IS Melbourne Overpriced
- Thread starter always_learning
- Start date
Market has dropped, or my current experience
I have just been advised that my units in Melbournes outer seaside location have dropped by around -15% ($305K -> $260K) in the last 4-5months. A painful experience, another drop llike that and I will be in full agreement with L. Bernham!
I have just been advised that my units in Melbournes outer seaside location have dropped by around -15% ($305K -> $260K) in the last 4-5months. A painful experience, another drop llike that and I will be in full agreement with L. Bernham!
geoffw said:
Based on the current valuations bottom line for the development is red
So I am sitting on paper losses, if I sell then I will incure more costs ie. agents fees and GST turning it into real significant losses. As always in a falling market the panic is the bottom will be, when "resistance" begin ie. buyers start buying start? What is worse is the rental market is saturated so I will take another blow if I choose to rent.paul_s said:
Dear Paul,
Sorry I've been in Christchurch and Auckland, New Zealand checking some projects that we're involved with so haven't replied.
Melbourne Docklands $7,000-$7,500/sqm. New Quay are at that price, Mirvac selling about $9,000/sqm (Sydney $12,000-$15,000/sqm). You're right, this is off the plan price which is the market value. Bank valuations are always 20% below market values, and they are stacking up with all the settlements I'm involve in.
Of course, these prices don't reflect the selling price because people read papers, hear stories, so they are afraid and sell, that's why only the minorities are wealthy. Investing is very simple, look at the longer term picture and ignore all short term negativities. I never sell my properties so it doesn't matter what people are doing out there, because properties double every 7-10years. Location is very important, so anywhere in the business district with employment will make you money over the long run- high rental yield, therefore high return on investment and less on the repayments....just don't sell if you don't have to.
For example: One of my IP before I got into this industry was in Keilor near highpoint shopping centre (15mins from CBD) value now about $350k renting only $220/wk, whereas my 1br apartment in Docklands value about $320k renting for $315/wk. I mean that's a difference of nearly $400/month out of my pocket. I want to get rid of that 3br house in Keilor but the costs (cgt, agents fee, etc.) associated with it is too much, so I rather use the equity in it to purchase another IP....never sell!!!
For those who don't know Docklands and it's potential, let me give you some information. The people I'm associated with, the Halim Group is a major financial funder in Docklands who can get access to all projects there and of course, selecting the better projects (location, quality, price, etc) to invest.
About Melbourne Docklands:
-Docklands, meaning a CBD can be built by a harbour. There are only about 9 Docklands in the world, all in an international city, London, Singapore, Hongkong, Vancouver, Capetown, Sydney (Darling Harbour), etc.
-Melbourne Docklands (postcode 3008) in planning for the last 30 yrs and and construction started about 4 yrs ago.
-$9billion funds already in placed and more to come (comparable figure of $4bil for infrastructure of Sydney Olympics)
-Docklands Authority (government body) researched and will put all the major attraction features of other docklands into Melbourne. London eye (ferris wheel), Docklands studio for films, Digital Harbour (Sillicon Valley)
-24hours restaurant, cafe and shopping (incl. 1,000seats Yum Cha)
-One of three Bureau of Meteorology in the world (Moscow and Washington DC)
-National Austrlia Bank head office (4,000 employees) operational now.
-Five star Shangri-La Hotel
-Melbourne times square (version of New York)
-Docklands park (central park New York)
-A world icon on scale with the Opera House
-5 times larger than Darling harbour, Sydney
-Melbourne Docklands is the first infrastructure driven by broadband technology in Australia.
-53% residential (7,000aptments capped by Docklands Authority) and the remaining space for commercial.
-Docklands will be completed by 2010-2012 but all the major areas will be done before Melb's Commonwealth Games 2006
I think that's all I can remember at top of my head, but more info check www.docklands.com.au
Property investors do not be alarm, I just went to a corporate conference (Australia-Isreal chambers of commerce) in regards to property market at Crown. KPMG, Stocklands and the major banks representatives were there. CBA statistics were saying.."next 10yrs, we need 1.6million dwellings to cater for our population and at the moment we are not building fast enough". This equates to about 160,000 dwellings need to be built every year for the next 10yrs and we are not meeting that demand. If we are just talking about Melbourne, it's about 3 Docklands to be built every year. Some of the factors contributing to this demand are:
-Y-generation are moving out much earlier from home
-Migration - international students, business, tourisms, etc.
-Population lives longer
-Divorce rate high, needs 2 dwellings as to 1
-Moving into CBDs where there are jobs
Anyway, I hope I didn't bored anyone. I just got a bit of time in my office so I thought the info would be helpful to all investors. I'm flying to Singapore next week so if you would like more info, you can email me at [email protected] else I'll try my best to check the forum for any responses.
Best regards,
Lance Truong
What BS is this?
A few 'inaccuracies' here Lance;
I'd say there are more than 9 major cities built by a harbour in the world...
What?
I agree with the general sentiment that there has been too much negative hype and there is still hope for inner city investing in the medium term, just not sure about some of the points you raised above.
TheBacon
A few 'inaccuracies' here Lance;
lance said:
I'd say there are more than 9 major cities built by a harbour in the world...
lance said:
What?
These factors dont make it a sure-fire winner.lance said:
I agree with the general sentiment that there has been too much negative hype and there is still hope for inner city investing in the medium term, just not sure about some of the points you raised above.
TheBacon
I'm with TheBacon!
Lance here are a few more inconsistencies:
Migration - international students & tourism are NOT migration. They are short-term residents & frankly I don't think you should consider them in housing stats of this kind.
Population lives longer - well actually this really has not influenced population levels at all, because the government adjusts migration accordingly to maintain a certain % population growth...so it's irrelevent.
Divorce rate high - well stable for last few years & looks to be trending downwards a little as people are again taking longer to tie the knot...so irrelevant
Moving into CBDs where there are jobs - Frankly most job creation right now is occurring between 5 &20km from major metros NOT in the centre of CBDs. And in any case Australia has excellent public transport in most cities, so it's not a key factor for people to live directly in the city itself (which has many downsides as well).
Do I understand correctly that you are a developer or marketer of inner metro units in areas such as the Melbourne Docklands?
Cheers,
Aceyducey
Lance here are a few more inconsistencies:
Not in my experience! Valuations only lag at the conservative side during a boom. When property is flat they tend to be spot on & when property prices are falling (like in the Docklands) they tend to be either spot on or higher than the market value.lance said:
This is not a website. Or at least I can't see it & the Domain Name Registrars I looked at have it listed as available (quick snap it up!)lance said:
These are not what I'd expect to be said at a conference. Because Gen-Y are staying at home LONGER. They can't afford to move out!!!lance said:
Migration - international students & tourism are NOT migration. They are short-term residents & frankly I don't think you should consider them in housing stats of this kind.
Population lives longer - well actually this really has not influenced population levels at all, because the government adjusts migration accordingly to maintain a certain % population growth...so it's irrelevent.
Divorce rate high - well stable for last few years & looks to be trending downwards a little as people are again taking longer to tie the knot...so irrelevant
Moving into CBDs where there are jobs - Frankly most job creation right now is occurring between 5 &20km from major metros NOT in the centre of CBDs. And in any case Australia has excellent public transport in most cities, so it's not a key factor for people to live directly in the city itself (which has many downsides as well).
hmm - looked at tetragroup website - tells me nothing except apparently they are my future.......what are you selling again Lance?lance said:
Do I understand correctly that you are a developer or marketer of inner metro units in areas such as the Melbourne Docklands?
Cheers,
Aceyducey
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lance said:
Regarding $7000-$9000 sqm I think that is way out of kilter with the open market, from what I can see of it $4000-$5000 is closer to the mark, here is a few from domain.com.au (just the ones I found on the first page of listings), those seem to be priced around $4500 per sq roughly, even then I tend to think most of the places advertised won't be selling for amounts close to their asking prices.
"$950,000 - $1,050,000 - This 25sq, 4 bedroom apartment is located in the newly finished third tower of the Mirvac development at Yarra's Edge. "
http://domain.com.au/listing.aspx?mode=buy&id=2004311064
"Price: $298,000 - Apartment 1 bedroom 1 bathroom 1 carspace
Building area: 69 sqm
http://domain.com.au/listing.aspx?mode=buy&id=2004316339
"Price: $330,000 -Apartment 1 bedroom 1 bathroom 1 carspace
Building area: 75.0 sqm
"
http://domain.com.au/listing.aspx?mode=buy&id=2004259773
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regarding melbournes prices....in the bayside suburbs I have seen some house on the market for 4 months, after being passed in at auction. If its A grade stock it will sell, but anything that has negatives, anecdotally I would say a 10-15% drop since last year
funny the stats I read havent caught up with the latest drop, like the com bank site, maybe valuers are telling the banks what they want to hear???? rather than whats really happening out there
HT
funny the stats I read havent caught up with the latest drop, like the com bank site, maybe valuers are telling the banks what they want to hear???? rather than whats really happening out there
HT
paul_s said:
Dear all,
I'm sorry if my info wasn't that useful. I guess it's not really info that I provided, but actually my experience in the investment field and the people I come across and associate with. They have turned me from an ordinary investor to a better one, looking from a business investment perspective and thinking outside the square. If you're happy where you are financially then do continue on that path.
Yes, I'm a senior advisor for a marketing company and very glad to say that, because the people behind us are the best when it comes to properties acquisitions, (Halim, Far East Consortium, Kuok Group, etc.). Since I was involved with the company, all the properties that I have purchased are from the company. My friends and colleagues here have helped me to where I am now and for that I'm very grateful. I guess you are who you know, if your friends are multi-millionaires then you will become one....it's all about knowing the right people. Every investors have their own ways and opinions when it comes to investing. As with me, all I do is used other people's knowledge and skills (OPS) who are successful already, and do exactly what they do.
Anyway, Melbourne Docklands website is www.docklands.com
For those who don't know much about Docklands please take some time out to read about it, because it is one of the biggest x-factors in the history of Australia's property market. I travel quite a lot meeting investors from Sydney and overseas, especially from Singapore and Hong Kong. They are very astute when it comes to properties, but trust me when opportunities come they know because they have the visions, foresights and connections.
I have 3 in Docklands 2x2br ($400k each) renting $390/wk, 1br ($320k) $315/wk, and i'm currently settling a 3br (internal 122sqm and terrace 248sqm) at $650k and bank values at $800k so don't need to use equity from my other properties. The $650k props is not via private sale but under negotiation with the vendor from one of our projects that we marketed. The rental yield deters a lot of the investors away. Sorry we don't deal with Mirvac's or properties in New Quay because of location and price. We also don't deal with resale properties, that you can go to your real estate agents and buy with stamp duties.
Well I hope you all the best in your endeavour to become a successful investor or any other ventures you happen to come across. If there are any new info, I would happy to share it with you on this forum.
Best regards,
Lance Truong
Lance,lance said:
Good luck with your negative gearing. I hope you are seeking independent advice and looking beyond the properties your company is selling. You don't want ALL your eggs (all investments & your salary) in the same basket!!!!
I note that the website you refer to is a marketing tool.
As such investors should not trust any 'facts' contained within it and should seek independent verification.
Lance,
So as a marketer - how are properties that you market valued for purposes of the developer choosing to build them & for the sales price?
On a QS basis? On a consumer product basis (materials/labour/overheads + margin)? Or based on market comparisons? Or another method?
Cheers,
Aceyducey
lance said:
Odd statement. I lived in Singaapore and Hong Kong for about 6 years. In my time there, all I heard about was the negative equity many property investors were carrying. Most people that believed that new apartments in *prime* locations was the only way to go, got burnt badly when the property markets collapsed and now have mortgages that are a lot higher than the value of their apartments.