the remaining 3%. This remains in line with the demand recognised by the consumers current preference for price pointed real estate. Brisbane’s Inner North continues to expand in terms of the number of residential projects currently being actively marketed, leading the market in terms of availability and hence the number of unconditional sales per quarter. A total of 14 projects are currently on the market following the new release of Park at Waterfront and Mosaic. Leighton Properties’ new residential tower, Mosaic, located in the Fortitude Valley saw the highest level of unconditional sales during the June quarter 2010. The building has seen 80 unconditional sales to June 30 taking the building to 38% presold. The Hamilton Harbour Precinct has also maintained its presence as one of the best performing projects. Hamilton Harbour Two recognised 36 unconditional sales during the three months to June 2010 closely followed by the new Leighton’s and Devine tower, Riverside Hamilton, which saw 24 unconditional transactions during the three months to June 2010. Other strong performers were Park at Waterfront by Mirvac which recorded 21 unconditional sales and Code which saw 26 unconditional sales. The strong population growth recognised in the greater Brisbane area and the council’s emphasis on infill development bodes well for the Inner North looking to continue its Inner City market dominance. Our recent analysis of this market suggests that there are up 4,500 apartments at different stages of Development Application and marketing release. When combined with the delivery of extensive infrastructure and amenity continued densification will occur as long as apartments remain price pointed to meet the demands of the active residential purchaser. General Apartment Market • The Inner North precinct transacted the highest number of settled transactions for the March 2010 quarter across all precincts recording a total of 255 settled sales. Consistent with all other inner city precincts this was a softening from the period prior. • The $400,000 to $499,999 and the $300,000 to $399,999 price points recorded the highest percentages of transactions at 27% of the 255 settled sales for the quarter • The median price established for the Inner North during the March 2010 quarter was $447,500. Median prices have slightly softened against last quarter (5.2%) however strengthened 8.2% over the longer 12 months period. • A resale analysis was undertaken in order to establish returns achieved by those who exited the Inner North property market during the three months to March 2010. Again, an average annual capital growth of 7.9% was sustained by those who sold their properties. These apartments were held for an average of just under 6 years before being resold into the market. • The Inner North continues to recognise stable growth in median weekly rents according to the RTA. The median weekly rent for a one bedroom apartment within the Inner North was $320 whilst a two bedroom apartment achieved a median weekly rent of $440. • Asking rents in the open market do however continue to achieve slightly higher returns. An apartment in the Viva is seeking a tenant to reside in a two bedroom for $650 per week whilst a one bedroom residential tenancy in Freshwater is seeking a tenant at $525 per week. Planned Projects • The Inner North precinct continues to maintain a strong pipeline of development activity. • Over 4,000 apartments are at different stages of the development process. On top of this, there have been a number of significant site sales which could see the region‘s pipeline supply expand a further 1,000 apartments. BRIEFLY... ➤ The Inner North outperformed all Inner City precincts, recording 214 unconditional apartment sales New Apartment Sales New Projects Pending Name Project Status Likely No of Apts General Market Apartment Sales Sale Price Range Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Less than $300,000 39 32 33 9 24 $300,000 to $399,999 100 109 89 69 67 $400,000 to $499,999 97 96 121 85 70 $500,000 to $599,999 28 50 75 47 39 $600,000 to $699,999 19 25 19 23 25 $700,000 to $799,999 12 10 16 16 5 $800,000 to $899,999 7 8 9 12 9 At least $900,000 12 11 29 29 16 Grand Total 314 341 391 290 255 Prepared by Colliers International Research Source: RPData ➤ The weighted average price for a new apartment in this precinct was $585,280 Development Suburb Status Paragon on Arthur Fortitude Valley Completed 39 33 1 6 Edenview Apartments Kelvin Grove Under Construction 65 35 3 30 Promenade Hamilton Apts Hamilton Under Construction 172 133 0 39 Theodore Apartments Kelvin Grove Under construction 69 61 0 8 Pier at Waterfront Newstead Under Construction 99 56 1 43 Pier at Waterfront Newstead Awaiting Construction 102 21 21 81 Hamilton Harbour - One Hamilton Under Construction 257 249 7 8 Hamilton Harbour - Two Hamilton Under Construction 212 176 36 36 Hamilton Harbour - Riverside Hamilton Awaiting Construction 189 24 24 165 Mosaic Fortitude Valley Awaiting Construction 210 80 80 130 Rive’ Apts - Stage 1 Hamilton Under Construction 95 59 5 36 Code Bowen Hills Awaiting Construction 132 100 26 32 Kingfisher Apartments New Farm Under Construction 32 31 2 1 ARIS Newstead Under Construction 39 18 8 21 Summary - 14 projects 1,712 1,076 214 636 Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey Chester St Development Approval/Deferred 63 (1 Beds) Bonney Lane Housing Development Development Application 83 (Studio, 1 Bed) 41-47 Beeston St Development Approval/Deferred 44 (1,2,3 Beds) 458 Brunswick St Development Application 87 (1,2,3 Beds) 8 Best St Bowen Hills Development Approval 34 (2 Beds) McLachlan & Ann Development Application 307 (1,2,3 Beds) Prepared by Colliers International Research Source: BCI Australia, BCC ➤ 636 apartments remain for sale within Brisbane’s Inner North Total Units Examples of Current Apartment Rents Project Beds Bath Car Furnished Rent $ Pw V Human Space 1 1 1 No $350 Cannery 1 1 1 No $365 Freshwater 1 1 1 Yes $525 Cube Apartments 2 1 1 No $400 Ultra Apartments 2 2 1 No $420 Time Square 2 2 1 No $450 Cannery 2 2 1 No $450 Degree 2 2 1 No $470 Ignition 3 2 1 Yes $650 Viva 3 3 2 No $650 Prepared by Colliers International Research Source: SEQ Rents ➤ The median price of units within the general apartment market was $447,500 Sold to Date Sold June QTR Available for Sale 8 Brisbane Apartment Report June Quarter 2010 9
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