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- Sep 30 2015 at 5:17 PM
- Updated Sep 30 2015 at 5:56 PM
Investors hit as mining services towns struggle
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/y/5/g/j/image.related.afrArticleLead.620x350.gjxrj8.png/1443599821789.jpg[/img]Mining services towns such as Gladstone are struggling after the end of the resources boom. Glenn Hunt
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by Mark Ludlow
The mining services cities which rode the great Queensland coal boom - which some investors thought would never end - have come crashing back to earth.
Property prices in the coastal cities of Gladstone, Mackay and Townsville, which both serve as mining services hubs for the Bowen and Surat Basins as well as home to fly-in, fly-out and drive-in, drive-out workers, have been hit hard following the collapse in international coal prices.
Some regional centres are holding out hope for new mines in the Galilee Basin, including Adani's controversial $16.5 billion Carmichael project, to kickstart their economies, but with funding issues and court delays they may be waiting a while yet.
House prices in Gladstone, the home of the $60 billion liquefied natural gas industry, have plummeted by 17.3 per cent over the past three years, according to CoreLogic RP Data, while in Mackay they are down 6.3 per cent.
Mackay house prices down
Mackay, which pitched itself as the main services centre for the big mines in the Bowen Basin, has arguably been the worst hit, given a lot of retrenched coal workers also used the city as a base to drive to the mines.
The median house price in Mackay was $406,020 in 2012. It has now fallen to $380,268. There are now a lot less cashed-up miners in the city of 120,000. This flows through to the local shops and businesses.
Mackay Mayor Deirdre Comerford told a recent parliamentary hearing the city was feeling the impact of lower coal prices and needed to keep attracting workers, given the large investments it had made in infrastructure.
"Mackay has invested heavily to support the level of growth demanded via the recent boom," she told the inquiry.
"It is critical that Mackay retains the level and mix of population to continue to contribute to the upkeep of such infrastructure, otherwise Mackay is left unfunded with deteriorating community assets."
Gladstone more diversified
Gladstone's economy is in slightly better shape because it has a more diversified resource base, including LNG, coal as well as Rio Tinto's Yarwun alumina refinery.
Property investors piled into the town on the back of the creation of the LNG industry with three mega-projects building their own processing plants on Curtis Island, off the coast of Gladstone.
An influx of 4500 extra people swamped the town as 13,000 construction workers helped bring the LNG dream alive. House prices and rents went through the roof in the industrial city - up 30 to 40 per cent - which was partly eased by the a construction camp being built on Curtis Island as well as a workers camp 20 kilometres from the city.
New Gladstone Ports Corporation chairman and long-term resident Leo Zussino admits there was some "over-enthusiasm from investors" during the construction phase of the LNG projects.
Only one of the big three projects, QCLNG, is exporting gas from Gladstone, with the other two proponents - Santos GLNG and Origin's APLNG - close to beginning exports in the next few months.
"We had more than $60 billion in investment in a short space of time. There is a slowdown in economic activity, but it will sort itself out. There is obviously going to be some readjustment," Mr Zussino told The Australian Financial Review.
"But there's still 6000 workers on Curtis Island and we will have another year of construction. Plus the LNG trains will need to be serviced every few years."
Townsville unemployment rate 6.5 per cent
Sale volumes across Townsville have fallen by more than 10 per cent over the year to May and 6 per cent below the five year average, according to CoreLogic RP Data's head of research Tim Lawless said.
"Home values are down over the 12 months to June for both houses [-2 per cent] and units [-1.2 per cent]. Market conditions are weakening when compared to May 2014 with homes across Townsville taking longer to sell," he said.
Townsville is also struggling with high unemployment (6.5 per cent) as thousands of workers look for the next big project.
The Queensland government is desperate for the mega-mines in the Galilee Basin to proceed to deliver a much needed boost to the state's economy.
Townsville Mayor Jenny Hill - who is trying to set up the northern city as a FIFO hub for the Galilee mines - said in August all of regional Queensland was sweating on the big mines going ahead.
"The Adani project could help kick-start the economy, not just for Townsville, but for Mackay, for Bowen and as far up as Cairns."
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Whitsundays, Hamilton Island and Airlie Beach are enjoying the sun
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A beach on the Whitsundays. Source: Supplied
[b]The early signs of an improving Whitsundays property market may have been subtle, but Hamilton Island developer Nigel Moore says he was ready for them.[/b]
First up, sales of luxury yachts by the once troubled brand Riviera began to gather pace. Next, new property sales in southeast Queensland’s holiday heartland of the Gold Coast picked up, followed by the Sunshine Coast. That’s when Moore knew it was time to head north.
“They’re clear indicators that the type of buyers attracted to our market were spending again; people were back buying toys,” Moore says.
He is not even troubled by the $60 billion sharemarket rout this week, saying: “We have ridden these tides before, it might give us a bump, that’s about it.”
Backing himself, Moore purchased north-facing beachfront land on Hamilton Island overlooking Dent Passage, in preparation for the island’s first new development in almost 10 years.
“I suppose it was an educated guess that comes from knowing who your market is after building there for 17 years,” he says. He previously developed Hamilton Island’s Shoreline, Pinnacles and Panorama buildings.
The 22 apartments in Hidden Cove went to market in April. Priced from $980,000, the luxury units are to have ocean views and an emphasis on privacy.
Hamilton Island Real Estate principal Wayne Singleton says all but four apartments have since sold and the entry-level price has increased to $1.24 million, putting its value at $7000 a square metre, near the island’s 2007 peak.
Despite Hamilton Island’s integrated tourist resort status, which negates the need for overseas residents to seek Foreign Investment Review Board approval on purchases, interest is predominantly flowing from Australia’s southern states.
“A lot of people are making serious money or are realising a lot of equity in their homes and are looking north for a lifestyle investment,” Singleton says.
“People are looking for a second home and the rental returns have been extremely healthy as the Australian dollar has come down. Plus you have to take your hat off to the Oatley family (Hamilton Island’s owners) for building a bigger, stronger and better brand.
“Hamilton Island looks amazing; they’ve resurfaced all the roads, the gardens are immaculate, there are new amenities and the power supply has improved. It has really helped lift the bar.”
Singleton says this has been a year of month-on-month sales records, with $22m worth of real estate sold in July and August.
Rental returns also have improved and the island’s occupancy rate is consistently above 80 per cent, unharmed by the reopening of nearby competitor Hayman Island.
A spate of premium and high-quality homes on Hamilton Island and the Whitsunday mainland at Airlie Beach also have been listed in the past two months.
Altronics founder Jack O’Donnell and his wife Lynette Leonie are selling their spacious Melaleuca Drive home, No City Limits, after 13 years.
The electronics businessman with a penchant for kite surfing and speed boating says it takes 1½ days of travel to reach Hamilton Island from his Perth base, compared with a 4½ -hour flight to their second home in the Cocos (Keeling) Islands.
Gracing the top of a 30m cliff, with a rear entertainment deck with 180-degree ocean views, the Chris Beckingham-designed home sits between George Harrison’s former estate and the palatial holiday home belonging to Cotton On millionaire founder Nigel Austin.
Offers of more than $6m will be considered for the property, which occupies almost 3000sq m of land and features five bedrooms and an open-plan layout with extensive use of natural timbers and stonework.
“Chris has got a knack of integrating the indoor and outdoor space and anything he designs sits so comfortable within its environment,” O’Donnell says. “It’s a breathtaking location. It provides solitude, and that’s a major attraction — to get away from an otherwise chaotic life with lots of commitments.”
In the two months since it was first listed a “healthy” number of genuine offers have been made, according to Singleton, who says confidence is improving as buyers look for better value outside Melbourne and Sydney.
“The wave is certainly coming up the coast. We see improvements in Brisbane and the Gold Coast, and we generally lag behind by about 12 months,” he says.
Queensland Waterfront agent Mark Meallin has three of the region’s highest profile prestige listings in the Whitsundays, ranging from $7m to a heavily discounted $19.9m.
Mandalay House is listed in conjunction with Gold Coast Sotheby’s International Realty agent Carol Carter. The grandiose 2649sq m Mediterranean-style house took more than three years to build and originally was listed for $25m by owner-developer Neil Murray.
Heaven’s Gate, a six-bedroom eco-friendly home on 1450sq m at 860 Gloucester Avenue, Hideaway Bay, also has been listed with Gold Coast Sotheby’s International Realty and Queensland Waterfront, and carries $10m price expectations.
Mechanical engineer Ian Bishop and his wife Missy, who bought the property in 2006 for more than $4m, are reluctant vendors as they downsize.
Newly listed Botanica House, which owners Janet and Ralph Hogan have made into a wedding destination since building the property in 2008, has received offers in the four weeks since it was listed with Meallin and joint agent Ray White Whitsundays.
Expressions of interest of more than $7m are being sought, with a leaseback of $300,000 a year in place until the completion of the final booking in December next year.
“We’ve experienced a 10-fold increase in inquiry on properties worth $2m or more in the past 12 months,” Meallin says. “For the overseas-based buyers out of the US, UK and China, the Whitsundays represent great value. For many Australians, they holidayed here or they’re coming back to fulfil a dream.”
Despite the rising median price, many prestige homes are being sold below replacement cost.
“The values are definitely improving at the top end,” Meallin says.
“There are more buyers on the ground and provided there are no major global events I think we’ll see a 10 per cent increase in values in the next year.”
Additional reporting: Lisa Allen
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- Oct 6 2015 at 2:57 PM
- Updated Oct 6 2015 at 4:56 PM
The silver lining in WA, Qld property: rental yields
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[img=620x0]http://www.afr.com/content/dam/images/1/m/g/j/1/y/image.related.afrArticleLead.620x350.gk2744.png/1444110994695.jpg[/img]A yield of 6 per cent in Northam still far outweighs the average house and unit across the nation of about 3 to 4 per cent.
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by Su-Lin Tan
There's an upside in property markets like Perth where house prices are falling: strong rental yields.
The town of Northam, 100 kilometres, east of Perth has made the top 10 best yield suburbs in property research group Residex's Best Rents Report in September.
"WA might be suffering a downturn, but it depends on where you look," Residex market analyst Eliza Owen said.
"We exclude areas which are dependent on mining and by dependency we mean more than 10 per cent are employed in mining. And Northam has a strong agricultural base. It's a regional centre with a lot of services and good hospitals in the areas...so they are always looking for medical staff."
Northam is home to many state and federal government departments including agriculture and food and corrective services.
Ms Owen said Northam made the cut not just because of its high yield of just over 6 per cent, its property prices were still "affordable" to investors.
"Areas with higher rental yield tend to be in the more affordable areas that had not seen capital growth," Ms Owen said.
While Northam had negative growth last year, it was expected to bring in 7 per cent a year average for the next 8 years, according to Residex.
A yield of 6 per cent in Northam still far outweighs the average house and unit across the nation of about 3 to 4 per cent.
SYDNEY FRINGE BENEFITS TOO
Sydney southern highlands village, Hill Top, 50 kilometres west of the Wollongong CBD, is in a similar position. Its houses are earning about 5.8 per cent.
Hill Top benefits from being a low cost country town for workers commuting to Wollongong.
"The typical property is usually rented out straight away, with rental vacancies lasting less than one week," Cameron's Real Estate Agency's Ian Cameron.
Hill Top is also next to Sydney's coastal region of Illawarra which is seeing strong growth from sea-change seekers, valuer Propell said.
Sydney's Fairfield ranked highly at a 5.29 per cent rental yield, benefiting from its proximity to the Liverpool CBD.
Southeast Queensland is also thriving with yields between 6 to 8 per cent for Brisbane suburbs such as Heritage Park.
Heritage Park, which has a strong yield of over 8 per cent, is attractive to families because of its "good size land", Ms Owen said.
Realtor John McGrath's also recently picked the southeast as a growth potential.
"Once state economic conditions improve and Sydney slows down, the South East Queensland property market will be ready to roar," he said in the McGrath Report.
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Will reinforce what AV Jennings has been guiding for the current year...
Residential developer Villa World racks up sales
Ben Wilmot
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Commercial Property Editor
Sydney
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Villa World managing director and chief executive officer Craig Treasure. Source: Supplied
[b]Developer Villa World has racked up 269 sales in the September quarter worth $106.7 million and expanded its holdings in the Coomera in southeast Queensland.[/b]
The sales rate — at an average of 90 per month — is up from an average of 82 sales per month in the year to June and is in line with the company’s target range of 1000-1200 sales for this financial year.
Villa World is on target to deliver seven new projects this financial year and two of those have recently been released to the market — the 82-lot premium land Riva project north of Brisbane, and the 81-lot house-and-land Ellabay project in Bayside Brisbane.
In Coomera, the company has bought an 11.1ha site that adjoins and will become part of the its Parkside estate.
The purchase adds 71 lots to the project, taking the total expected yield to 179 lots.
“Villa World remains well capitalised and expects to spend between $135m and $150m on development site acquisitions this financial year,” chief executive Craig Treasure said.
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Thought Robina Loh has disappeared liao but still around...
Robina Group’s master-planned community
Turi Condon
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Property Editor
Sydney
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An artist’s impression of the Robina Group's Boheme apartments on the Gold Coast. Source: Supplied
[b]The Loh family’s Robina Group will develop 500 residential properties at its Gold Coast master-planned community, aiming to take advantage of the upswing in the market.[/b]
Work has started on the first unit project at Robina, inland from Surfers Paradise, with the $250 million Boheme Apartments seeing $35m in off-the-plan sales.
The 129-unit project, to be built by Brisbane-based Cullen Group, is due for completion in late 2017.
Robina Group director Tony Tippett said the company had decided to return to apartment development after solid sales in the project.
“The Robina Group recognised demand for new inner-city apartments is on the rise and the sales momentum of Boheme Apartments has proven this — and we closely monitor market trends,” Mr Tippett said.
Two-bedroom apartments in the project are priced from $459,000, with Mr Tippett noting the feedback from Sydney and Melbourne purchasers who were looking for apartments in the under-$500,000 bracket.
There was also a shift to lifestyle properties, he said. “All residents are within a 250m walk of Robina Town Centre with its 350 retailers and restaurants, surrounded by key benefits such as Cbus Stadium, Robina Hospital, private and public schools and just a short distance from public transport and the motorway.”
The Gold Coast was one of the hardest-hit regions in the aftermath of the financial crisis with property prices crashing up to 50 per cent and a prolonged recovery period. Residential researcher CoreLogic RP Data found dwelling prices had bounced back 4.9 per cent in the year to September 30, with apartments increasing 1.9 per cent in value over the year.
Robina, one of the Gold Coast’s first master-planned communities, was founded 35 years ago by Indonesian-born Singaporean businessman and real estate developer Robin Loh, who died in 2010. Dr Loh paid about $11.2m in 1980 for what was once a 20 square kilometre grazing property.
Earlier this month, Robina Group completed $110 million of sales in three residential terrace house projects at Robina.
The company recently sold its “The Rocket” office tower at Robina to Clarence Property Group and Sentinel Property Group for $70 million.
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Chinese buyers snapping up new apartments in Brisbane, Gold Coast
Natasha Bita
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National Education Correspondent
Brisbane
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China’s richest man, Wang Jianlin, has a controlling stake in Jewel, a $970m luxury hotel and apartment development at Surfers Paradise on Queensland’s Gold Coast. Source: Supplied
[b]Chinese buyers splurged nearly $1 billion on Queensland properties during 2014-15, doubling their investment during the year.[/b]
The state’s Foreign Ownership of Land Register shows investors from China spent $872.5 million buying land and property. Hong Kong investors spent $112m. The $984.5m total figure is more than double the $463m spent by Chinese investors the previous year.
China has been the top source of foreign investment in real estate — including residential, commercial and rural properties — for the past three years in Queensland.
Foreigners own 31,133 parcels of land in Queensland, indicating investment is being channelled into big commercial developments and agriculture. Chinese buyers own 3585 parcels of land covering 237,490ha, while British investors own 5904 properties covering 2.2 million hectares.
Singapore has leapfrogged the US as the second-biggest source of foreign investment in real estate in Queensland. Singaporean investors spent $421m last financial year — nearly three times more than the year before.
Foreigners invested $1bn in real estate in Brisbane City, including $383m from China — in 2014-15.
Chinese buyers were the biggest spenders on the Gold Coast, investing $373m, nearly two-thirds of the total foreign investment. China’s richest man, Wang Jianlin, has a controlling stake in Jewel, a $970m luxury hotel and apartment development at Surfers Paradise.
In Cairns, where Hong Kong billionaire Tony Fung has proposed an $8.2bn hotel and casino complex at Yorkeys Knob, Chinese investment totalled $9.2m last financial year.
Analyst Michael Matusik estimates Chinese buyers are snapping up more than half the new apartments being sold off the plan in major developments in Brisbane and the Gold Coast.
“I’ve not seen a degree of buying like that in 25 years in the industry,’’ he said. “There is an increasing number of Chinse buyers — some of it is capital flight, some is the expectation of living here one day in the future.’’
Chinese buyers still preferred to buy houses or apartments in Sydney or Melbourne, he added.
Queensland is the only state or territory to record land purchases by foreigners. Foreign nationals now own 3.4 per cent of the state’s land area, up from 3.2 per cent in 2013-14 and 2.9 per cent in 2012-13.
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Noosa Heads, Noosaville and Sunshine Beach bounce back from GFC
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The garden apartment at 1/23 Hastings Street sold for $7.2 million. Source: Supplied
[b]Next month, part-time Noosa resident and semi-retired company director Alex Hamill will join about 5000 other competitors in the famous Noosa Triathlon. It will be Hamill’s 24th appearance at the southern hemisphere’s biggest amateur triathlon event, while his wife Brenda will be going around for a 16th time.[/b]
It’s just one of the many aspects of an enviable lifestyle enjoyed by the former chief executive and chairman of what was once Australia’s biggest advertising agency, George Patterson.
“There are very few places in Australia, if any, that have a beautiful beach, great food, shopping, low-rise development and a national park right on their doorstep,” Hamill says.
The couple’s circumstances are similar to those of many well-heeled Noosa residents. A Sydneysider who first holidayed at the renowned Sunshine Coast tourist destination in 1974, Hamill vowed to buy a holiday home there one day. He got his chance in 1999, buying a three-bedroom unit off the plan in the Gerry Nettleton-designed Villa Nette, at 2/56 Park Road, Noosa Heads, for about $2 million.
It was to be a personal project for both the developer and Nettleton, who would each keep one of the villas. “When I got the spec sheet I told them that whatever they were doing to their own villas was good enough for ours,” Hamill says.
“It’s a quality build. I’ve lived in several quality buildings in Sydney and this is as good as, if not better than, anything there.”
A five-minute walk to the white sands and protected waters of Little Cove and two minutes from the Noosa National Park, it’s not a hard place for the Hamills to live for six months of the year.
But after 15 years they have decided it’s time for a change of scenery, and are planning to swap high-end Noosa Heads for bustling Noosaville, with its ever-expanding array of restaurants, riverfront bicycle track and constantly occupied picnic tables, where residents can be seen toasting their health and good fortune with a bottle of Champagne.
Hamill, who is asking $3.6m for his unit, says the market has improved since the unit previously went to auction — regrettably, on the Friday night of the Brisbane floods in 2011. Despite the four contracts out on the unit, there were no bidders.
Now offering the property through Richardson & Wrench Noosa director Peter Butt, Hamill is more optimistic about selling in the present climate but is under no pressure, or in any hurry, to sell the property.
Noosa Heads, Noosaville and Sunshine Beach — barometers of the Sunshine Coast’s luxury holiday market — were crippled following the global financial crisis, with prices falling by up to 40 per cent. But the area is now on the up-and-up, according to the Real Estate Institute of Queensland, whose June market update highlights Noosa as the top performing region for sales activity outside of Greater Brisbane.
While the rest of the Sunshine Coast recorded a 5 per cent drop in activity, sales in Noosa were up 12 per cent for the three months to June.
The REIQ says there are several segments within the Noosa market, some outperforming others. While the executive and prestige properties are taking longer to sell, median sales prices for houses are up 4.7 per cent in the 12 months to June.
Anecdotal evidence that Noosa is back in fashion was everywhere during the school holidays last month. The queue for Betty’s Burgers on busy Hastings Street wound around the corner; restaurants were holding three booked-out sittings every night and retailers such as iconic surf brand Rip Curl smashed their daily sales targets. It’s a resurgence that has been 18 months in the making, according to Richardson & Wrench Noosa director Butt, who sees the town’s economic indicators critical to buyer inquiry and overall market confidence.
“We’ve had a huge interest in property in the $500,000 to $1.5 million range and we’re experiencing a lack of stock in the top end of the market,” Butt says. “Most well-priced property or anything that was reasonably distressed 12 to 18 months ago has all been sold. “We’ve been in a transitioning market for the last 12 months. There’s still good value property around but they are few and far between.”
Of the nine properties Richardson & Wrench auctioned last month, five sold under the hammer for between $620,000 and $1.2m for a one-bedroom beachfront unit. Negotiations are continuing on two others.
“It appears the money trail from Sydney and Melbourne is starting to work its way through,” Butt says. “The lag time after an interstate sale tends to be about three to nine months and we’re starting to see that now as everyone comes out of their winter recess.” It took only a week of negotiations for the luxuriously appointed three-bedroom beachfront garden apartment at 1/23 Hastings Street to sell, says Tom Offermann, owner of Tom Offermann Real Estate.
A Brisbane buyer beat two interested Victorian parties, paying $7.2m for the apartment only 12 months after it previously sold for $6.2m.
Offermann says the price, a sign of increasing competition for well-located properties, is in line with what was achieved seven years ago, still about 10 per cent off the 2007 peak.
“The benefits of a strong holiday period flow through into the future months,” he says.
“The school holidays resulted in strong inquiry levels and the holiday unit market, which has been quiet for an extended period, started coming back to life about nine months ago.
“We’re starting to list properties for the busy summer period and are scheduling auctions for the last two weeks of January.”
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Brisbane's future student 'slums' worry property investors
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[img=620x0]http://www.afr.com/content/dam/images/g/i/h/e/o/j/image.related.afrArticleLead.620x350.gkjf4s.png/1446021746947.jpg[/img]Singaporean private equity group Valparaiso is converting the old Boeing building in Brisbane into student accommodation. Supplied
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by Mark Ludlow
Property investors and town planners are concerned a wave of new student accommodation in Brisbane could create inner-city "slums" and hurt property values.
Brisbane City Council is offering big discounts on infrastructure charges for developers to build student housing. There are now 19 development applications to build more than 6500 new beds in and around Brisbane's CBD.
The council has approved six developments since the incentive scheme was launched by Brisbane Lord Mayor Graham Quirk in February.
The latest is a two-tower apartment complex, backed by Singaporean company Wee Wur Holdings, to build 1608 units in Woolloogabba, two kilometres south of Brisbane's CBD.
It follows the $110 million re-development of the old Boeing building on the corner of Adelaide and Wharf Street in the city by another Singaporean private equity group Valparaiso, under the company name "Student One".
The group paid $65 million for the prime office space site as well as a food court across the road, which it will turn into a new $120 million 41-storey tower - also for student accommodation.
The incentive scheme for developers - which can save them up to 80 per cent on infrastructure charges - is open until July 2017.
The development must start construction by mid-2018 and must be within a four-kilometre radius of the city centre. The council has not set minimum requirements for the size of rooms, but there is an expectation they would be a market standard of 20 to 22 square metres.
But the units planned in some student accommodation in Brisbane will be less than 10 square metres - about one-fifth of the size of an average apartment development of 50 square metres. There will also be rooms with up to six beds in some of the Brisbane developments.
A town planner, who did not want to be named, said there was growing concern about the precedent the student accommodation would set for the city, especially with lower requirements for room size as well as lack of car spaces.
"There is a feeling it will just create slums in the city," the town planner said.
Other investors are concerned about the impact the student accommodation will have on other premium apartment developments in the area, especially if it is used for short-term use.
'A GREAT ECONOMIC GENERATOR'
But Brisbane's Lord Mayor said the projects would be quality, purpose-built accommodation only for students.
"This incentive has helped to make projects viable that previously wouldn't have stacked up financially," Councillor Quirk said.
"Brisbane has a significant student population and it is great to offer purpose-built accommodation options in inner-city areas where there is easy access to public transport and local services."
Brisbane City Council hopes to capitalise on the growth in overseas students coming to the city. There are now 75,000 international students in Queensland's capital, generating $3.77 billion a year, making international education the city's biggest export market.
Councillor Quirk said there was now a shortage of student beds in the city, raising hopes some of the new development would be ready by 2017.
"There is a large interest from the tertiary education sector and I am strongly of the view that this incentive will be a great economic generator for our city," he said.
But Labor leader in Brisbane City Council Milton Dick said he was concerned there was not enough infrastructure and support services for the high-density student living.
"These are revenue-making machines for developers," Mr Dick said. "I'm concerned about the council giving the green light to large dormitory-style developments without thinking of the consequences.
"The last thing we want to see is high-density dormitories set up in the city and suburbs without proper services for overseas students."
Property Council of Australia's Queensland director, Chris Mountford, said student accommodation was a legitimate investment asset class.
"It's not operating like hotels," Mr Mountford said. "This is purpose-built, longer term accommodation. I'd be more concerned about students sharing a single house."
Private equity firm Blue Sky - which is planning a 283 bed, 12-storey tower in Woolloongabba - is offering investors returns of 15 to 18 per cent for a minimum $50,000 investment.
Blue Sky Private Real Estate's Adam Vaggelas said the company saw good earning potential in student accommodation. He said there was a shortage in student accommodation across the country compared with other countries.
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Brisbane facing flood of units
Turi Condon
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Property Editor
Sydney
[b]Brisbane’s apartment market faces a wave of nearly 20,000 units to be built over the next three years, the first time such large chunk of supply has been developed in the city.[/b]
A report from JLL estimated 19,800 apartments were either being built or being marketed in inner Brisbane with around 13,600 expected to be completed in 2016 and 2017.
JLL found interstate purchasers dominated the market, accounting for more than half of the off-the-plan sales, while foreign purchasers (25 per cent) and local purchasers (22 per cent) made up the balance over the past year. Despite the rash of new development, JLL said cheaper prices than southern capitals and higher yields would underpin demand.
“However, we anticipate the investor market will moderate over the next 12-18 months, as large numbers of new apartments enter the rental market,” JLL director of residential research, Rupa Ganguli said. “This will have impacts for the ‘investor type’ stock but opportunities will be available to those developers focused on the high-end, owner occupier market.”
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Sydney buyers heading to Brisbane
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/1/g/t/n/image.related.afrArticleLead.620x350.gjzqnn.png/1446642146107.jpg[/img]Property buyers father and son, Andrew and Chris Theodosi purchased a Brisbane property where the prices are lower. Fiona Morris
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by Matthew Cranston
The gap between Sydney and Brisbane house prices is starting to bear fruit for developers and vendors in the Queensland capital with dozens of southern buyers taking the plunge.
For about a year the gap between Sydney and Brisbane had been expanding but evidence of southern buyers jumping was not that noticeable by agents and developers.
Now it is.
Sydney based hospitality worker Chris Theodosi has just bought a three bedroom house in the Brisbane's bayside suburb of Wynamm West for $494,000. It was his first trip to the city.
"Brisbane is in the right phase of the cycle," Mr Theodosi said, "I think Brisbane will catch up again with other cities over the next five years and that's why I have bought there."
He and his father Andrew Theodosi had been looking to buy since last year and were close to purchasing in other south east Queensland cities such as Logan and Springfield.
"Some of the properties we missed out on buying [in Brisbane] I asked the agents and they said it was purchased by someone from interstate," Andrew Theodosi said.
"I think people are aware of the gap in value [between Sydney and Brisbane]. Sydney obviously has increased far too much for us to be investing there. It has gone beyond where we would like to be for a rental return."
Listed developers such as Stockland and Mirvac have seen more Sydney buyers for Brisbane apartments and private developers such as Tim Gurner have also recorded as much as 40 per cent of investors were from Sydney.
In established housing RE/MAX Advantage's Tandi Gill has recorded at least 10 Sydney buyers in Brisbane's bayside area in the last few months.
BEST TRADING IN 15 YEARS
"The majority are investors but we are also dealing with buyers who have lived here before and gone to Sydney and now moving back."
Ms Gill said about 70 per cent of investors were buying houses in the $400,000 to $600,000 range.
Her colleague Reno Muscat said the business has had the best 12 months trading for almost 15 years.
RE/MAX recently showcased Brisbane housing packages at the Sydney Buyer Expo in Homebush where more than 5000 people attended alongside developers such as Villa World which has also been targeting the southern buyers.
RE/MAX expects that more of the properties coming onto the market will be high rise apartments. While the latest QBE LMI Australian Housing Outlook report prepared by BIS Shrapnel indicates some concerns over a potential oversupply of apartments in Brisbane RE/MAX does not foresee any such problems in Brisbane's Bayside.
"There is not much high rise development [in the Bayside] we don't have the area or rezoning that would lead to an oversupply," Mr Muscat said.
For Chris Theodosi buying a home in Brisbane was all about getting better value for money. He took a loan with ANZ geared at about 80 per cent and hopes to have the house rented by the end of November.
He expects plenty of upside in value.
"I feel over the long term it will rise like history shows."
National Property Research Co director Matthew Gross sees the price differential between Brisbane and Sydney as more influential in driving a property boom than the fundamentals such as the state's unemployment and population growth.
"It's bizarre but it's true," Mr Gross said.
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