a few years back, i was going to buy a central equity flat in the centurion block on whiteman street. in the end, i bought in london and it turned out pretty well. how have the apartments in yarra crest,the centurion and the summit in city road panned out as investments in terms of capital growth and rental incomes? back then, they were in the 200k to 300k price bracket if i remember correctly. i was put off by the poor reputation of central equity.(and they were always having property fairs in hong kong to off load their flats which was a bad sign). now i am tempted again by central equity’s newer blocks at victoria tower (and city tower/melbourne tower)the prices are in the range 400k to 500k. they have a rental guarantee of 5% for the first year which on a 500k flat is 479 dollars a week. i feel that this would be a high figure on the open market without the guarantee. what do you think? are the flats overpriced and the rents achievable unrealistic? they look cheap now beside the eureka and freshwater place. so is it time to snap up one of the last few in victoria tower, city tower or melbourne tower. they tell me they are nearly sold out . and they are very easy to let. too good to be true? any advice?
Who is they? If they are REA, the likelihood is that the most favourable point of view will be put. I don’t know anything about central equity. Can you find out what they’re renting for to private investors eg can a friend ring up and amke an inquiry, can you look at a website, can you ask people in similar complexes
Sounds like you are from overseas or spent alot of time overseas. Do a search on the forums for Southbank and Docklands and you will see what the locals believe.
Most real estate has doubled in Melbourne sinve 2000, except for Southbank and Docklands. Personally I would buy anywhere in Melbourne wihin 10kms than Southbank or Docklands.
If you have $500k go look at Port Melb, St Kilda, Albert Park, South Yarra etc.
yes, you’re right. i’m british but have lived for the past 7 years in hong kong. in response to your question, ‘they’ are the people at central equity. ‘they’ tell me that the vacancy rates are very low/non existent but of course they are still in the 2 years’ rental guarantee period.
i checked out the rents being asked for on the apartment blocks completed last year. they are asking for about450/460 a week on the 3 bedroomed flats. and they seem to be getting it. it could be that many of the tenants are the children of rich overseas people from hong kong china and other east asian countries who are students in melbourne.so to these folks, the cost is not much of an issue. i saw that the flats in the blocks completed last year and situated behind the crown casino (the centurion, yarra crest,riverside gardens, the summit)have not increased that much in value since they were marketeted off plan in hong kong maybe 3 years ago. the just completed blocks(victoria tower and the sentinel) are in the range 4-500k.the newest two blocks which stand next to them are even more expensive in the range 5-600k for 3 bdrooms. ‘they’ tell me that buiilding costs are going up year by year, hence the continuing price hikes. in spite of all this, the two new blocks are already almost sold out.so somebody must be buying them! are they all stupid people from the far east with more money than sense?
if i don’t buy one one of these, can you recommend any other new developments in south melbourne/post melbourne? actuall i went to look at some second-hand apartments in these areas. they had better views and were better built than the central equity ones. but of course, it’s not legal for me to buy one of these. i have to buy new.
i have been in melbourne over the easter holiday to have a look. it’s a great place to live. maybe down the line, in the short term our family may move here or in the longer term when the kids have ggrown up, my wife and i will move here when i retire. so, i’m looking for a place as a reasonable investment which could also make a family home down the line a few years.
ok, i’ve gone on a bit so i’d better sign off and wait to see if you guys have any other helpful advice to add. i have donea search in the forum archives by the way andgot some other ideas. so cheers for now. howard.<<<<are they all stupid people from the far east with more money than sense? >>>
Yes. And they are the ones who rent them too.
Have you looked at Docklands and Port Melbourne.
There are some new developments around Port Melbourne. Mirvac developed the area there.
I now understand why you are interested in new developments as you can only access them. As I am an aussie I would not buy them and feel they are overvalued.
But if your prepared to hold for the long term then I believe you will do ok.
Personally I prefer Docklands or Port Melbourne. Docklands is better then the project in London so dont be daunted by the word. I was doing the aussie backpackers stuff in the UK when they were re-developing docklands in London.
The centre of Melbourne is moving towardss docklands and with some boats, telstra Dome, restuarants, markets etc its got great potential.
Look at MAB or Lend Lease not Mirvac. They are in the middle of the Docklands action while Mirvac is on the fringe.
cheers yack. i think it’s just a different perspective if you are a local as opposed to an overseas investor/owner occupier. i agree that the central equity properties are over-priced and the net yields are low and the resale potential dodgy. from an asian perspective (or a london one, come to that), the flats are still relatively cheap and they are in the heart of the city which is great to them/us. the reality is that they are probably not good investments and you could probably do much better with 500k to invest, but they sure look attractive to us outsiders.
i did go to docklands and saw some of the developments. conder tower (not yet built) mirvac and lend lease. they are even more expensive than comparable southbank apartments and there are so many of them! who is going to buy them all and live in them all? the infrastructure isn’t there yet either – a few shops and restaurants and not too good from a transport point of view. maybe in 10 years time it will be the new hub of melbourne as you say, but right now it seems like it’s stuck out on a limb away from the centre. it may well be that, as you say, the centre of melbourne is moving that way. we’ll have to wait and see.
am i right in thinking that melbourne will host the 2006 commonwealth games? if so, will this impact on centrally located apartments? and are there any other significant events in the pipeline to stimulate the market. i am thinking of the increase in the foreign student population. as i wander around town, i am amazed at the number of chinese people here. and they are not hong kongers but are mostly from the mainland as they are speaking mandarin not cantonese. it looks like there is and will be an even bigger boom in chinese students studying in melbourne and their parents can afford to set them up in centrally located flats. this must be a big factor for the future. yes?
well, thanks again for your advice, yack. please continue to chat. howard.<<<<<am i right in thinking that melbourne will host the 2006 commonwealth games? if so, will this impact on centrally located apartments? and are there any other significant events in the pipeline to stimulate the market. >>>>>
Yes. The 2006 Commonwealth games are here in Melbourne. I dont really think it will effect the property market. We already have the best sports infrastructure in world. Most events can be walked too from the city.
Major events are always being held in Melbourne. There is the Grand Slam Aussie Tennis Open, Melb Grand Prix, Melb Cup race (the only public holiday in teh world for a horse race), MCG cricket matches, Aussie rules footie games (always being held at docklands – Telstra Dome). Not to mention Jeffs shed (Melb Exhibition Centre) and all the conferences they try and get to Melb. These will certainly feul Docklands and Southbank but I agree you are talking 10 yrs.
But then we will probably say – geeeeez if only I purchased then. Its a tough one though.
I prefer docklands to southbank because.
1. Telstra Dome is already getting people to Docklands.
2. Some restaurants have opened.
3. Once a market is there it would get weekenders and melb surburbs day trippers there
4. There are supposed to be some office buildings going up.
5. It would be good if they got more boats thereIf you buy inner city or southbank now and you can bare a bumpy ride for 7-10 years then i think all will be o.k.
Most international major cities have an inner city poulation (within 5km) of about 10-15% of the population.
Melb and syd are only 5-6% at this stage. We sit about 10 years behind in international trends so i think in the long term it will pan out fine.
aluminatiHey howard,
here’s my 20 cents on Victoria Tower, I’m actually getting finance right now for a client…Firstly some banks won’t lend on it at all – Adelaide Bank – as they last year had valuations come back at around $50k LESS than what was paid for them, and that’s apparently still the case…
Secondly, some banks have problems accepting rental guarantees – I’ve checked!!
Thirdly, some banks WILL lend on these style inner-city apartments, but will then only do so on VERY modest Loan to Valuation Ratios – AMP will only lend say 60% on many inner-city places…
So yeah, my gut feeling about the real INNER city Melbourne aparment market says “overpriced” and riddled with some problems getting good finance…
Hope that helps a bit !
Cheers, Marianne.
Just a few thoughts,
Freshwater Place and Eureka towers really aren’t in the same league as the central Equity buildings going up, the quality is much higher and the location better ie on the river where the views can’t be built out for many apartments. Eureka in particular is likely to be a very exclusive building with the top penthouses going for $8 million plus. The quality of apartments at the docklands is also considerably higher than central equity southbank places.
Central Equity seem more and more willing to put up towers very close to each other (5 together in the latest lot) there is also a large amount of vacant land behind those 5 currently used for parking, i.e. expect the views of the south facing apartments to be built out in 5-10 years.
Regarding prices I’ve heard of many examples of people experiencing capital losses in Southbank, an agent told me of a 2br apartment they sold last month, owner bought it off the plan 4 years ago @380k, sold last month for 320k. The better perfoming buildings tend to be the ones not developed by central equity. From what I can see the problem is simply overpricing, thats why they do so much marketing towards people who aren’t familar with the market here.
Don’t believe the claim about “they are very easy to let” vacancy rates of 1-2mths is pretty much standard around southbank, I’ve heard of brand new places being on the market for 6 mths or more before being let (since a big stream of apartments become available at the same time).
Paul_S,
Freshwater Place & Eureka prices are in the vicinity of $6-7k per square metre. CE are around $4.5-5k psm
That makes a significant difference. Sure, the internal fit-outs and facilities might be a little better in quality but these are two different markets.
The back of Victoria Tower is a vacant block which has plans for a commercial development for 5 levels. Behind that is City Link and Sturt Street.
The views for properties facing the Yarra might not be built out but there will be many apartments who don’t have a northerly apsect in these buildings.
The hype in property bull markets is overexaggerated, so to when the expected slow/downturn comes/is here.
James
Good post and very relevant right now to me. I am one of the ‘overseas investors’ who took the bait and now its time to pay up. One consolation is the weakening Australian Dollar given that settlement is due.
I have read posts elsewhere where someone had thought of pulling out however the letters received can be very intimidating if this looks like a possibility, things must be getting desparate for the developers with so much unfavorable press.
Looks like we are in it for the long haul and its a toss up which will be the lesser loss in the situation namely:
1 – proceed and sell as soon as possible
2 – proceed and hope market recovers in 2-5 years
3 – withdraw and get suedAny thoughts on how to decide would be welcome.[glum2]
what was your original strategy – sell prior or on completion or hold for reasonable period?
cheers
brahms
If you don’t ask, the answer is no!!
Howard,
I know you are looking at buying an apartment… but if I had a spare 500k to splash around, I would buy a house in Camberwell or Glen Iris or thereabouts. You’d still be able to buy at the lower end of the market there, but it’s the eastern suburbs, and they will always do well in Melbourne.
I was in Melby for the weekend… the oversupply of apartments in southbank and docklands is nothing short of depressing. Huge apartment blocks with hundreds of units in each of them, no points of differentiation… all you have to do is have a couple of firesales in them, and your own property will be devalued based upon past sales.
Thinking about fitouts… well, what units don’t have euro stainless steel appliances these days… they all do. Some blocks now have furniture packages. There are some units in Hawthorn being advertised right now for $170k- 1-bedders, with a 6.5% rental guarantee (about $225 a week), with furniture packages too… I reckon you’d be better off buying 3 of those with your 500k, than buying one southbank. And really, who is gonna pay $500 a week for an apartment with no differentiation, when there are a million to choose from? Go to Domain.com.au and check out the rental section. You will find what the southbank apartments are *really* renting for… or how many of the same ones in the blocks are being rented.
That area is not looking good, from a driveby point of view. Also, there are lots of social problems (hoons) in the southbank area. Slums of the future is my call on them.
kay henry
Kay,
Definitely disagree with the slums of the future statement.Many of the residents (outside of professionals) are international or students of varying Asian backgrounds, and even Asian families who have migrated to Australia. Unemployment is not an issue here.
Whilst the buildings are not the HMAS in Port melbourne or The Melbournian on St Kilda in terms of style (and price too) these are not the Central Equity buildings of the early 90’s, which they had received their bad reputation for. I currently rent in a 10 yr old CE building in Southbank an can attest to the sound proofing issue (or lack thereof) as one issue. However, I had lived previously in a 2 yr old CE, with no issues whatsoever.
Southbank is predominantly office and residential towers, so in terms of residential infrastructure ie shopping, restaurants etc, you need to go to Southbank/Southgate or Clarendon Street South Melbourne (5 mins away).
No doubt an oversupply currently, which is being reflected in subdued rents 1br for newer building about $270-$300 and 2br $350-$400. As an investment, it is very marginal whether you would buy. If you chose the premier buildings though, you are paying ~$600k+ in The Melbournian.
But again, given the inflow of people into inner-city and migration, the imbalance is not as severe as everyone thinks.
James
James :o) Thanks for your reply. Just in terms of disclosure, or for the sake of objectivity, I know you said you currently rent one of the apartments, but do you also own an apartment in the area?
kay henry
Originally posted by kay henry:That area is not looking good, from a driveby point of view. Also, there are lots of social problems (hoons) in the southbank area. Slums of the future is my call on them.
Totally disagree, but hey you’re entitled to your opinion. I think if you had driven passed “Melby” during the week as opposed to the weekend you may have seen a different breed of people than the “hoon” types you obviously encountered.
James :o) Thanks for your reply. Just in terms of disclosure, or for the sake of objectivity, I know you said you currently rent one of the apartments, but do you also own an apartment in the area?
Kay, could you please explain – this makes no sense to me……
The remainder of my question has been deleted, as apparantly it was misinterpreted as “getting stuck into…” and that was not my intention. My apologies once again to Kay, and anyone who may have seen my asking for clarification as a form of personal attack.
Cheers,Jo
I tend to agree with Kay on this. While I can see the Docklands attaining prestige, I see Southbank as a 50/50 chance of developing into a lower socio economic class.
The Southbank apartments are fairly average in size, layout and fittings. Saleable when new but watch out in a few years time when the poor workmanship and quality of materials becomes very evident.
If I was looking for something close to town I’d concentrate on Port Melbourne, Albert Park and St Kilda.
I did look at quite a few OTP CE apartments a couple of years back. My gut feel at the time screamed “stay away” and I am so glad I listened.
*sigh*
Jo, I spent much of my life in melbourne. My family lived variously in richmond, brunswick, elwood, glen iris, The Basin… and I have read about social problems in southbank in much of the Melbourne media.
Thwe question to george was to ask him, if he disagreed with the “slums of the future” comment, did he have any personal interest in the area. People “talk up” places that they have a personal/business interest in… I was wondering if he owned an IP perhaps in the area. Sometimes, I have chosen not to make comments about areas that I own in, because, unless I say I have an IP there, then my opinion is not as objective as it might be if I do not have a property there, but am speaking out of research I may have undertaken.
I thought my request for discolure wopuld have been fairly easily understood. Please Jo, don’t try to engage me in the kind of personalised arguments you have with others on here. I was asking george a question- my question to him was not hostile, so I’d ask you to take your derisive comments and argue with someone who cares.
kay henry
Kay said
>>>That area is not looking good, from a driveby point of view. Also, there are lots of social problems (hoons) in the southbank area. Slums of the future is my call on them.>>>
I tend to disagree. You get hoons in all different inner city areas. As Melbourne matures more people will move into inner melbourne. I work near Southbank, but I personally dont like the buildings and prefer to live in other areas. I would go for a 2 bed unit in South Yarra myself. I often go for walks at lunch time and there is always new development taking place.
I still prefer Docklands to Southbank. On Friday night I had dinner in Southbank and walked to Docklands via the Casino. Outside Southbank I was asked twice for food money from kids. Having lived in San Francisco I have no qualms nowadays saying NO. But it is off putting.
I felt safe walking all the way to Docklands on my own but that was at 6:00pm. I dont know about 11pm as I got a lift home with the boys.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
