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Historically low interest rates are driving signs of an improving residential market, according to Lend Lease which just posted a 10% increase in statutory profits for the year to $551.6 million.
It has construction backlog revenue of $17.3 billion and $15.0 billion of funds under management. The estimated end value of its development pipeline is $37.4 billion – the largest in the company’s history.
“While the market outlook presents challenges, the depth of our pipeline provides Lend Lease with significant earnings visibility and a platform for a strong growth trajectory over the next three years,” the newly reappointed Steven McCann said in a statement.
It says the domestic environment is challenging but says there are early signs of an improving residential market given low interest rates.
“(The) Australian interest rate environment should provide more favourable outlook for residential markets,” Lend Lease said in its results.
It says it had increased residential enquiry levels as well as strong pre-sales at key urban regeneration projects.
It made progress on six major projects in Australia during the 2012-2013 financial year.
Click to enlarge
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awalsh-7Ub9EypybQ

Residential recovery under way as Lend Lease posts 10% profit increase

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Auction clearance rates have been bouyed by investor activity at record levels in Sydney, contributing also to strong quarterly price growth, according to the latest housing market report from Australian Property Monitors.
<img height="337" width="470" src="/images/stories/2013/08/sydney-aug-26-chart-one.jpg" alt="sydney-aug-26-chart-one">
“The Sydney housing market continues to track at record levels, with the July auction clearance rate at 75.9% - the highest ever recorded for that month and the second highest monthly rate on record,” the report by Australian Property Monitor senior economist, Dr Andrew Wilson says.
“Seller activity is responding to strong clearance rates, with Sydney auction listings in July 16.4% higher when compared to July last year.
“Sydney house prices are unsurprisingly on the rise as buyer competition for properties intensifies. The Sydney median house price rose by 2.7% over the June quarter, which was the highest quarterly rise recorded since March 2012. Sydney house prices increased by 4.2% over the first half of 2013, and were up a total of 6.7% over the whole financial year.
“Investor activity continues to be a significant contributor to the Sydney housing market, with latest ABS lending data for New South Wales showing investors at record levels, and contributing to more than half of national home loan commitments.”
<img height="303" width="470" src="/images/stories/2013/08/sydney-aug-26-chart-two.jpg" alt="sydney-aug-26-chart-two">
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Sydney auction clearance rates soaring: APM's 2006-2013 chart

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CUA has dropped interest rates on its three year fixed rate home loan from 4.89% to 4.79%.
Its comparison rate is now 5.29%.
CUA’s Jason Murray says the product is now the equal lowest rate in the market and 30 basis points lower than the lowest rate offered by the big four banks on an equivalent product.
“The market is fiercely competitive at the moment and as a result, it’s an ideal time for Australians to shop around for a great deal on their home loan,” Murray says.
According to CUA, over the three year fixed rate term of a $300,000 loan, paying principal and interest, its three year fixed rate home loan at 4.79% could save homebuyers $43 per month – or $1,551 in interest payable over the full term of the loan (three years), when compared to the average rate of the big four banks' equivalents.
On June 26 <a href="/news">CUA cut the rate by 10 basis points</a> to 4.89%.
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CUA cuts three year fixed rate to 4.79%

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There are 10 regions in Australia where the property market is still declining, according to Herron Todd White’s latest monthly report.
The 10 regions are across the ACT, New South Wales, Victoria, and the Northern Territory, but mostly Tasmania and Queensland.
<table style="width: 470px;" border="0" cellspacing="0" cellpadding="0">
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<tr height="20">
<td height="20" width="163">Region</td>
<td width="113">State</td>
</tr>
<tr height="20">
<td height="20">Canberra/Queanbeyan (h)</td>
<td>ACT</td>
</tr>
<tr height="20">
<td height="20">Canberra/Queanbeyan (u)</td>
<td>ACT</td>
</tr>
<tr height="20">
<td height="20">Wagga Wagga (h)</td>
<td>NSW</td>
</tr>
<tr height="20">
<td height="20">Wagga Wagga (u)</td>
<td>NSW</td>
</tr>
<tr height="20">
<td height="20">Shepparton (h)</td>
<td>VIC</td>
</tr>
<tr height="20">
<td height="20">Burnie/Davenport (h)</td>
<td>TAS</td>
</tr>
<tr height="20">
<td height="20">Burnie/Davenport (u)</td>
<td>TAS</td>
</tr>
<tr height="20">
<td height="20">Hobart (h)</td>
<td>TAS</td>
</tr>
<tr height="20">
<td height="20">Hobart (u)</td>
<td>TAS</td>
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<td height="20">Launceston (h)</td>
<td>TAS</td>
</tr>
<tr height="20">
<td height="20">Launceston (u)</td>
<td>TAS</td>
</tr>
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<td height="20">Emerald (h)</td>
<td>QLD</td>
</tr>
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<td height="20">Emerald (u)</td>
<td>QLD</td>
</tr>
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<td height="20">Gladstone (h)</td>
<td>QLD</td>
</tr>
<tr height="20">
<td height="20">Gladstone (u)</td>
<td>QLD</td>
</tr>
<tr height="20">
<td height="20">Gold Coast (h)</td>
<td>QLD</td>
</tr>
<tr height="20">
<td height="20">Gold Coast (u)</td>
<td>QLD</td>
</tr>
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<td height="20">Alice Springs (h)</td>
<td>NT</td>
</tr>
</tbody>
</table>
Source: Herron Todd White
"The Gladstone residential market continues to ease with declining prices still evident which have been decreasing since November 2011. This has been seen across all residential market sectors including vacant land, residential units and dwellings," the report says.
"From October 2010 to November 2011 Gladstone and surrounding areas had experienced strong growth in the residential property sector. This was due to strong investor sentiment after the announcement of the EIS approvals for three LNG projects in Gladstone.
The construction workforce required for completion of these projects is currently at peak levels. 
Subsequently the demand for accommodation has eased significantly with supply currently outweighing demand in the residential property sector. This is putting downward pressure on prices while supply is continuing to increase. 
Local buyers are coming back into the market as prices are decreasing and becoming more affordable. 
"The buyers are first home owners as well as home owners upgrading. Interstate investors are still active however, interest has slowed significantly. There is potential for further market correction while supply is increasing in the proposed new product which will continue for at least another 12 months."
 
<hr>
 Photo courtesy of Diego Molla/flickr.
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Gladstone among the 10 property markets in decline: Herron Todd White

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Melbourne's median house price remains 1.4% below its previous peak of around $561,000 in June 2010, according to Australian Property Monitors’ quarterly housing market report.
Its median price as of the end of the June quarter is $553,447, up 5% over the three months to record the strongest price growth of all the capital cities.
“Melbourne’s housing market continues to record solid to strong results, with buyer activity spread relatively evenly through most regions, price brackets and buyer types,” the report says.
“Auction clearance rates in Melbourne have continued to average close to 70%, which is the highest since the boom period of 2009 and 2010. Seller activity is also rising in Melbourne, with auction listings 9% higher in July 2013 compared to July 2012."
“Melbourne recorded the highest house price growth of all the capitals over the June quarter, increasing by 5% – the best result since March 2010. Melbourne house prices increased by 5.7% over the first half of 2012, and are up by 6.1% over the 2013 financial year."
“Despite strong recent growth, Melbourne’s median house price remains nearly 2% below its previous price peak recorded in June 2010."
“Despite a resilient performance so far this year, the outlook for the local Melbourne economy remains mixed, with the jobless rate expected to rise through the remainder of 2013. This is unlikely to affect the housing market in the short-term, with the market likely to be boosted by the upcoming spring selling season,” the APM report stated.
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Melbourne's price growth strongest of all capital cities, but below previous peak: APM

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Cloud nine has floated over to Brunswick West with a house selling for 41.4% more than the pre-auction price guide, continuing a trend of properties selling above their price guides.
Melbourne auction prices are still hovering around 10% to 11% above their pre-auction price guides.
Auction price results from the past two weeks were consistent with the previous three weeks that followed the July school holidays.
A Property Observer analysis of 47 auction sales in the August 18 and August 11 weekends found 45 of them sold for more than the price bracket indicated by their price guides.
Those 45 sales sold for an average of 10.4% more than the upper bracket of the price guide – slightly down from 11% in the previous survey.
A slightly greater proportion of properties sold for more than 10% above the price bracket – 18 out of the 47 sales compared to 25 of 68 sales in the previous period under review.
A <a href="https://www.nelsonalexander.com.au/properties/buying/brunswick-west-43-smith-street" target="_blank">three bedroom home</a> at 43 Smith Street in Brunswick West (pictured below) sold for $1.018 million despite a pre-auction price guide of $660,000 to $720,000.
{yoogallery src=[images/stories/2013/08/aug23brun]}
Buyer's agent Catherine Cashmore said interest in the property was unprecedented. A valuation prior to auction put it at $850,000 and the first bid of $740,000 was more than the reserve. There were more than five bidders on the corner block California bungalow. 
"Prices in the area are being pushed 10% to 20% above reseves. We assessed that in the current market it could worth $850,000. The first bid put it straight on the market," Cashmore told Property Observer.
"The agent did the right thing. The reserve wasn’t too far from his range. We'd anticipated $850,000 but at $950,000 there were still three bidders, over $1 million there were two.
"The price was far above what could be justified by any comparable or any previous sale.
"You could have had a developer who’d assessed that he could make his margins on it.
"But if it’s the classic buyer putting down a deposits of 20% and borrowing 80% you'd have to ask if the valuer will rubber stamp it."
It was sold by Nelson Alexander agents John Matthews and Jillian Brooke.
The next greatest disparity was a four bedroom weatherboard house at <a target="_blank" href="https://www.jelliscraig.com.au/property/RINGWOOD-25-Kendall-Street/5809549/">25 Kendall Street in Ringwood</a> (pictured below) which sold for $761,000 despite a price guide of $540,000 to $590,000 - a difference of 29%. 
{yoogallery src=[images/stories/2013/08/aug23rich2]}
It was sold by Jellis Craig agents Daniel Bullen and Stephen Le Get.
Of the 47 auctions analysed just two sold for the indicated price guide.
Homes in the sub $600,000 bracket were closer to their price guides than other brackets, selling for an average of 5.44% more.
Homes in the $600,000 to $1 million bracket sold for 12.3% more than price guides.
And homes in the $1 million plus bracket sold for 20% above price guides.
Cashmore says a lot of bidders at auctions enter in a testosterone fuelled competition to win the property, only coming to their senses after the auction.
"When you bid for a property and get caught in a battle you don’t get a chance to step back and think rationally. One of the reason advocates try to go down prior to auction is even though you pay a slight premium when the agent calls around the other buyers to ask if they want to put down a counter offer they have a chance to sit  down and think," Cashmore says
"Most of the buyers have done their homework and they can think reasonably about what it’s worth and what they want to pay. When you’re caught up in an auction there’s a pseudo endowment psychology. It's almost as if you own it already."
The auction results analysed in the survey are taken from <a target="_blank" href="https://www.nationalpropertybuyers.com.au/">National Property Buyers</a> who attend auctions of properties they deem to be investment grade.
The price quotes are received as close as possible to the auction date to avoid step quoting practices, the buyers agency notes.
Meanwhile RP Data's Cameron Kusher notes an inevitable interest rate rise could spell the end of a rebound in the Melbourne housing market.
Melbourne house values have increased 3.4% over the past  financial year – compared to a decrease of 6.6% the previous year – a recovery that Kusher puts down to low interest rates.
“But my concern is how this rebound can be sustained, particularly once mortgage rates start to rise,” Kusher wrote in the Herald Sun recently.
“I struggle to see how the recent increase in home values is based on sound market fundamentals. Values have risen across the city virtually unabated, bar a fall in 2008 and 2011, since 1996, which has stretched affordability.
“While unemployment remains relatively low, as do mortgage rates, if there is a shift higher in either it could have an adverse impact on Melbourne home values”
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As durability of the rebound is questioned, Melbourne auction prices still selling 10% above pre-auction price guide

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Many properties under the National Rental Affordability Scheme have had valuation concerns leading to borrowing hurdles but mortgage brokers suggest there are still opportunites.
There have been <a target="_blank" href="/news">concerns that NRAS properties are overpriced </a>because of the exorbitant commissions charged by property spruikers.
“But some of the NRAS properties are legitimate. There’s a mixture out there,” says Colin Rice, a Perth-based mortgage broker who’s dealt with several NRAS sales.
On many of the sales he’s dealt with the bank valuations accord with the asking price for the property.
He brokered finance on a Footscray property which was initially valued off-the-plan at the $499,000. The investor then paid $499,500 – the price it was valued at upon completion.
“The bank value and what the client actually paid was the same. That’s a good thing. It’s hard to say what the valuer went on. It’s possible the valuer didn’t know it was an NRAS property or maybe they just went on face value,” Rice says.
In September 2012 Rice brokered finance on an NRAS property in Petrie in Moreton, Bay Queensland. It was purchased at $331,000 but the bank valued the property at $310,000 – a significant shortfall but not enough to dissuade the buyer.
“I assume he proceeded because of the tax benefits of owning an NRAS property,” Rice says.
“The valuer did make note it was in a declining market at the time.”
And he brokered for an NRAS property in Manly West which was valued at $410,000 of-the-plan and $420,000 on completion. It was purchased for $430,000.
“There was an improvement in the valuation. I don’t know if there was a rise in the market or if it was undervalued in the first instance.”
“It’s is a common assumption the valuers assume there’s been a large commission which is automatically taken off the value.”
But in each instance the sale proceeded without too much of a set-back from financing issues.
Early teething issues with banks seem to have passed and any difference in valuation is made up in equity from another property.
“Initially I think the banks were a bit hesitant because they didn’t know quite how it all worked and the legalities but now they have their head around it most of the banks will do NRAS.
“They don’t have an issue with it, you just have to disclose to the banks it’s an NRAS property.
“They just look at the overall exposure of the clients. If it’s on the mark then the banks are happy. I haven’t had  any that have been declined because it’s NRAS. Not at all.”
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Brokers find NRAS opportunities that accord with lender valuations

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Buyers agent Patrick Bright says he would avoid properties being sold under the National Rental Affordability Scheme which have seller commission fees set too high.
Bright says NRAS properties should be valued lower than what they are being sold at.
“I wouldn't touch an NRAS property for several reasons. And yes the valuations should be a lot lower,” Bright tweeted.
Property Observer noted banks have been <a href="/news">refusing to lend on some NRAS</a> properties saying they are overpriced given hefty spruiker fees – some say as much as $25,000.
“$25,000 for an intro to a developer is in my opinion a complete rip off and it’s just being passed onto the buyer,” Bright wrote on linkedin in further comments on the Property Observer article.
“(I would) love to see a planner justify how that would be putting your client’s interests ahead of your own.
“I am sure the FPA (Financial Planning Association of Australia) would come up with an argument though as they have done pretty well to water down FOFA (Future of Financial Advice reforms) from what it should have and could have been. As per usual lobbyists get to the pollies and the public continue to suffer.”
Property commentator Margaret Lomas recently write that <a href="https://www.propertyobserver.com.au/western-australia/is-there-really-government-income-guaranteed-housing-ask-margaret/2013081464151" target="_blank">re-sellers can receive a $25,000 plus commission</a> to sell NRAS properties which inflate the price.
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NRAS properties overpriced: Buyers agent Patrick Bright

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The Hilton development in Surfers Paradise will go down in history as one of the worst loss-making Gold Coast high rises for property investors, with virtually every initial off-the-plan apartment buyer losing money.
Property Observer has found 40 of 41 apartments in the ill-fated development, resold  at big losses. Just one of the original buyers managed to resell an apartment at an increased price – a measly $5000 extra after six years.
Some of the worst losses were at the prestige end. Unit 2205 originally sold in June 2012 for $2.435 million. It then sold six months later for $1.675 million –a loss of $760,000.
Unit 2305 originally sold off the plan in 2006 for $2.465 million. It then resold in May 2012 for $1.725 million – a loss of $740,000.
Unit 23202 originally sold in June 2012 for $1.9 million but resold in February this year for $1.3 million – a loss of $600,000.
And unit 3401 originally sold off the plan for $1.81 million in 2006 and then for $1.3 million in April 2012, a loss of $510,000.
But it’s not just early investor who lost money. Investors who bought as recently as 2012 have lost significant sums of money.
Unit 3603 sold in June 2012 for $1.116 million, and sold four months later for a $121,000 loss.
And unit 3201 sold in July 2012 for $950,000 and resold in April this year at a $35,000 loss.
The only original buyer to sell at a higher price waited six years before selling. They bought the three bedroom apartment at unit 3204 in 2007 for $1.295 million, selling at $1.3 million in February this year – a $5000 return.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/stories/2012/12/hiltonsurfers.jpg" alt="hiltonsurfers" width="470" height="346">
Just one apartment remains unsold in the Boulevard Tower and seven in the Orchid tower with slashed prices attracting a surge of buyers in the past year.
The Boulevard tower has 186 units made up of one, two and three bedroom apartments.
The 57-level Orchid Tower houses the 169-room Hilton Hotel and 224 apartments.
In 2007, off-the-plan apartments were priced from $594,000 for one-bedroom units to $1 million-plus for two-bedroom units with study.
The developers are now selling the last eight remaining apartments. Three Sixty was recently marketing a two bedroom, two bathroom unit on the 25th floor which was being sold for $1.025 million but is now priced at $785,000.
A two bedroom, two bathroom unit on the 10th floor was being sold at $935,000 but is now being sold for $705,000. And a two bedroom, two bathroom unit on the third floor which was being marketed at $799,000 is now being sold for $665,000.
Peter Malady, managing director of 360 Project Marketing - the group marketing the remaining eight units -  says units are being discounted by as much as 36% from their original asking prices.
Buyers from all around the world have been snapping up apartments now - coming from China, South East Asia, New Zealand, domestic and local.
Malady says most of the buyers have been investors but with some owner occupiers.
Construction started on the $700 million project in early 2008 but was halted later that year when it was crippled by debt and funding issues. By September, developers Raptis Group were under the administration of Deloitte who with the backing of ANZ managed to restart construction with the help of Brookfield Multiplex in 2009.
The Boulevard Tower was finished in late-2010 and the whole project officially opened on September 14 after the Orchid tower was completed.
Raptis bought the site, formerly the Dolphin Arcade, for $59.3 million in 2005 from Villa World, which had bought it for $32.7 million in 2002.
Construction of the hotel was triggered by increased tourism from China and India.
In July 2012 it was reported 101 buyers were being sued by ANZ after failing to settle on their apartments.
"Out of the 410 apartments we’d sold about 385 of but at settlement time a number of clients weren't in a position to settle. Valuations had moved not only in the Gold Coast Hilton project but also family homes," Malady told Property Observer.
Malady says there was a recent surge in sales.
"It’s been strong this year, absolutely and reasonably last year. There’s no supply here on the Gold Coast. There’s limited supply left in the three supers towers - Soul, Oracle and Hilton." 
There has been more than $54 million in apartment sales this year.
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Hilton Surfers Paradise resale price collapse for all but one exiting property investor

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John McGrath says one of the most attractive traits of Sydney’s Barangaroo development is its green credentials.
“One of the coolest things about Barangaroo is its plan to be Australia’s first large-scale carbon neutral community – in fact, the aim is to make it the first of its size in the world to be climate positive,” McGrath wrote on Switzer.
“Sustainability has been a major factor in the masterplan, which includes a harbour cooling system, a recycled water service that will deliver 60 Olympic pools of recycled water to the CBD per year; a waste recycling service; and 6,000 square metres of solar panels.”
He says the $6 billion Lend Lease development will reinvigorate the city but will also lead to many commercial developments being transformed into residential towers.  Major commercial tenants in the project will be Westpac, KPMG and Lend Lease – the group developing the site.
“As Barangaroo attracts the city’s best commercial tenants, this will probably result in some older commercial buildings in the CBD being redeveloped into residential apartments, as demand from commercial tenants declines.”
“This isn’t a bad thing as there are plenty of buyers who are keen to live in Sydney’s CBD. Executives love new apartments and living in the CBD means they’re close to work as well as all the great entertainment and lifestyle amenities the city has to offer.
“Downsizers are a group of buyers increasingly heading to the CBD, as many Sydneysiders refuse the seachange option in favour of New-York style living close to all the action.”
The development hopes to have 96% of all people heading there arriving by public transport, bicycle or by foot.
The 22 hectare former container port will hold 23,000 workers will house up to 1,500 residents living in 800 apartments.
It will also be home to James Packers' new $1.4 billion casino which McGrath says will attract high net worth Asian visitors.
Barangaroo South – the first of three areas at Barangaroo will open in 2015 and will host apartments and three commercial towers.
The six hectare Headland Park will open in mid-2015 and will have waterfront promenade, native gardens and cultural spaces.
And Central Barangaroo’s preliminary plans include large public spaces, cultural and civic components and further commercial development.
Some <a target="_blank" href="https://www.propertyobserver.com.au/developments/harbourfront-barangaroo-apartment-developments-stoke-significant-anticipatory-interest/2013080863814">5000-plus enquiries by prospective buyers</a> have emerged for the first luxury apartments at Barangaroo South.
There are just the 159 off the plan apartment offerings in the first two buildings which are due for completion by late 2015.
The two low-rise buildings, the Alexander and Anadara, are the first two residential instalments of a master plan that will eventually include 800 apartments at Barangaroo South.
But they don’t come cheap starting at $1 million for a one-bedroom apartment.
The two-storey penthouse on the northern wing of the Anadara building, known as The Cloud, is expected to fetch more than $10 million.
 
 
 
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John McGrath's sights set on sustainability at Barangaroo 

For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

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The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

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The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

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According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

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Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

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Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

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Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

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Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

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Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

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Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

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Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

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Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

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La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

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<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

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Alistair Walsh

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