Inner-Brisbane apartment sales surge as rents rise and investors seize opportunity: Midwood

Inner-Brisbane new apartment sales almost doubled over the August 2012 quarter, with projects associated with developer David Devine proving far and away the most popular, according to the latest Midwood Report.

The Midwood Report recorded 363 apartment sales over the three months to August, compared with 192 recorded over the corresponding period last year.

The majority were high-rise sales, which increased from 133 to 316 quarter-on-quarter, with the August 2012 quarter recording the largest number of high-rise sales since May 2005

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Source: Midwood Report

According to report author Bill Morris, sales were mostly to overseas investors, “indicating that prices have finally reached the point which neutralises the effect of the high Australian dollar”.

The report also notes that Brisbane rents have been rising at 8.1% per annum over the past five years to August 2011, outpacing median household income, which has risen by only 4.5% per annum over the same period.

“These rent increases are unprecedented in Australia and indicate a critical shortage of investment properties. This reflects both the limitations on lending for property development and the statutory processes and costs of development, which now virtually eliminate small developers from the market,” says Morris.

The top-selling project over the quarter was Metro Property Development’s Plaza project (pictured above) in South Brisbane, which recorded 113 sales over the quarter, with apartments priced from $413,000 for a one-bedroom unit rising to $562,000 for a two-bedroom, two-bathroom unit.

Metro was co-founded by David Devine and Ken Woodley.

The Plaza project was designed by architects Deicke Richards and includes 168 apartments over 12 levels with a total end value of $80 million.

Jon Rivera, associate director at property consultants Urbis, says South Brisbane appealed to both owner-occupiers and investors due to its solid infrastructure, “high rental yield for landlords and a great lifestyle for those who live there”.

“On average the rentals in South Brisbane are achieving a rental premium of approximately between 20% to 30% above inner-city Brisbane rentals. This indicates the strong demand for accommodation in the suburb and more specifically the shortage of residential supply, which may be pushing rental rates,” he says.

off-the-plan marketing of the Plaza project began in August, with construction due to begin next month.

 


The second and third-best selling projects were also Metro projects.

Brooklyn on Brookes in Fortitude Valley, which is now under construction at the corner of Ann and Brookes streets, managed 84 sales, with 216 out of the 260 apartments available now sold.

One-bedroom units in the project sold starting from $418,000 rising to $588,500 for a two-bedroom, two bathroom unit measuring 75 square metres.

Metro’s Madison Heights project (pictured above) on Campbell Street in Bowen Hills recorded 55 sales over the quarter, with prices starting from $346,000 for a one-bedroom unit rising to $556,000 for a two-bedroom, two-bathroom unit

Morris says the price point is around $7,000 per square metre for small units sized between 55 to 70 square metres. The mix comprises one-bedroom, one-bathroom units or two-bedders.

Metro sold 84% (165 out of 195 apartments) of apartments in its New York-style Chelsea development in Bowen Hills to investors, with 90% of these apartments having secured tenants.

The project was developed in conjunction with Indian-based Pearls Australasia.

“Rental vacancies in Brisbane’s inner city are currently very limited,” notes David Devine. 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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