Credit to original source: Realestate.com.au
DEMAND for yet-to-be-built homes in Brisbane has skyrocketed, with buyers still willing to fork out millions to buy apartments off-the-plan despite the coronavirus crisis.
Inquiries for units in new developments have jumped 82 per cent in the past month, compared with the same time last year, while interest in buying houses off plan is up more than 28 per cent, according to new research by the property website Realestate.com.au.
Real estate agents are also reporting increased interest and big sales in yet-to-be-built apartment projects in recent weeks.
Place Estate Agents Kangaroo Point director Simon Caulfield said he thought one of the reasons for the spike was the delay between the signing of a contract and settlement.
“The benefit (of buying off plan) is that you only have to put a 10 per cent deposit down now and in 12 to 18 months we’ll be well out of this situation,” Mr Caulfield said.
“I think that’s one of the motivations at the moment.”
Mr Caulfield has just sold off plan the penthouse in the ‘Thornton’ apartment development at 11 Thornton Street, which only launched a fortnight ago.
The deal, reportedly worth a whopping $7.5 million, includes the existing heritage house, while the other 12 full-floor apartments in the building are available for about $6 million each.
Mr Caulfield said there had also been strong interest in ‘Prominence’ at 128 River Terrace, Kangaroo Point, with one of the full-floor units selling off-the-plan for $3.65 million.
“The demand for this full-floor product is not just about luxury, it’s a lot to do with the fact that it’s all one level, no neighbours, 360-degree views,” he said.
“My last five off-the-plan buyers have come from large homes on big blocks, but the frontage of the apartment is bigger than their house.
This week Mr Caulfield sold another two apartments off-the-plan in ‘Monterey’ at 9 Lambert St, Kangaroo Point.
One was a three-bedroom apartment that fetched just over $1 million and the other was a four-bedroom, half-floor apartment, which sold for $2.27 million.
New research by MCG Quantity Surveyors also reveals a trend toward off-the-plan investments over existing property.
MCG managing director Mike Mortlock said that between April and December 2019, nearly 50 per cent of people surveyed had purchased a new home, rather than an existing one.
And in the same period, 71.5 per cent bought or built a new dwelling, compared to just 28.5 per cent who bought an established home.
“So new dwellings are certainly popular with investors,” Mr Mortlock said.
“We’re certainly seeing (investors) being much more beneficially treated by federal tax policy. People are much more incentivised from a tax appreciation point of view to buy new.
“Of course, there are the maintenance considerations that go into older properties as well, or it might mean project marketers are being more successful in their efforts.”
According to MCG’s 1000 Assets 2020 report, a four-year study of investor sentiment and behaviours, Queensland has also recorded a substantial drop in the average number of units per unit development project — down 17.32 per cent, which supports anecdotal evidence of a rise in full-floor apartment demand.
“I don’t think people want to live in massive developments,” Mr Mortlock said.
“Certainly you have the advantage of amenities, but there are also large strata fees and the difficulties of capital growth in large developments.
“The smart developers are moving to more boutique projects — you can see that in the floor sizes changing. We’re getting away from some of those student accommodation, shoe box style developments, which is a positive.
“I think there will be more demand for these quality apartments that are a bit bigger than normal.”
Mr Caulfield’s most successful off-the-plan apartment complex is ‘Walan’ at 2 Scott Street, Kangaroo Point, which launched in 2016 and features only full-floor residences.
He has recently negotiated four resales in the complex, with the vendors achieving a 10 to 15 per cent increase in price, which he said was “unheard of”.
Kristine and Greg Malone bought an apartment off-the-plan in ‘Walan’ and are now looking to resell the property at a profit.
The luxurious apartment at 4/2 Scott St, Kangaroo Point, has four bedrooms and three bathrooms, with stunning city views.
“For us, the decision (to buy off-the-plan) was made around location and the size and design of the apartment,” Mrs Malone said.
“It’s quite a boutique building, with only 14 residences — only one per floor — so that’s definitely what attracted us to it.”
Despite the stigma of some off-the-plan investments losing money, Mrs Malone said other resales in the building had been successful.
“We’ve been really happy with the other sales that have been achieved in the building so that’s been pleasing to see,” she said.
Realestate.com.au chief economist Nerida Conisbee said conditions in the development industry were “extremely tough” this time last year, with the banking royal commission and uncertainty surrounding the federal election.
“Since the Coalition’s win, buyer confidence has roared back and we saw a number of new developments kick off in Brisbane,” Ms Conisbee said.
“With COVID-19, we’re now faced with uncertainty in the market and buyers are becoming more cautious for the time being.”