The Block apartments were right on target for South Yarra prices: Nicole Jacobs
GUEST OBSERVATION
There has been quite a deal of commentary on the prices achieved for these properties and it’s important to understand why.
Those who know the South Yarra property market know that you cannot buy a 180sqm four level townhouse with double garage and cellar for $8,000/sqm. If you have one, then call us now as we have buyers!
We knew very early on these apartments were unique to South Yarra. There is nothing else on the market currently that compares. To buy under $11,000/sqm (apartment 2), under $12,000 (apartment 3) and under $13,000/sqm (apartment 4 and 1) you are buying very well in this prestigious suburb. This does not not even include the square meterage for the double gargae, cellars and storage!!
Jacobs Buyer Advocates are on record publishing a guide four weeks before the auction that the prices would be between $2m and $2.5m with strong competition, so we were not surprised, and neither were our buyers.
Experienced bidders at The Block auctions know that the bidding is fast. It is not like most Melbourne auctions being held every weekend where you can hear the birds chirping because everyone is ‘waiting for someone else to bid first’.
There are always hopefuls in the crowd wanting a bargain or to promote their company who never bid (year after year) or bid $1,000, not to slow the auction down but to get their faces on television.
The auctioneer for Josh and Charlotte, David Wood of Hocking Stuart is an experienced selling agent and auctioneer who is right when he said “ the properties were sandwiched in style between an apartment and a house, and that was a rarity for the suburb that boosted their appeal.
“The Block apartments brought something really special to the marketplace that the South Yarra market hasn’t seen for some time,” he said.
He went on to say, “I think they are a true representation of their worth in the marketplace today.”
The so-called ‘surprised buyers’ that were squeezed out of the market on the night would not have had this opinion had they read our free comprehensive report. We had enquiries at the lower levels however knew from our comparative sales data this would not mean they would be successful on auction night.
A buyer advocate is there to represent their buyers’ best interest. When you know the market facts and can confidently give this knowledge to your buyers they are being represented with integrity and authenticity.
Owner-occupiers are always going to be more emotionally invested when buying a property as opposed to investors who are largely focused on potential for capital growth, possible depreciation and rental return. The return for owner-occupiers who are going to live there for 10 or 20 years is not measured in these terms.
In deciding the value of any property, you first have to look at what the value of the land and the improved value of the property is. In this case, the property was initially purchased for $5.7m. Add stamp duties and legal costs and you’re already at approximately $6m.
Even with a conservative estimate of $300,000 of renovation costs per apartment, plus the $100,000+ of furniture and fittings and that adds another $1.6m to a total of $7.6m. Add a builder’s margin of 10% for holding costs, council, architect and engineering fees, and you’re now at over $8m for the 4 apartments which already values them at over $2m each before a profit is made.
The reserves added up to the cost of buying the property plus stamp duties and the owner (in this case Watercress Productions) decided that any profits, including renovation costs made thereafter would be given to the contestants for their effort.
The reserves are relevant only in context of the contestants’ profit. The market (usually two competing buyers) always determines the value of any property. There’s no such thing as above market prices, it just means that the market has moved on or values that specific property highly.
Nicole Jacobs is director of Jacobs Buyer Advocates and a judge on The Block: Triple Threat.
