Alex Perry development and others all the fashion in Fortitude Valley

Alex Perry development and others all the fashion in Fortitude Valley
Alex Perry development and others all the fashion in Fortitude Valley

Construction of the 11-storey Alex Perry-designed apartment block in Fortitude Valley is due to begin in January next year as a record number of inner-city Brisbane developments look to sell enough units off the plan to convince lenders to finance their construction.

A spokesman for the Perry project says developer Chrome Property Group is in final negotiations with the builder and says the development “on course”.

While reluctant to reveal exact numbers, he says the first “chunk” of apartments was sold to investors from Sydney who attended the June launch. Inquiries have come from as far afield as Romania.

The 131-apartment development (pictured above) is expected to have an end value of $75 million, with one-bedroom apartments selling in the high $300,000s and two-bedroom units selling around the $550,000 mark.

Construction of another development, the 20-storey Belise at 510 St Paul’s Terrace (pictured above), is due to commence in the second quarter of next year.

The project comprises 199 apartments.

A spokesperson for this development told Property Observer about 50 had been sold off the plan since launching in October last year.

“We have just had our first interstate buyer from Perth, and we have also had one Chinese buyer,” he says.

Laing O’Rourke’s $250 million M&A project (pictured above), which is currently under construction on McLachlan, Connor and Ann streets in Fortitude Valley, has sold more than 65% of the 234 one- and two-bedroom apartments. 

Another development under construction, Leighton’s 18-storey Mosaic project (pictured above) on East, Church and Ann streets had sold roughly half of its 212 apartments by the end of March and is due for completion by late 2012. 

The first four levels are due become serviced apartments or a boutique hotel. 

Other projects at the development stage include a number of approved projects by Metro Property Group, including the Brooklyn on Brookes development at 116 Brookes Street, which will consist of 191 apartments over 14 levels.

According to Troy Linnane, national director of valuation and consultancy at Colliers, financiers require a significant number of pre-sales to fund developments.

This could prove something of a challenge for the more than dozen other developments

Colliers has forecast 1,800 apartments to come up for sale in the inner Brisbane market over the next 12 months with a further 4,500 due to be released in 2013.

Currently Colliers estimates the annual take-up of apartments in the inner Brisbane market at around 1,200 with around 60% of the sales in the inner north market which includes Fortitude Valley, Bowen Hills, Newstead, Tenerife and Hamilton.

Linnane says developers are “pushed” at the moment when it comes to selling off the plan and for all the proposed projects to go ahead will require interest from interstate and overseas investors.

Another challenge for developers, according Linnane, is the similarity of the developments – they’re all mainly one- and two-bedroom units, he says.

In the inner-north Brisbane market, there were 108 sales from 20 projects during the first quarter from a total stock of over 1,200 apartments, according to the most recent Colliers report on the Brisbane apartment market.

While investor demand is continuing to underpin transaction volumes in the inner-city market, “especially for price-pointed, affordable stock generating strong rental income”, Collier warns that the market “may be adversely impacted by rising interest rates and increasing vacancy in the medium term”.

Sales volumes for new apartments declined for the second consecutive quarter during the three months to March 2011, though volumes are stabilising when compared against a moving annual average.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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