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- Sep 6 2015 at 4:42 PM
- Updated Sep 7 2015 at 9:38 AM
Developers want to roll back Victoria's sudden 'broad-brush' planning curbs
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[img=620x0]http://www.afr.com/content/dam/images/g/j/g/6/8/v/image.related.afrArticleLead.620x350.gjg202.png/1441582708492.jpg[/img]Cutting the long shadow of developments: Developer lobby group UDIA has criticised the Victorian government move to cut density of permitted CBD projects. Georgia Metaxas
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by Michael Bleby
Victoria's overnight imposition of building controls risks curbing a construction boom in which apartments have outstripped stand-alone houses, developers say.
Planning Minister Richard Wynne's decision to place interim density controls on Saturday drew a heated response from a development industry stung by the unheralded move.
"Swift, uncanvassed action such as that taken overnight by the Planning Minister serves only one purpose – to undermine investor confidence, which can only lead to reduced activity," said Danni Addison, Victorian chief executive of the Urban Development Institute.
"The Andrews government is kidding itself if it believes that severe and unexpected actions such as this will have no impact."
The change imposes an immediate plot ratio of 24:1 - limiting the floor space created by any development to 24 times the size of its site footprint - over the CBD and parts of neighbouring Southbank. It cuts the potential yield of development schemes well below levels that have risen as high as 65:1 in recent years.
Not all developers were as scathing as the lobby group. It was "a bit too early" to say the interim measures – subject to a 12-month consultation – would cut investment, said Grocon head of development Dan McLennan, who also cautioned against "kneejerking" against them.
A "broad-brush" tool such as plot ratio alone wouldn't prevent bad projects and the state should consider a NSW-style requirement for developments above a certain value to hold design competitions, forcing developers to consider a range of ideas for their projects, Mr McLennan said.
"One of the more concerning trends I see in the CBD of Melbourne would be the concentration of design within certain firms, as opposed to a broad spectrum of architects in developing the look and feel of the city," Mr McLennan said.
"The best architects we've worked with have been the ones who really challenge you as opposed to the ones who simply draw the lines where you want them to. In the cut and thrust it's frustrating, but you look back at the end product and you see the benefit."
Mr Wynne defended the moves on Sunday.
"Developers wanting to max out sites with little regard for the public realm may be put off with the changes but architects, developers and asset owners with long-term interests should appreciate how strategic CBD planning will maintain values and the city's integrity," he said.
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- Sep 25 2015 at 4:16 PM
- Updated Sep 25 2015 at 5:15 PM
'Don't buy a Melbourne apartment off the plan' says burnt buyer
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[img=620x0]http://www.afr.com/content/dam/images/g/j/s/1/0/l/image.related.afrArticleLead.620x350.gjs04w.png/1443165304263.jpg[/img]Joan Carville, in front of Vogue Apartments, where she lost $51,000 when she failed to settle her off-the-plan contract. Josh Robenstone
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by Larry Schlesinger
Standing defiantly in front of the South Yarra apartment development that cost her $51,000, Joan Carville has a simple message for her fellow property investors: Don't buy a Melbourne apartment off the plan.
Carville, a working mother of two in her late fifties, learned the hard way about the dangers of buying in Melbourne's inner city apartment market, where cries of "over-supply" continue to reverberate.
In 2011, she lost her entire $37,000 deposit and racked up more than $14,000 in legal fees after failing to settle on a tiny $375,000 studio apartment. She had bought the unit off the plan two years earlier, on the advice of her financial adviser, but fell foul of unforseen changes to lending rules.
"Buying off the plan is very risky. Your circumstances can shift and change, but when it comes to settle, there is no wiggle room to negotiate," she told the Australian Financial Review.
With a glut of apartments hitting the Melbourne market over the next few years – 21,000 were approved in the past 12 months – and lenders once again tightening up their lending to investors to meet APRA requirements that annual investor lending growth be no more than 10 per cent, more investors risk not being able to settle their contracts, a point highlighted by Westpac chief economist Bill Evans in a speech in Sydney this week.
"The issues about pre-sales is a real worry," Evans said. "Someone commits to a pre-sale and in two years they go to the bank and say, 'Can I have my money now?' and the bank has no obligation to give them the money."
Phillip Almeida, a director at investment firm Performance Property Advisory (PPA), who advised Carville to cut her losses in Melbourne and invest elsewhere, said the firm was currently advising many other clients – unable to settle due to valuations coming in 10 and 15 per cent lower than purchase prices or because of the tighter lending rules – to forfeit their deposits and buy elsewhere.
"A number of clients have been referred to us but unfortunately it's mostly after they have signed contracts. These contracts are prepared by high-end law firms and are very difficult to get out of," Almeida said.
Carville ran into trouble after her mortgage lender, a big four bank, changed its rules on financing apartments under 40 square metres. The bank wrote to tell her she would need to pay a 20 per cent deposit rather than the 10 per cent she had put down.
Unable to raise the additional $37,500, she said tried unsuccessfully to negotiate with the developer, Ryssal Three, owned by the wealthy Stamoulis family.
"The developer would not negotiate.They sent me a threatening legal letter telling me to settle. I felt bullied."
On the advice of Philip Almeida, she bore the heavy financial loss, dusted herself off and regrouped.
In 2013, she bought an apartment in a small art deco block in Bellevue Hill, Sydney, where she has benefited from the surge in values in the Sydney market. Her apartment, which she bought for $550,000 and rents out at $550 a week, is now worth more than $700,000.
But, she hasn't forgotten the lessons of her off the plan Melbourne disaster: "I have talked so many people out of buying off the plan, many the same age as me, but also the friends of my children."
Her advice: Be smart, do your own really thorough investigations and make sure your financial adviser is not taking kick-backs.
The Financial Review contacted the Stamoulis Property Group for comment, but they did not respond.
Ashley Williams, director of Evolve Development and a board member of the UDIA Victoria, defended the right of developers to keep the deposit if a buyer failed to settle.
"There are genuine costs for a developer if they have to resell an apartment and if buyers pulled out of their contracts en masse because of a change of sentiment – as happened on the Gold Coast post GFC – the consequences for the developer could be dire," Mr Williams said.
A spokesman for Consumer Affairs Victoria said if buyers want to end a contract because they have changed their mind, they would likely to lose their deposit.
"Buyers should exercise caution when buying off the plan, and seek legal advice before they sign a contract of sale. They need to make sure they understand the terms of the contract before agreeing to purchase a property," he said.
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New planning rules to boost Melbourne's university precinct
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[img=620x0]http://www.afr.com/content/dam/images/g/k/4/8/3/q/image.related.afrArticleLead.620x350.gk43xh.png/1444309388615.jpg[/img]An artist's impression of the University of Melbourne's new sustainability and innovation hub, Carlton Connect.
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by Nick Lenaghan
Melbourne's bustling university and bioscience precinct, just to the north of central city, will get a boost with new planning rules that raise height limits and allow medium-density development.
The rezoning, approved by Planning Minister Richard Wynne, covers 130 hectares of the inner city from Carlton to Parkville.
The area, just a short tram ride from the CBD, is home to the University of Melbourne and a number of hospitals and research facilities in the bioscience sector.
RMIT University is nearby, along with a growing sector student accommodation sector.
The University of Melbourne's "Carlton Connect" proposal, an sustainability and innovation hub that is to be redeveloped on the former Royal Women's Hospital site, will be among the first projects to benefit from the planning changes.
The rule changes also pave the way for development around a future underground train station at Parkville. While the station is still on the drawing board it forms a key link in the state government's plan for a new metro inner-city rail link in the city's north.
Through a series of planning scheme amendments areas north of the CBD will be brought within the capital city zoning and given varied preferred height limits up to 60 metres.
The changes will also ensure protection for the historic residential areas in Carlton and Parkville, according to Mr Wynne.
"These plans give certainty and preserve the look and feel of Carlton, because there is clear definition between the densely developed areas south of Victoria Street to medium-rise buildings around Melbourne University and the residential areas of Carlton and Parkville further north," the minister said.
University of Melbourne vice-chancellor Glyn Davis welcomed the rezoning, with his institution now in the middle of several knowledge precincts, ranging from biomedical research and to public policy groups.
"Everything we want to achieve in these precincts is around partnership and impact, to really add value to what industry and government are doing," Professor Davis said.
"We truly want to be a public spirited and engaged university, and this decision will help us meet this goal."
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UEM Sunrise gets moving on Melbourne CBD's tallest apartment tower
Giant Malaysian sovereign developer UEM Sunrise has few concerns over settlement risk as it launched construction of the 92-storey Aurora Melbourne Central.
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[img=620x0]http://www.afr.com/content/dam/images/g/k/e/n/g/f/image.related.afrArticleLead.620x350.gkcj90.png/1445420991284.jpg[/img]An artist's impression of Aurora Melbourne Central, a residential development by UEM Sunrise which will be complete late 2019. Supplied
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by Nick Lenaghan
Giant Malaysian sovereign developer UEM Sunrise has few concerns over settlement risk as it launched construction of the tallest residential apartment tower in the Melbourne CBD.
The $770 million, 92-storey Aurora Melbourne Central, with 941 apartments and 250 serviced apartments, will not be finally complete until late 2019.
Before then owners of lower level units will be able to take up residence, even as concrete is being poured on the higher level.
UEM Sunrise managing director Anwar Syahrin Abdul Ajib, played down the prospect of buyers failing to settle, pointing to the considerable diversification by country of Aurora's buyers.
Around 70 per cent of the buyers are from offshore, including China, Singapore, Malaysia, Brunei and Europe.
"That gives us comfort," he said. "We have that risk, yes, but it is within manageable levels."
Also mitigating settlement risk is the fact that foreign buyers usually borrow on significantly lower loan-to-value ratios than their typically highly leveraged Australian counterparts.
Foreign buyers usually have the capacity to pay in full by cash but employ some debt for tax purposes, he said.
This month the Reserve Bank of Australia sounded its strongest warning yet on the potential for over-supply in some apartment markets, including Melbourne.
SETTLEMENT RISKS
The central bank warned about the prospect of price drops and subsequent settlement risk as buyers of off-the-plan apartments were forced to tip in more of their own cash.
The prospect of settlement risk has become a hot topic among developers and bankers as lenders further tighten borrowing criteria.
Last week Lend Lease chief Steve McCann confronted the issue directly,pointing to his group's strong pre-sales and solid margins.
Thomson Geer property lawyer Eu Ming Lim, who is acting for UEM Sunrise on the Aurora project, said the settlement risk associated with overseas buyers had been overstated.
"A significant portion of good-quality overseas purchasers would provide personal funds for settlement with the balance coming from the local Australian banks," he said.
"The reality would appear to be that purchasers are usually able to provide all personal funds if required, or alternatively contribute additional equity even if there was a shortfall."
AMBITIOUS SCALE
Addressing the launch event, architect Callum Fraser, of Elenberg Fraser, acknowledged the scale of the project, whose unique design has been modelled on Malaysia's national flower, the hibiscus.
"I've never been so terrified in my life heading to market with 1000 apartments," Mr Fraser quipped.
Aurora, to be constructed by Probuild, is already sold out while a second 446-apartment project, Conservatory, also in the CBD has has sold around 70 per cent so far.
UEM Sunrise is now turning its mind to a residential conversion of the former police complex on St Kilda Road and will consider other opportunities, including the mooted the White Bay redevelopment in Sydney.
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Melbourne land sales peak, but lot prices unchanged at $211,000 median
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[img=620x0]http://www.afr.com/content/dam/images/g/j/8/u/9/0/image.related.afrArticleLead.620x350.gku6m3.png/1447054818386.jpg[/img]New home sales in Melbourne are surging to new heights Wayne Taylor
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by Larry Schlesinger
Sales of new housing lots in Melbourne's outer suburbs surged to their highest levels on record in the September quarter with almost 1900 lots sold per month, according to the latest National Land Survey Program update.
Sales over the quarter were 25 per cent higher than the last peak in late 2009, when demand was brought forward by the $30,000 in first home owner incentives on offer at the time.
Despite the surge in sales, which lifted Melbourne's share of the national greenfield market to more than one-in-three land sales, median lot prices remained flat as developers flooded the market with a record 5419 new lots, according to the NLSP, prepared by Research4 and Charter Keck Cramer and released on Tuesday by the Urban Development Institute of Australia.
The median Melbourne lot price was $211,000 over the quarter – still four per cent cheaper than the previous peak in 2010 – and $250,000 cheaper than metro Sydney lot prices, $40,000 below Perth lot prices and $50,000 less expensive than South East Queensland lots.
[img=620x0]http://www.afr.com/content/dam/images/g/k/u/n/m/w/image.imgtype.afrArticleInline.620x0.png/1447053764997.png[/img]AFR Graphics
On a per square metre basis, the average price of Melbourne land ($493 a sq m), is less than half of that of Sydney ($1022 a sq m).
HIGH VOLUMES BENEFIT
Victorian president of the UDIA, David Payes, said that in terms of pricing, Melbourne had benefited from the high volumes of lots released and competition between developers due the release of numerous Precinct Structure Plans (master plans allowing development in new suburbs) by the previous government.
"While in the short term competition between projects will subdue any future price growth, the medium and long-term price growth increases are likely to be greater if the trend of sales outstripping lot production is not redressed," said Mr Payes, who is also the managing director of developer Intrapac.
Despite the surge in new lot releases, the amount of unsold lots or "overhang" fell by 15 per cent to its lowest level since 2010.
According to the NLSP, sales volumes have now peaked and will start moderating as production capacity becomes affected by construction industry constraints, lower investor appetite and slowing building approvals.
Last month, Victoria's biggest private land developer, Villawood said it would begin marketing of its latest Melbourne project, Waratah in December, two years ahead of schedule, to satisfy the demand for new housing on the fringes.
"We're getting more buyers from Sydney because Melbourne land is half the price," said Villawood executive director Tony Johnson.
Andrew Perkins, research manager for residential developments marketing company Red23, said developers were pushing volume over price growth.
"Developers need to be careful that sales volumes are being strongly underpinned by investment sales networks," he said.
According to Red23, the median sale price for lots across all Melbourne growth areas in September was $213,000 but the median advertised price for lots unsold was $203,000 with prices ranging from as low as $130,000 a lot in Melton in the outer north west, to almost $300,000 in Point Cook in the south west.
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Bro GG, is the melbourne 100 storey unit built by aspial all sold? I wonder how many will throw back to developer when the bank say need to top up 10% additional cash?
Good luck to those in search of a tenant...
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(10-11-2015, 11:18 AM)Contrarian Wrote: Bro GG, is the melbourne 100 storey unit built by aspial all sold? I wonder how many will throw back to developer when the bank say need to top up 10% additional cash?
Good luck to those in search of a tenant...
Brother Contrarian,
To be frank, I seriously dunno... Aspial said all sold mah... we have to trust them as they could have gotten all their brothers globally to support them... maybe these brothers all v solid just need outlet and product to recycle their $...
This is a changed world order and we just have to wait and see...
Good luck to what we are analysing as well...
Odd Lots Vested
Aspial
GG
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> Aspial said all sold mah
Likely they are right bro.
They know this game... if locals buy sure wont pay up and bank wont finance 90%.
So they market to locals, because locals use lower LTV. With lower LTV, banks can take the loan.
Whatever it is, only the developer wins. The home investors will have empty units or very low rentals :-)
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Melbourne's top-end homes rising the fastest
[img=620x0]http://www.afr.com/content/dam/images/g/l/1/f/a/s/image.related.afrArticleLead.620x350.gl1eta.png/1447796806654.jpg[/img]Location, location, location: Melbourne's leafy suburb of Armadale where a house on a developable block sold for $3.53m at auction on Saturday Supplied
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by Michael Bleby
Melbourne's highest-priced homes are rising fastest in the current housing-market boom, with that segment of the market buoyed by low interest rates and business confidence.
Dwellings in the top 25 per cent price bracket have jumped 10.8 per cent over the past six months, more than the rate of gain shown by homes making up the middle-band and also more than those in the lowest-priced quartile, figures from CoreLogic RP Data show.
The residential property market is coming off its wild highs as investors pull back. Auction clearance rates in the Victorian capital posted their fourth straight week under 70 per cent, preliminary CoreLogic figures show and last week's strongest clearance rate was in the city's western suburbs. But even amid signs of a slowdown, sustained demand is pushing prices at the top end higher.
"Confidence is high, stock levels are still relatively low and everything's moving," said Gowan Stubbings, a director of estate agency Kay & Burton.
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A 1930s 6-bedroom, 4-bathroom family home in Hawthorn East, with views overlooking the local Anderson Park and Melbourne CBD sold largely unseen for $4.3 million on the weekend.
Mr Stubbings sold 17A Moorhouse Street in the upmarket eastern suburb of Armadale on Saturday. Developers fought for the two-bedroom house on a site that was unencumbered by heritage or other restrictions and it sold for $3,530,000, equivalent to more than $6000 per square metre and well above the typical rate for Armadale.
"It was in a good part of Armadale, just off High Street," said Mr Stubbings, who declined to confirm the sale price. "It had no single dwelling covenants. It was pretty unencumbered by what you could do with it."
Price growth of homes in the top quartile in Melbourne has also out-performed over the past 12 months, with a 14.6 per cent rise that outstrips the 11.2 per cent of the mid-market range and the 8.8 per cent of the lowest quartile.
But over the longer term, the top tier doesn't do so well. Over the past five years, the top 25 per cent of homes in the Victorian capital have gained 22.8 per cent, which is just less than the 23.6 per cent of the mid-market, CoreLogic figures show.
Over that period, the cheapest 25 per cent of homes have gained 18.4 per cent.
The top end of the market is likely to keep doing well, provided interest rates stay low, Mr Stubbings said.
"I don't see the market changing in the short term," he said. "It drives confidence if interest rates are low."
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Melbourne property to overtake Sydney in 2016
[img=620x0]http://www.afr.com/content/dam/images/g/l/4/x/d/7/image.related.afrArticleLead.620x350.gl4tfv.png/1448194444398.jpg[/img]A full brick three-bedroom Federation home on 420sq m at 18 Trevanion Street, Five Dock in Sydney, sold quickly at $1.325 million. Supplied
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by Su-Lin Tan
The smaller housing boom in Melbourne has led to the capital city preserving its values better than Sydney, which is headed for a definite cooling.
While preliminary auction rates for Melbourne fell to 64.7 per cent, there were more properties cleared in Melbourne than Sydney, according to Corelogic RP Data.
Listings in Melbourne showed its tenacity by holding similar numbers to the week before, while Sydney's listings fell.
Sydney's preliminary rate was 59.3 per cent, the third week in a row the city has recorded below 60 per cent and the lowest since February 2013.
[img=620x0]http://www.afr.com/content/dam/images/g/l/5/2/q/o/image.imgtype.afrArticleInline.620x0.png/1448175389106.jpg[/img]The Revy apartments will start at $2.5 million.
"The boom has not been as prevalent in Melbourne, that's why the market is holding," property analyst SQM Research's Louis Christopher said.
"We strongly believe Melbourne will outperform in 2016 … while the slowdown in Sydney is definitely accelerating."
Mr Christopher who correctly predicted the size of the recent boom had predicted the Melbourne market will continue to rise to double digit growth in 2016 but Sydney will maintain in a 4 to 9 per cent range.
"We are going to see more of the 4 per cent than a 9 per cent," he said.
"Truth is the clearance in Sydney has been in the low 50s for a while, a contrast to the June quarter."
While the outlook for Sydney is a downward one, total listings in Sydney are still higher this year compared to last year.
Even though auction listings have fallen, private treaty sales remained high, Mr Christopher added.
VERY GOOD PRICES
"For Sydney, the high 50s is still very good," Ray White NSW chief auctioneer, Scott Smith said.
"The number is realistic and vendors are still getting a very good price. Nothing wrong with it and better for all of us."
Mr Smith said the Sydney market is doing what it has always done: its eastern suburbs, northern beaches, lower north shore and inner-west areas performing strongly.
A full brick three-bedroom Federation home on 420sq m at 18 Trevanion Street, Five Dock sold quickly at $1.325 million at its auction.
Ray White's Fiona Hellams sold the home, which also has an entertainment deck, to a young couple securing a 65 per cent return for its owners who last bought it at $801,000 in 2009.
Apartment sales in Sydney were steady but quieter.
Chinese-backed developer Aqualand's luxury apartments, The Revy, opened for expressions on interest on the weekend. 120 parties surveyed the display suites that can only be described as plush.
The 43 apartments with one penthouse reside on the waterfront at 8 Darling Island Rd, Pyrmont at the heritage listed Royal Edward Victualling Yard (REVY), the first Royal Yard in the Southern Hemisphere.
Aqualand's general manager Wayne Xiong said, interest in the apartments, which start at $2.5 million for two-bedroom units to $14 million to $16 million for the penthouse, has been strong.
On Sydney's northern beaches, Sydney developer, CABE, sold the penthouse in its over-55's luxury waterfront boutique, Watersedge, in Bayview overlooking Sydney's Pittwater for $3.5 million.
This is the third property sold in the five-residence project.
Britely Property has also sold 50 per cent of its 40-unit Bourke & Phillip development in Waterloo in Sydney's inner south.
Buyers paid up to $1.8 million for apartments with the most popular being $1.2 million two-bedders.
Clearance rates in Brisbane improved from last week to 43.6 per cent, similar to the same time last year. Auction volumes were also higher.
But the prestige housing market in Brisbane was not as buoyant.
The 5440sq m five-bedroom, five-bathroom estate at 52 Tristania Road, Chapel Hill with its own tennis court and pool was not able to inspire buyers to raise bids above $2.8 million.
Johnston Dixon's John Johnston, who is marketing the property with Josephine Johnston-Rowell, says they are negotiating with the bidders.
"There was a surprisingly good crowd on a stinking hot day … but I don't know the market at the moment. I readily confess the conditions make it very hard to pick," Mr Johnston said.
The property, which also has its own gymnasium, sauna, pavilion, and creek-side sporting field is seven kilometres from the Brisbane CBD.
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