Heavily discounted Hilton Surfers Paradise the only notable Gold Coast high-rise seller in November quarter: Midwood

The Gold Coast apartment market remains deeply troubled with developers reporting only 19 high-rise apartment sales over the November quarter, a 70% plunge from sales figure a year ago, according to the latest Midwood Report.

Quarterly sales figures were more than double the paltry eight sales recorded in the August quarter, but just a fraction of the 73 sales recorded in November quarter of 2011.

In total there are 705 high-rise apartments available for purchase on the Gold Coast, which at current sales rates would take close to a decade to clear.

The Midwood report classifies high-rise sales as those developments of 40 storeys and higher.

All but three of the sales over the quarter were in the Brookfield Multiplex-constructed $700 million Hilton Surfers Paradise (pictured below), following prices being reduced by up to a third.

There were no sales reported in the two other major high-rise apartments – Niecon’s Oracle and Juniper’s Soul, both of which are in the hands of receivers.

The Midwood report records just 45 total unit sales on the Gold Coast over the November quarter, compared with 107 in the corresponding quarter last year.

Putting this in context, there were 386 apartment sales recorded in Brisbane over the same period, more than three times more than the 110 apartments sold a year ago.

In the Hilton, prices ranged from $495,000 for a two-bedroom, one-bathroom apartment over 76 square metres to $1.63 million for a two-bedroom, two bath apartment over 118 square metres.

According to 360 Project Marketing, which is marketing the Hilton apartments, buyers have snapped up more than $15 million in apartments during the past three months, following a recent reduction in prices of up to 34%.

Marketing director Trent Milburn of 360 Project  says the new price tags have stimulated buyer activity across the board.

The project also has Foreign Investment Review Board (FIRB) approval, and Milburn says many of the buyers have come from south-east Asia.

“A month ago a foreign buyer could have purchased an apartment in the development for under $500,000, two months ago they could have bought for under $450,000 – now we’re at $525,000 and headed for $600,000.

Since January, 65 apartments have sold at prices between $435,000 and $2.3 million, with the final sub-penthouse currently on the market for $3.45 million.

Out of the 410 apartments across the Boulevard and Orchid towers in the Hilton development, 134 remain up for sale.

Midwood reports two sales – one each in the Oceana and Solitaire Towers – as part of the Element Burleigh Beach project being developed by Amalgamated Property Group and marketed by CBRE, which is nearly sold out.

A further sale was recorded at Southport Central III, the Lindaning Pty Ltd/Colliers International development in the hands of receivers, with 87 out of 258 units still available for sale.

Report author Bill Morris notes that high-rise sales “continue to be sluggish”, with only the Brookfield Multiplex/360 Project marketing Hilton recording a reasonable volume, having re-introduced 109 apartments when contracts had fallen over, and discounted them by 30%.

“Oracle and Soul are only recently in receivership and the liquidators have yet to mount a solid marketing campaign and price list,” says Morris.

Morris notes that a new project, Broadbeach Central has been announced by Amalgamated Property Group and Morris Property Group on Main Street Broadbeach, however off-the-plan sales have yet to commence.

There was little for investors to cheer about either with rents unchanged across both units and houses.

Median weekly rents for one-bedroom apartments are unchanged from two years at $290 while the median two-bedroom apartment rent is up slightly from $340 in 2010 to $350 currently.

The Gold Coast market has been hit by both a slowdown in interstate and overseas migration into Queensland over the last few years with regional population growth slowing from 3.4% in 2001 to 2.1% in 2011.

Overseas migration numbers have nearly halved from around 60,000 per year in 2008-09 to just over 30,000 in 2010-11 while interstate migration has fallen from around 27,000 in 2007-08 to less than 10,000 in 2010-11.

The Midwood report notes that he recent downturn in Queensland net overseas migration is clearly a result of the lack of employment opportunity.

“With Queensland’s two biggest employers, construction and hospitality industries in the worst position we have seen since pre-GFC, migrants are choosing to settle elsewhere,” says the Midwood report.

The Midwood report shows that the number of apartments approved for development increased over the six months to June 2012 from 450 to 490, but numbers have been trending down since the GFC, when there were more than 1,800 apartments approved in the second half of 2007.