High body corporate fees slow Gold Coast apartment investment

Investors in the coastal north area on Queensland's Gold Coast are moderately to highly active, with the typical investor appearing to be mainly international using local builders and smaller project developers, according to valuation firm Herron Todd White's month in review.

The November report suggested investor activity in the central high density beachside locations has traditionally been driven by both local and non local investors.

The report added that in central Surfers Paradise, investor activity is steady to strong with the sub $500,000 price point seeing the most activity.

However, high body corporate fees and property outgoings are deterring investors said the report.

"For example Unit 26, The President, at 29 Northcliffe Terrace, Surfers Paradise sold in May 2015 for $358,000. 

"This is a circa 1973, 2-bedroom, 1-bathroom unit of 86 square metres. It is an absolute beachfront development comprising 30 units on a parent site of 1,533 square metres." 

The report noted that the agent had said that due to the high underlying land value, rates were circa $5,000 per annum plus the body corporate fees of approximately $150 per week made the unit unviable for many potential investors.

The HTW November review then went on to add that new residential stock which fits criteria for Foreign Investment Review consideration and approval seems to be appealing overall to asian investors on Hope Island, as this location is pre-approved for Foreign Investment Review.

"Lately we are seeing an increased amount of non local and particularly Asian investors, who are prevalent on new product."

It went on to suggest the general housing stock in and around the Southport CBD and spreading into Labrador and Ashmore are also appealing to these investors.

"Investors are looking for larger dwellings on larger parcels with Residential Choice classification that can be split for higher density development such as duplex and triplex development.

"The most intense demand however appears to be for residential estates close to the Southport CBD or highly regarded established precincts such as The Southport School (‘TSS’) location and areas with Broadwater proximity.

"Investor activity away from the beach side locations is stronger than previously, with villas and townhouses in larger cluster unit developments in the more outlying suburbs having seen some increase in price levels from low to mid $200,000s up to high $200,000s," the report adds.

"Local owner occupier buyers are competing with local and interstate investors in these outlying suburbs for freestanding houses.

"Pacific Pines which was developed through the 1990s and 2000 has seen healthy increases in price levels over the past 18 months with entry level now circa $380,000.

"This locality is well serviced for schools, shopping and transport, appealing to both investors and owner occupiers alike."

The report goes on to note that general sales for duplex and triplex parcels reflect values of $190,000 to $240,000 per dwelling site in the Southport CBD area.

"In more prestigious areas such as Paradise Point this range is running at $275,000 to $325,000 per dwelling site.

"Interstate buyers are purchasing new units, however, typically at levels above local market price points.

"Student accommodation has slowed with a recent and apparent slight drop in values. We have not seen any activity on flats, however these are perhaps more tightly held.

"Despite recent rate rises signalled by Westpac which may affect the larger city markets, values on the Gold Coast are still comparatively low and appealing to interstate and foreign buyers. There is still room to improve as Gold Coast was hit very hard after the GFC."