Post a Comment On: Brisbane Apartment

On 10 March, the AFR reported that there will be a "very messy end" to the apartment boom.  See AFR story here.  It says:

""In Melbourne the oversupply will be significant, in Brisbane it will be worse. It is an accident waiting to happen," said BIS-Shrapnel managing director Robert Mellor at the group's six-monthly Building Forecasting Conference."

Has the end already started?

Let's look at a recent apartment project in Brisbane, that recently completed -- The Milton at 55 Railway Terrace, Milton.  Some examples of the disaster there:
Apartment 1302 is listed for sale for 10% below in the initial price, at $365,000.  For a one bedroom apartment, looking West, which has a 55 sqm internal floor space, and a main bedroom that is only 3m by 3m, and no car space, $365,000 is expensive.  Rent is estimated by the selling agent to be $450 to $460 per week unfurnished, which seems to be optimistic. Apartment 2901 - one bedroom, is not even listed at a price -- "make an offer" Apartment 2709, which is four bedrooms, if it sells at all, will sell for a huge amount less than the current owner has paid Apartment 2005 is listed at $1.1M, which is very high for a 3 bedroom apartment in Brisbane that is only 123 sqm -- you can buy luxury two bedroom apartments elsewhere that are this size and at a lower price, and it only has a narrow tandem carpark Apartment 2311, is not listed with a price Apt 2609 is two bedrooms, "bring me offers" Apartment 3008, a top floor two bedroom, 91 sqm in total, is listed unpriced Apartment 3009, also a top floor two bedroom, is listed for $849,000 -- are they dreaming? Apartment 2511, 2 bedrooms, listed at $659,000 is said to be under offer Apartment 2007, 1 bedroom, is listed at $490,000 Apt 502, 2 bedroom, 74 sqm internal, is listed at $499,000 The list goes on. The onsite agents, Mint Residential, have a large number of apartments for rent.  And so do offsite agents.  The following are rent ranges, depending on floor, car parking etc: 3 bedrooms, from $650 per week to $800 per week 2 bedrooms, from $570 per week to $720 per week 1 bedrooms, from $370 per week to $490 per week A fully furnished two bedroom is listed at $640 per week Some apartments have 4 weeks free rent, which (for example) in effect reduces the rent per week of a $500 a week apartment to $460 a week over a yearly lease. The Milton won my award for the wildest advertising claims of 2010.  See this prior post.  In that post, I said:  "They have a sheet of paper showing investment returns for a 2 bed, 1 bath apartment listed at $650,000. The prediction is that this apartment will be worth $807,500 on completion of the project in 2013, and will be worth over $1M by 2016. The predicted rent is over $720 a week in 2013."
As can be seen from the above, this was in fact wildly inaccurate.  
The Milton has a host of problems, not simply that it was sold for prices that are way above market price.  The development is on a train line, with half the apartments looking west and close to a brewery.  The river views are distant, and will be blocked by construction of apartments in front.  Body corporate for a 2 bedroom is about $4,800 a year.  See comments in prior posts.  It is very dangerous buying off the plan in Brisbane.
Compare the above to a 2 bedroom, 2 bathroom, 1 car apartment, 106 sqm, with direct river views, for $700,000.
If The Milton is representative, then we are in for a very rough ride.
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