THE first real signs have emerged that Brisbane could shake off settlement risk fears amid a quarterly record $1.49 billion worth of apartment completions across the wider city.
Brisbane developer Tom Dooley of Tom Dooley Development has seen 161 of the 163 luxury apartments in his Skyring project in Newstead settle – all of which were designed to suit owner occupiers.
“This was the big acid test,” Mr Dooley said. “We had six that didn’t settle and we’ve resold four, with two of those now left to sell”. He said those that failed to settle came about because “people’s financial position changed in the two years since they commenced (sales)”. “It’s unfortunate, obviously we never like to see that happen but two out of 163 apartments, that’s a small percentage.”
The CoreLogic New Settlement Risk Report identified 92,102 new units set for completion across the Australian capitals in 2016, warning of “a big disconnect” between annual sales in the past five years and the number of units coming on the market. CoreLogic researcher Cameron Kusher warned “even a recurrence of the peak year for sales in Melbourne and Brisbane over the next two years wouldn’t represent enough demand to cater for all of the new units set to settle over the coming 24 months”.
Mr Dooley believed bigger, better designed owner occupier stock would buck the predictions. He said local buyers – who made up 93 per cent of Skyring sales – had settled their purchases. Of the nine offshore buyers, two in Skyring had fallen through, he said, “because of APRA changes they could no longer borrow here”.
Rental returns were also holding up, he said, with 125 of the units rented out within five weeks, averaging a 5 per cent.return.
The numbers for settlement of investor stock – that is smaller units sometimes without carparks – were yet to come through. Karen Morris, a manager with FlightCentre., was among owner occupiers still putting money into apartments, having bought a two bedroom unit in Gasworks Residences. “For me it was the precinct, the reputation of the builder and I just like that it was designed for owner occupiers rather than the rental market so it’s a little bit bigger, with more attention to detail. The facilities, the rooftop pool, yoga mats and gym, the restaurants, that’s what appealed to me. This is my new home.”