By Matthew Cranston, Financial Review, 22nd Jan 2014
Investors from Sydney and Melbourne are flocking to Brisbane’s apartment market seeking better value for money after being pushed out of increasingly expensive southern cities.
Brisbane developer Silverstone Developments reports that 72 per cent of off-the-plan sales in its Vertice project at Dutton Park were sold to interstate buyers. “NSW investors are far and away the largest property investors in our current boutique inner-city apartments, and the number of ACT and Melbourne investors is also on the rise,” Silverstone’s managing director, Troy Daffy, said.
Other developers, from listed groups such as Lend Lease, Mirvac and Stockland, to privates such as Metro Property Group and ARIA, are all reporting surging interest from interstate buyers.
Sydney resident Garth Williamson, who just bought in the Vertice project, said he purchased in Brisbane because it was better value.
“I have looked around Sydney – it would be nice to buy something here, but to get the same yield here as I would in Brisbane at the same price points, it’s a lot tougher,” Mr Williamson said.
“I think the market up there is about to take off. I think there will be a long-term capital growth and I think there will still be strong yields – I am looking at 6.5 per cent yield for my two-bedroom apartment.”
Silverstone’s other projects, Siena Milton and Sanctuary on Oxford, have seen interstate investors snap up 63 per cent and 71 per cent of those apartments respectively.
“Interstate investors have signed unconditional contracts on every single apartment in our new development in Brunswick Street, New Farm, called Lucca, which hasn’t even been publicly launched yet,” Mr Daffy said.
Lend Lease managing director for apartments Matthew Wallace said The Green project at Brisbane Showgrounds has experienced increased sales from the NSW market.
“We believe Lend Lease’s strong reputation in Sydney is a driving factor, along with price, value for money and regeneration of the showgrounds precinct,” he said.
Mirvac’s chief executive for residential John Carfi said there was an upswing in sales of quality Brisbane properties to interstate investors.
“The low rental vacancy rates and increasing rental yields in prime locations across Brisbane, as well as the price differential between Brisbane properties and those in southern states, provides an attractive offering to interstate investors,” Mr Carfi said.
The chairman of valuation firm Herron Todd White, Gavin Hulcombe, confirmed there was evidence that Melbourne and Sydney residents priced out of the market were looking to relocate.
“One of the drivers in the 1990s and early 2000s was that there was a bigger price gap between Sydney and Brisbane. Then the gap closed between 2003 and 2007. Since 2007, the gap has slowly opened up again and that is partly because of the increase in Sydney prices and the decrease in Brisbane’s.”
Mr Hulcombe expects further interest will be contingent upon how many jobs the south-east of state creates.
In areas close to the city, such as South Brisbane, ARIA and Metro Property Group have started projects and interstate demand is growing.
Metro’s Property’s chief executive Luke Hartman, who is based in Melbourne, said: “I think with the run of the market in Sydney and Melbourne, you have seen Brisbane become more attractive. There is a lot more value for money in the Brisbane market.
“During the global financial crisis, very little construction took place, and the rental demand is very strong.”
Stockland’s Kingsley Andrew has also noticed the change: “There is reviewed interest from NSW, Victoria and Western Australia, and this is most evident in the established housing market. We expect this to flow through the new housing in the coming six to 12 months.”