BRISBANE Apartment Report

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Inner South Precinct Significant Infrastructure Spend Brisbane’s Inner South unconditional sales have strengthened further during the three month period to June 2010. A total of 49 unconditional sales were recorded for the precinct, the strongest sales rate since the December quarter 2008 eighteen months prior, and a figure 80% above the period prior which saw only 27 transactions. The 49 unconditional sales recognised a weighted average figure of $605,612, a figure approximately $115,000 below the March quarter three months prior yet directly in l ine with the December period 2009. The softening weighted average is representative of the markets continued propensity to buy price pointed real estate which provides secure investment returns. The June 2010 quarter Inner South unconditional sales were heavily weighted by the new release of Universal Apartments in South Brisbane. This price pointed project developed by Roca Constructions saw a total of 34 transactions and the overwhelming majority of sales in the Inner South. Waters Edge was again one of the top performing projects in the region, recording 13 unconditional sales for the three month period to June. Of the unconditional sales which transacted within the Inner South, the overwhelming majority was in two bedroom configurations. Almost 90% of the regions sales were in two bedroom variations. The remaining 7% of sales recognised during the quarter were in three bedroom transactions. In terms of the stock which remains for sale, the Inner South is one of Brisbane’s precincts which are heftily weighted toward two and three bedroom apartments. At the end of the financial year 214 new developer apartments remain for sale within the precinct. When these 214 available apartments are broken down by product type, 52% are two bedroom configurations, 34% are three beds and only 13% are one bedroom types. This suggests that, considering the wider apartment market is transacting price pointed real estate, and as a result demanding smaller one and two bedroom apartments Colliers International research suggests that there is a significant opportunity to release price pointed one and two bedroom apartments to the region. Recent years have seen the Inner South precinct come under the spotlight for redevelopment given its significant development potential and its desirability as a place to visit, work and live. An Inner City precinct, currently underdeveloped, the Inner South has been identified as one of Brisbane’s foremost developing precincts. Its proximity to a cultural hub, schools, universities, hospitals, major entertainment arenas as well as direct access to major developing transport infrastructure nodes will unduly accelerate this growth. West End has however, again ignored the potential for which the region can provide. The South Brisbane Riverside Plan has restricted its building heights from twelve stories to only seven, negatively impacting proposed development in the region. From the perspective of residential projects, the Inner South’s location, investment in infrastructure and surrounding amenity will drive demand; the greater community must however recognise that well planned sustainable development will facilitate the long term growth of the precinct. General Apartment Market • The most recent three month period ending March 2010 has recorded a total of 129 settled sales for the 2010 quarter. This number reflects a 30% strengthening in the number of settled sales against the December quarter prior. • The Inner South recorded a median price of $413,500 for the March 2010 quarter. This a softening of 3% from the December quarter prior which saw a figure of $430,000 however is a 6% strengthening from the same period twelve months prior. • The majority of settled sales recorded within the three months to March 2010 were under the $500,000 mark. A total of 70% of transactions were recorded below this mark whilst the most active price point was the $400,000 to $499,999 price point, which realised 30% of the total transactions. • The $300,000 to $399,999 price point also registered significant levels of sales during the quarter with 22% of transactions. • Colliers International undertook a resales analysis to substantiate real gains within the Inner South precinct. For those who sold their apartment during the June period, a strong average capital growth was attained of 8.5% per annum. This was the highest average annual capital growth across all precincts during the March quarter. For the properties which were resold during the quarter, the average hold time was 5.5 years. • Figures released by the RTA for the March quarter suggest that the median weekly rent for a one bedroom apartment is currently $290, whilst a two bedroom apartment demands a median weekly rent of $450. • Asking rents on the other hand tell a different story. A two bedroom apartment within Riverview Gardens for example is currently seeking a tenant at $650 per week, whilst a three bedroom apartment in Koko is asking for a long term tenant at $850 per week. Planned Projects • Station 16 and Montague will recognise unconditional sales during the September 2010 quarter following public releases to the market. • The Inner South is currently revisiting their town planning scheme, with particular emphasis on building heights and density. • The State Government has recently put forward plans to enable up to 40 stories to be developed in the Woolloongabba local area. BRIEFLY... ➤ 49 unconditional sales were recorded within the Inner South precinct New Projects Pending Prepared by Colliers International Research Source: RPData ➤ The weighted average price of a new apartment for the quarter was $605,612 General Market Apartment Sales Sale Price Range Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Less than $300,000 29 28 26 8 25 $300,000 to $399,999 47 50 47 33 28 $400,000 to $499,999 28 31 51 22 38 $500,000 to $599,999 13 16 14 14 17 $600,000 to $699,999 9 10 8 5 6 $700,000 to $799,999 6 3 7 6 9 $800,000 to $899,999 2 2 3 1 At least $900,000 8 8 5 8 5 Grand Total 140 148 108 99 129 ➤ 214 new apartments remain available for sale at the end of the June 2010 quarter New Apartment Sales Development Suburb Status Gabba Central I and II Wooloongabba Completed 271 269 2 2 Riverpoint West End Completed 129 94 0 35 SL8 West End Completed 112 109 0 3 Waters Edge - Reach West End Under construction 234 95 13 139 Universal South Brisbane Awaiting Construction 69 34 34 35 Summary - 5 projects 815 601 49 214 Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey Name Project Status Likely No of Apts 45 Boundary St Development Approval 46 (1,2,3 Beds) 151-159 Logan Road Development Application 83 (1,2 Beds) 320-324 Vulture St Development Application 214 (1,2,3 Beds) Station 16 Development Approval 60 (1,2 Beds) Gabba One Development Application 115 (1,2,3 Beds) Buranda Village Development Application 866 (1,2,3 Beds) Southpoint Development Approval 247 (2,3 Beds) West Village Development Application/Deferred 212 (1,2 Beds) Montague Development Approval 424 (1,2,3 Beds) Phoenix Deferred 626 (1,2,3 Beds) Prepared by Colliers International Research Source: BCI Australia, BCC Total Units Examples of Current Apartment Rents Project Beds Bath Car Furnished Rent $ Pw SW1 1 1 1 Yes $510 River Plaza Studio 1 1 No $295 SL8 1 1 1 No $410 Saville 1 1 1 No $380 South Edge 2 2 1 Yes $600 Koko 2 2 1 No $530 SL8 2 2 1 No $610 Leftbank 2 2 2 No $610 Riverview Gardens 2 2 1 Yes $650 River Plaza 2 2 1 Yes $575 Koko 3 2 2 Yes $850 Prepared by Colliers International Research Source: SEQ Rents ➤The median price for general apartments within Brisbane’s Inner South was $413,500 Sold to Date Sold June QTR Available for Sale 10 Brisbane Apartment Report June Quarter 2010 11
Inner East Precinct Supply Constrained New Apartment Market The June 2009 quarter saw 18 registered unconditional sales in the Inner East precinct at a weighted average price of $921,667. This is the highest weighted average price recorded of any inner city precinct by over $300,000, and as can be expected in a price sensitive and volatile marketplace, the sales rates are reflective of this, falling considerably from the 44 unconditional sales registered in the March quarter prior. Of the stock which transacted during the quarter, the majority of transactions occurred within two bedroom variations, recording 56% of the total sales. Three bedroom apartments recorded 34% of the 18 transactions whilst the remaining 10% of sales were in one bedroom configurations. Whilst it could be argued that these sales are a result of the product type which is currently offered to the market, it should also be recognised that the Inner East has been a region with limited new supply in recent years which has restricted unconditional sales registered. Yungaba and Aqua’ta again outperformed all other projects within Brisbane’s Inner East recording seven unconditional sales a piece during the three month period to June 2009. Yungaba at a weighted average figure of over $1.1 million and Aqua’ta at approximately $670,000. Quartz again recorded a consistent four unconditional transactions. The Inner East therefore closes the 2010 financial year with 123 apartments available for sale over six different projects. Of the stock which remains for sale in the Inner East precinct, there is an overwhelming majority of two and three bedroom apartments. A total of 52% of the stock available for sale exists as two bedroom off-plan apartments whilst three bedroom variations total a further 41% of the remaining stock. One bedroom apartments total only 6% of the apartments available for sale suggesting there may be a demand for this product mix. With the focus on high end, $1 million plus residential in the region currently, the projects being actively marketed can expect a slower than average rate of sale given the $1 million plus market was a very small proportion of the total settled sales registered for the quarter, less than 5%. A considerable challenge continues to occur for new apartment product available for sale within Brisbane’s Inner East precinct. A significant price differential continues to exist between the new apartment transactions, a weighted average price of $921,667, and the resold stock which recognised an average price of $504,198. This equates to an enormous differential of 83% between the two figures and is a telling example of why minimal new apartment sales are occurring when compared to the existing market. Competition for buyers is, and will continue to be, a prevalent issue for new apartment configurations within the Inner East precinct. The greatest competition being the existing apartment market. Into the future, a lack of stock and limited future stock given land constraints in the region, may provide the motivation instigating the capital growth required to force resale apartment values closer to the new apartment product currently available for sale within the marketplace. The new apartment stock delivered to the market must ensure that the end user is front of mind and competes on a level which appeals to the target market, whether it is owner occupier or investor stock. The project cannot be all things to all markets; however effective design will allow different aspects of the building to appeal to varying markets. Currently, price is the underlying factor adding or detracting from the consumer’s motivation to purchase. Value propositions in development must be strong and encompass different elements including location, lifestyle, amenity, infrastructure, design and view corridors in order to appeal to a competitive market surrounding the individual purchaser General Apartment Market • The median price for an apartment within the Inner East precinct during the three month period to March 2010 was $435,000 a softening of 2% from the December period prior and a figure 11.8% above the same period in 2009. The Inner East was the only region to recognise double digit growth over the past twelve months. • In terms of price point activity derived from the settled sale price of the Inner East apartment market, activity continues to be heavily weighted toward the sub $500,000 price point with 68% of the quarter’s sales falling below this point. • Brisbane’s Inner East has seen a strengthening in the settled sales activity registered during the three month period to March 2010. A total of 189 settled sales were recorded during the most recent quarter, a figure 22% above the quarter previously. • A resale analysis was undertaken by Colliers International Research in order to establish returns achieved by those who exited the Inner East property market during the March 2010 quarter. An average annual capital growth figure of 7.5% was realised. Properties were held on average for 7 years before being resold. • Demand for tenancies within Brisbane’s Inner East has seen stable rental returns through recent months. According to the RTA, median weekly rents for a one bedroom apartment in the Inner East are $310 per week whilst a two bedroom apartment saw a median weekly rent of $430 per week. • Current market rates suggest that rental tenancies are seeking much higher weekly returns than the median suggested by the RTA. A two bedroom apartment in Silver Quays is asking for a tenant at $700 per week whilst a three bedroom apartment in One Holman Street is seeking a tenant at $1,000 per week for a long term tenant. Planned Apartment Market • A number of sites remain for sale in the precinct and are seeking a developer who is able to undertake the proposed projects. • The Inner East remains as one precinct which will look continue to be undersupplied into the long term. BRIEFLY... ➤ 18 new unconditional sales were registered during the June 2010 quarter New Apartment Sales New Projects Pending General Market Apartment Sales Prepared by Colliers International Research Source: RPData ➤ The weighted average price of a new apartment for the quarter was $921,667 Project Status Likely No of Apts Seven Hills Tafe Redevelopment Development Application 250 53-61 Kitchener St Development Approval/Deferred 28 (1,2,3 Beds) @20 Development Application 192 (1,2,3 Beds) Dockside Garden Towers Development Application 102 (1,2,3,4 Beds) Life Options Project Development Approved/Deferred 32 (1,2 Beds) Shafston International College Development Application 142 (2,3 Beds) 498 Wynnum Road Development Application 72 125 Bulimba St Bulimba Development Approval 34 (1,2,3 Beds) Community Care Centre - Coorparoo Development Approval 20 (1 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 26 18 23 7 18 $300,000 to $399,999 73 85 76 48 54 $400,000 to $499,999 47 33 51 39 57 $500,000 to $599,999 15 18 26 27 29 $600,000 to $699,999 2 13 13 12 12 $700,000 to $799,999 3 4 2 3 3 $800,000 to $899,999 2 4 2 9 4 At least $900,000 13 8 17 10 12 Grand Total 181 183 210 155 186 ➤123 units remain available for sale within Brisbane’s Inner East precinct Name Suburb Status Castlebar Cove Kangaroo Point Completed 38 34 0 4 Forty Park Avenue Kangaroo Point Completed 5 4 0 1 Scott Street Kangaroo Point Under Construction 11 5 0 6 Quartz Apartments Bulimba Under Construction 52 40 4 12 Yungaba Promontory Kangaroo Point Awaiting Construction 68 31 7 37 Aqua’ta Bulimba Under Construction 81 18 7 63 Summary - 6 projects 255 132 18 123 Prepared by Colliers International Research Source: Colliers Brisbane Unit Survey Total Units Examples of Current Apartment Rents Project Beds Bath Car Furnished Rent $ Pw Lana Place 1 1 1 Yes $310 1 Holman Street 1 1 1 No $410 The Docks on Goodwin 1 1 1 No $420 Vicinity 2 2 1 No $420 The Docks on Goodwin 2 2 1 Yes $630 Stradbroke Tower 2 2 1 Yes $700 30 Silver Quays 2 2 2 Yes $700 Shaftson Towers 3 2 1 Yes $750 1 Holman Street 3 2 2 No $1000 Prepared by Colliers International Research Source: SEQ Rents ➤ The general apartment market registered a median price of $435,000 Sold to Date Sold June QTR Available for Sale 12 Brisbane Apartment Report June Quarter 2010 13
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BRISBANE Apartment Report

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