End User Apartments Defy Slowdown

We hear of the demise of property hot spots Noosa, Byron Bay and the Gold Coast – the property icons the media love to love when it’s booming and love to hate when it’s not.But despite the realities facing the property market across the board, we have unearthed one sector that is going along just swimmingly thank you very much – the primely positioned, end user apartment market.We have two cases to make our point.The first is Settler’s Cove at Noosa – a $650 million ‘residents only’ apartment project that is continuing to see demand for its apartments to such extent that the developer, Ralph Sarich’s Cape Bouvard, is proceeding with the construction of its next stage Iluka.Interestingly these apartments (some of which have already sold off the plan) are similarly priced as the previous stages of the project which were completed in 2007 before the GFC.The second project is the $88 million Eclipse, an apartment project currently under construction on the beachfront at Broadbeach by Amalgamated Property Group.(Yes, an apartment project that has just started construction on the Gold Coast and yes it has achieved 27 sales at a total value of approximately $40 million equating to an average sales price of $1.5 million).Noosa agent David Conolly, of Century 21 Conolly Hay Group, says the limited choice of high quality apartment stock for the end user market has helped to insulate the end user sector from the downturns experienced in the luxury housing market.“We’re seeing ongoing demand primarily for apartment living from those people aspiring to retire in Noosa against a predominance of investor-driven holiday apartments or large luxury homes,” said Mr Conolly.“It’s a supply and demand equation – while prestige homes and higher-end rental apartments have seen price corrections, the market for luxury end user apartments in the $1.5m -2m price bracket is quite resilient.“The percentage of retirees entering the Noosa market will continue to grow in the coming years and they will look to fulfil their plans regardless of the perceptions in the market. They’ll want to get on with their lives.”On the much-maligned Gold Coast, only 26 apartments remain for sale across a total of 146 beachfront apartments targeting end users in Broadbeach – one of the city’s most tightly held markets.Chris Litfin, head of project marketing for CB Richard Ellis Gold Coast, says the beachfront market for end users in Broadbeach has continued to attract robust inquiry because of the rarity of residents’ only apartments.“The beachfront market is a very small sector of the overall apartment market in Broadbeach but it continues to attract strong interest just for what it is – a beachfront apartment for residents,” said Mr Litfin.“Other areas of the property market tend have struggled in these times, such as apartments offering holiday letting.“But there is always inquiry from people who want to live on the beach in resident only developments and the small number of available apartments to meet their criteria is keeping both sales and prices stable.”Mr Litfin said only 100 apartments have been developed in Broadbeach over the last decade to meet demand from the end user market, including Amalgamated Property Group’s (APG) Verve, Juniper’s Waterline and Howard Group’s Vogue on Broadbeach.“Residential apartments are some of the tightest held property on the Gold Coast and the fact that there are very few new projects coming online given the current market activity is only accentuating a shortage of supply,” said Mr Litfin.“People are not only buying here because of the location – they know there is nothing proposed on the back of the completion of Eclipse and the opportunity to get into this tightly held sector of the market may be some years off if they don’t get in now.“Similarly, buyers are getting tremendous value in this type of stock because of the economic environment – five years ago you would be lucky to get into a beachfront apartment targeting end users for under $2 million and now it is possible for around the $1m mark.”Mr Litfin said over the last five years, 50 of the 100 end user apartments had traded at an average price of $2 million, with 20 selling in 2007 soon after the settlement of Verve.The average selling price had remained constant over that period when other sectors of the market such as holiday let apartment had dipped in some cases.“Owner-occupier product tends to hold its value well because people tend to only sell when they are moving, and if they can’t achieve the price they want that will simply stay put,” said Mr Litfin.“Beachfront apartments targeting end users will always attract a higher premium than a few blocks back from the beach in holiday let apartments.”