Glenelg Apartments

[callum.newton]

Evening All,

I have been looking at -and am suprised by- the large volume of apartments for sale around the Glenelg foreshore, particularly around the Colley reserve area. Can anyone suggest a reason for this?

Are there issues with the management of the apartment complexes?
Has an oversupply caused the rental price to drop significantly?
Issues with the building construction?
Complaints arising from the nightclubs in the area?
Is there something obvious I am missing here?

Everyone talks about Glenelg being a boutique area and that the capital growth potential of the area is sound, but it seems that a disproportionate number of those apartments are for sale as compared to other property in the area.

With all of this competition, the advantage has swung back into the buyers favour but, why are so many on the market at the same time?

Cheers for any input.

C

 

[Gools]

Callum, you might want to have a look at this thread:
http://www.somersoft.com/forums/showthread.php?p=436089&highlight=Glenelg#post436089

It will answer most of your concern.

Appears that Glenelg has an oversupply of low yielding appartments. Timing your entry to the Glenelg market will be important. I don't think just yet is that right time. Let the shake out finish first.

Gools

 

[eightgrate]

Glenelg is Excellent

There is nothing wrong with Glenelg, just too many apartments build in such a short space of time. It has the best facilities in Adelaide outside the city, is 20 mins to the CBD and serviced by the tram, amazing beaches, cafes, restaurants etc etc. it really is Adelaide's 2nd hub.

As with populated areas (just like the CBD) It can get a little noisey at times, but a few of my friends live in apartments down there and you cant hear much. It is quieter than the city. In my opinion most are well build with the only expection being Liberty towers (corner of colley and anzac, the big white eye sore). Liberty towers looks a bit too 'tacky' Gold Coast for me, the others look good and will keep looking good decades later.

After yesterdays hot weather and walking down Glenelg and the beach, it is a very special place, just ask any tourist. If I could afford one i'd buy straight away. Glenelg is what Port Adelaide is aspiring to be, if it ever gets there its a long long way off and it will wont be as desirable as it doesnt have the beach right there.

 

[atti]

true but the port has two things that got going for them, beach 5 mins drive away, multi million dollar development and JOBS!! everyone would like to live close to their work (SUB MARINE + DESTROYER), if u can get something like 2 bed room for super cheap in port i would get it.

i am doing research into apartments atm, as some of city ones gives good + cashflow being that if u got good LVR. i need to find out if these rent back options are garantee P.A or just a hoax.

 

[eKwatee]

Evening All,

I have been looking at -and am suprised by- the large volume of apartments for sale around the Glenelg foreshore, particularly around the Colley reserve area. Can anyone suggest a reason for this?

C

My opinion and it's only an opinion is that to many speculators thought they could buy these apartments off of the plan and on sell them before completion. Allot of investors did this really well and made good gains on selling them, especially in the first couple of apartments built, but when it come to the completion of the Platinum apartments, they couldn't sell them. Allot of the apartments sold off of the plan by the developer in the Platinum building were only for speculation, not for owner occupiers so it skewed the true demand for these apartments. The real demand for people wishing to live in the building wasn't there. So come time for the speculators to settle once the building was completed, they couldn't on-sell them and were forced to settle or loose their deposits so they had to to settle and rent. Hence oversupply of rentals with no real or true demand. I believe allot of the investors who bought these didn't really want them.

 

[callum.newton]

Thanks for the link to that discussion Gools. I had read that discussion already but it didn't really explain to me WHY so many investors had purchased those apartments and are now attempting to get out. Thanks for your opinion eKwatee on this matter, this was probably the answer I was looking for.

Timing your entry to the Glenelg market will be important. I don't think just yet is that right time. Let the shake out finish first.
Gools

Gools, By "shake out" I assume that you mean the time it takes for oo to decide that they would want to live in those apartments and begin buying out the investors or increasing demand to drive rental prices up. I must admit that I have not experience this type of phenomena before. What are your thoughts on the time it takes an area such as Glenelg to achieve this? As I am also looking at the Port Adelaide area, it has been suggested that this type of sudden oversupply will create a similar situation there as well?

What sort of triggers would cause each of these areas to suddenly have a large interest from the oo/renting types?

Eightgrate you are right about the image of Glenelg and its "special place". When I was growing up in Adelaide, I used to be a nipper at the local surf life saving club...and that was way back when Magic mountain graced the foreshore with its "unique"silhouette!!!

Cheers

 

[Gools]

Callumm,

By shake out I mean the time it takes for the people that don't really want to be owners there to sell out. Then a good solid base is formed where long term investors and OO's are the majority of owners. This would make for less apartments to be on the market at anyone time and prices can stabilise.

The hard part is you need to pick the last part of the "shake out" occuring so you can get one at a good price but have stable growth and yield into the future. Now may well be that time, you'll need to do some solid research to confirm it or not.

I can remember when OTP buyers were screaming at Agents down there to just sell the "darn things". They had been caught out with the profits made by those who had invested first down there. A bit like a pyramid perhaps?

Matt, thanks for your explanation. Exactly what I was thinking but didn't know how to write.

Atti, I don't share your enthusiasm with the Port River developments. I hope my opinion changes and I guess it will but there is still substantial work to be done down there before I would consider it a nice area to own a $500k apartment. At least at Glenelg you are right on the beach and the corridor into the CBD is reasonably nice.

Gools

 

[Rob Williams]

Atti, I don't share your enthusiasm with the Port River developments. I hope my opinion changes and I guess it will but there is still substantial work to be done down there before I would consider it a nice area to own a $500k apartment. At least at Glenelg you are right on the beach and the corridor into the CBD is reasonably nice.

I agree. Glenelg has a huge X Factor which money just can't buy. It's just plain "nice". I've been to the Port River development a few times. No X Factor going on there. Other end of the X Factor scale in my opinion.
It's interesting that there is an overriding assumption that the people working on various projects will want to live nearby. I would suggest that only applies when nearby happens to be somewhere they want to live because it's a nice place to live and raise a family.
Through family and friends, I've had a long term affinity with defence personel. From my experience, I have found that a very high percentage of them simply won't live near where they work. That's despite to option of cheaper than market rent. They want to live somewhere they consider "nice" and are happy to pay more to do so and commute, if necessary.

 

[boomtown]

A proper shake out requires no new developments coming onto the market in the immediate area - the area needs to be built out first (or at least close to built out).

 

[Xenia]

There is nothing wrong with Glenelg, just too many apartments build in such a short space of time.

Glenelg is great I agree, I grew up there!

There is something specifically wrong with the apartments you are talking about, beyond an oversupply, so a thourough due diligence is required. Check out the tenants and get a valuation if you are thinking of buying anything. I cannot provide any further info on a public forum but do your homework !

 

[callum.newton]

Cheers for that expansion of the "shake out" Gools...its something I kind of intuitively knew existed but without knowing how to say/express it. It would be interesting to note the shake out time which the Port would experience when even more of those apartments are built up that way.

This is probably a difficult question, but is there anything like a textbook theory like the "7-10 year property doubling rule of thumb" which could be applied to a "shake out cycle"? Probably a similar answer to timing ones purchase in the property cycle to just before a boom... Still, I would be interested to hear if anyone has any further to add to this.

I'll speak to council when next down that way to find out if any further high rise apartments are on the cards but availability of land for such a project would be an issue I guess.

Good point Rob about the Port using the awarding of the naval contracts to promote itself as the future high density / desirable residential area. A lot hinges on if the tram line is extended...

Boomtown - the shakout is exactly what occured on the Gold Coast a number of years back yes? How long did that take to shakout?

 

[steveadl]

Through family and friends, I've had a long term affinity with defence personel. From my experience, I have found that a very high percentage of them simply won't live near where they work. That's despite to option of cheaper than market rent. They want to live somewhere they consider "nice" and are happy to pay more to do so and commute, if necessary.

Spot on, many of the defence workers who are based at Edinburgh don't live in the area - especially the higher paid engineers etc. Many live in the eastern/north eastern suburbs (I guess depending on their incomes). DHA had a fair few houses in Northgate.

 

[LynnH]

Agree completely with Rob and Steve.

Hubby was in the RAAF used to work at Edinburgh many years ago - back then, you were allocated a MQ (married quarter) in one of the nearby suburbs and had no choice but to live there. Friends who are still in the RAAF live at Belair (southern suburbs) and others are nearby at Blackwood - the commute both ways is against the traffic, so it's easy driving.

As Rob says, living in a 'nice' area beats living in the Salisbury/Elizabeth area hands down.

Cheers
LynnH

 

[silversands]

I know of some who commute from as far south as Sellick's Beach. - 50k's south of Adelaide city. Then it must be another 35 k's approx to base?
That must say something about coastal living and fresh air, verses those suburbs in the immediate surrounds of Edinburgh.

Re shake out of Gold Coast, is that not still happening?

 

[cgw]

Glenelg is obviously the place to be in Adelaide. But Semaphore, near Port Adelaide is just as nice and will improve with Port Keys development, Defence jobs, new highway to RAAF Edinburgh, new tram line from the city to Semaphore.
There is a lot of the older houses on the esplanade at Semaphore to Outer Harbour being rebuilt or redeveloped.

 

[tarah]

Hi Callum,

Glenelg is a beautiful place to live and a great place to invest but I think it is best to spend a bit extra and buy a townhouse or unit in a small complex. A house is even better if you can afford it! It depends on what you are looking for - CG or CF.

Over the last few years there have been so many apartments built in Glenelg so there is an oversupply.

I kept my apartment in Liberty Towers because the mortgage is smallish and the CF is good. With a few -ve geared properties I decided it's a good idea to have at least one property with good CF! At the moment it seems owners are trying to sell out of Liberty Towers due to the holiday renters causing excessive noise (I lived there for 4 years and didn't have any problems though). I received a letter about a year ago from the body corp saying that the building was supposed to be residential only and not holiday rentals. I think the body corp are taking some sort of legal action because the owners weren't told of the Oaks leasing to holiday makers.

Glenelg shows high CG historically from what I have seen so I personally think it is a great place to invest! One day when I can afford to buy my esplanade home I will be buying in Glenelg!!!!

Hope this helps

Tarah