27 posts tagged “gold coast”

Prices on the Gold Coast for apartments are going backwards.  Some examples:

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."

"PROLIFIC Kirra developer, the Pikos Group, has moved to sell its Pure tower development site in the southern suburb to focus on projects in Darwin....

Pedro Pikos said the group had intended to start work on the 13-storey project in July after selling 14 of the tower's 33 apartments for an estimated $20 million."

GCB

From a Colliers email:

"Since early March, six penthouses have reportedly sold across the Gold Coast, from beachside Burleigh Heads to waterfront Hollywell in the north, for a combined total of almost $20 million.

The sales included the penthouse at Ivory in Burleigh Heads which sold for $4.185 million, Ultra in Broadbeach which was secured off the plan for between $3 million and $3.5 million, Pintari and The Inlet in Main Beach, both snapped up for $3.4 million, and Allisee in Hollywell for $2.6 million.

The City’s latest penthouse sale was in Chevron Renaissance’s spectacular Skyline Tower.  It sold earlier this month to a local resident for $2.95 million in a deal negotiated by Colliers International Gold Coast’s Director - Prestige Property, John Natoli.

There has been a surprising number of penthouse sales on the Gold Coast in the last four months as vendors were meeting the market on price, driven by the global financial markets, and buyers were quick to act to secure solid investment opportunities – in this case prime residential property."

"Discounting by more than 20 per cent is commonplace for some top Gold Coast addresses and many houses and apartments are yet to sell. A property owned by the bankrupt entrepreneur Matthew Perrin sold on Albatross Avenue, in Mermaid Beach, in May for $2.75m after it was purchased for $4.375m in October 2005.

Former Sydney Swans footballer and founder of tourism group Breakfree, Tony Smith, sold his Hedges Avenue house at Mermaid Beach for $28m to IT entrepreneur Daniel Tzvetkoff - less than half the expected $60m. Now the half-finished mansion Mr Tzvetkoff purchased is to be sold after his company BT Projects was placed in administration.

Other prestige properties around the country are set to sell at sharp discounts, with many vendors shaving millions of dollars off the asking price."

See The Australian, photos and chart
The chart shows that people lost money in New Farm, Coronation Drive, Paddington, Hamilton, Hastings Street in Noosa and the Gold Coast.

"The sort of prices that were being paid were not sustainable and now we are back at 2001 and 2002 prices," Mr Fatouros said.  He estimated prestige home prices have fallen about 25 per cent from their peak, with another a decrease of 10 per cent to go.

"I don't think we have seen the bottom yet," he said.

But one Gold Coast agent, who declined to be named, said there were more mortgagee sales to come.  "The banks don't want to flood the market with pressured sales and are hoping for some recovery in prices," he said.

"They are drip-feeding properties on to the market."

The Australian

"Meanwhile recent investor confidence has buoyed Brisbane's luxury apartment market, according to analysts."

"Development group Pradella has sold 73 per cent of the 54 apartments off the plan at West End development Waters Edge."

Brisbane Times

"However, the forces affecting Brisbane are similar to Melbourne but the Gold Coast has an apartment oversupply. Both Melbourne and Brisbane are feeding on the fact that Sydney dwellings are just too expensive and the shortage is making the situation worse."

Business Spectator

Terry Ryder, a real estate commentator, had an interesting article in The Australian on Thursday about investing in Noosa.

"The apartment market has done even worse, delivering growth averaging less than 2 per cent a year. The median unit price for the Noosa region today is lower than four years ago.  This kind of subnormal performance is common among popular seachange locations -- contrary to the widely held belief that the Gold Coast and Byron Bay are great places to invest in real estate. They may be lovely places to live but that's a different matter. Investors want an affordable entry price, good income returns and high capital growth -- and they're unlikely to find any of the above in these markets."

"Instead, many prefer the cheaper priced units and apartments, which also often are closer to the CBD. The affordability is especially a growing factor this year, as that section of the market has become the dominant force in the property market. ...  With the growing market share, units have also shown a stronger capital growth than houses in nearly every capital of the country. In Sydney, Brisbane and Canberra, units showed positive 12 month growth in median value up to February this year, compared to negative growth for house median values. ...
Another key is to make sure there is a parking spot included, something that can make a huge difference in demand, especially if the unit is in an area with few street parking opportunities. “No matter where you buy an apartment, never ever buy it without allocated parking,” says Wakelin.

What not to buy

There are, however, areas where demand is not so strong. For one, stay away from high-rise apartments, particularly in areas of overdevelopment such as the Gold Coast, the Sydney CBD or the Docklands in Melbourne, say experts.

“We find for investment purposes, high-rise apartments do not work,” says Wakelin. “They are very generic, so there’s little scarcity value with them.” Ryder agrees, saying investors should not be swayed by the magnificent views from atop beachfront high-rises in the Gold Coast. Investors should remember they won’t be living in these properties, and in the long run, they don’t show as much capital growth.

“There’s a lot of glamour in buying a high rise, but history shows it’s generally a poor investment,” says Ryder. “Put aside the emotions, and just look at the sums. You’re better off not buying something with an ocean view like in Surfer’s Paradise.”

He also says buying a used apartment is better than buying a brand new one.

“There’s a huge price differential with a new product and equivalent second-hand product,” says Ryder. “That’s simply because the cost of development is so high. The research shows there’s commonly a price difference between 30-40% between new and old apartments.”

That ultimately means for an investor that it’s harder to get capital growth out of a newer product. It might look nicer, but it will cost you in the long run. There’s also little scarcity in some areas for new product, such as the Gold Coast, where new apartments have been built without abandon. And once its no longer new, you actually lose that tag and that value.

“There’s a lot of risk in committing to buy something now and paying two years later, whereas the market can go in the wrong direction in that time,” says Ryder. “Plus developers tend to build that (expected value growth) into today’s prices these days.”

REA

On the Gold Coast, there were 79 new unit sales in the three months to May 2009, compared with just 49 the previous quarter. But it is a long way from the boom times of 2007 when 369 new units sold in the August quarter.  The latest Midwood Queensland Investment Report says at current take-up rates there is more than four years' supply of new unit stock.  In the past three months, nearly half of the new unit sales were in Meriton's Brighton on Broadwater project.

Midwood report author Bill Morris said most of these deals were in the sub $500,000 range, where the market was fairly steady.

Median price data from the Real Estate Institute of Queensland released yesterday reveals no change in the median price for units in the Gold Coast local government area.

The median of $345,000 for the March quarter is 3.4 per cent down on the previous year.

Real Estate Institute of Queensland chief executive officer Peter McGrath said price discounting had helped bring buyers back into the market at the upper end.  "We've seen some receiver sales where people who bought a unit off the plan for $2.5 million, being sold for $1.6-$1.7 million," Mr McGrath said.

"Units that had previously been selling for $900,000 were getting $750,000."

In Brisbane, the unit market also is showing signs of improvement despite the median price for the Brisbane statistical division dropping 1.4 per cent over the quarter to $345,000.  Over the year, the median has increased by 2.6 per cent.

There were 28 unconditional new apartment sales in Brisbane during the May 2009 quarter, the highest number since February last year.  For the past 18 months, new unit sales have averaged 13 every three months.

The median price for all unit deals in Brisbane city has fallen 4.3 per cent to $440,000 in the three months to March 2009. Over the previous 12 months the median increased 1 per cent to $450,000.

The Australian and GC

"THE last apartments in the Drift development at Casuarina will be up for grabs via a liquidation sale, after developer APH Properties announced a major sell-off of its final holdings in the project."

"On completion in 2010, the Casuarina community is expected to include 600 beach homes and 1500 apartments and villas, along with commercial and recreational facilities."

Source:  GC

Prices still seem high.  They are listed at $685,000 to $900,000 for a three bedroom apartment.

I will avoid this development and location! 

APH is the developer who is trying to get Trilogy Towers off the ground - so maybe they need cash to proceed with Trilogy?  The sales agent said that APH had finance, and would start work in February this year, but clearly that was not the case.