14/11/2013 - 14:16

Developers cautiously back into high-end projects

14/11/2013 - 14:16

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Luxury apartment projects have been a risky business in Perth and not many developers are willing to venture there; but there are a few exceptions.

Developers cautiously back into high-end projects
VIEWS: Gary Dempsey at the Bluewater project in Scarborough. Photo: Attila Csaszar

Luxury apartment projects have been a risky business in Perth and not many developers are willing to venture there; but there are a few exceptions.

Still smarting after the hit they took after the GFC, Perth’s luxury apartment developers are gradually re-establishing their footprint in the marketplace, recording strong pre-sales across a number of projects.

There’s no doubt they have a quality product to sell, with the million dollar views from the balcony of the Bluewater apartment building in Scarborough, for example, offering a glimpse of the luxury available to the fortunate few.

It’s a similar story at the Taskers site in North Fremantle, where a viewing tower looks out over both the river and ocean.

However among the handful of apartment projects targeting the top end of the market, Port Bouvard’s namesake project south of Mandurah, Mirvac's Leighton apartments, and the Rivershores apartments in North Fremantle all have a rocky history.

Still others have managed to navigate the GFC and its fallout and are positively targeting growth.

In Claremont, Aria Land has teamed up with Otan Property Funds Management to develop the Freshwater project, with 70 apartments.

Not far away, Westland Investments’ Dalkeith on Waratah comprises 31 luxury apartments, with prices starting from $1.5 million.

A third example is 52 Mill Point, which has eight apartments and an average price of $2.27 million. Three of the eight have sold, according to project manager Finbar.

Developer Gary Dempsey has put together the Bluewater and Taskers projects, with AFG Property being the joint venture partner at Taskers.

Mr Dempsey said the demand for his luxury apartments was evidenced by the pre-sales; he has achieved 80 per cent pre-sales at Bluewater and 70 per cent pre-sales at the first stage of the Taskers project.

Most of the buying interest has come from people already living near the beach or in the western suburbs, who want to downsize from their family home.

“They want something smaller but they still want the quality of the homes they lived in,” Mr Dempsey said.

“We will have the exact same specifications, for fittings and finishes, as luxury houses.”

Mr Dempsey is the developer and builder of both projects, and takes an active role in sales and marketing.

He believes this integrated model is key to his operation, as it gives him full control over the end product.

He also believes being close to his market is an advantage.

“I only want to develop in areas that I would want to live,” Mr Dempsey said.

He has seen many other developers get into strife because they don’t really understand the local market.

“That’s another mistake some of the national and international developers have made in the past; they assume if something works in Sydney or Melbourne, it will work here.”

History

Mr Dempsey started off building houses and duplexes, and later set up commercial builder Strategic.

His experience as a developer included a luxury apartment project in South Perth about a decade ago.

“That did extremely well, so I decided there was a market for the top-end apartments,” he said.

His approach to that development is similar to what he is doing at Scarborough and North Fremantle.

“We did something unprecedented at the time, we had three high quality units; we could have built nine on that site but that’s not the kind of project I wanted,” Mr Dempsey said.

It’s been a long effort getting his current developments off the ground but Mr Dempsey seems pleased with progress to this point.

“I was really frustrated before; this is what I’ve always wanted to do,” he said.

Bluewater comprises 36 luxury apartments, ranging in price from $627,000 to $3.75 million.

Similarly, the price range at Taskers is from $585,000 for a one-bedroom apartment up to $5 million.

Like any property developer, one of the big challenges facing Mr Dempsey is getting financial backing.

“The lenders haven’t been in tune with what’s going on in the local market,” he said.

“Typically decisions are made in Sydney or Melbourne.

“It took them a long time to get their heads around this.”

At Bluewater, he brought in several individuals as co-investors, with St George Bank providing the debt funding,

At Taskers, AFG Property came in as joint venture partner while NAB is the senior lender.

“Private financiers have started approaching me, so it will be easier for my next project,” Mr Dempsey said.

Taskers saga

The Taskers development will comprise 130 apartments, built in four stages, along with eight three-storey town houses.

Communal features will include a cafe in stage 1, along with 3,000 square metres of parkland, a 25-metre lap pool and a gym.

An eight-metre deep excavation of the limestone base has been completed, allowing construction of the basement to start last month.

Mr Dempsey has been working on the project for the better part of a decade.

Initially the project was stalled while waiting for planning approval from former minister Alannah MacTiernan.

Then it was delayed by objections from the former Fremantle council, in part because councillors considered six storeys to be highrise.

Mr Dempsey responded by appealing to the State Administrative Tribunal.

“They gave us full approval,” Mr Dempsey said, though only after paying $400,000 on expert consultants and in legal fees.

The tribunal ruled that the structure plan for the Taskers site would have “an acceptable visual impact” and was “an appropriate urban design response to its site and locality”.

Tony Beamish’s investment group SAS Global went to the SAT at the same time, in a bid to get approval for a planned development on the neighbouring One Steel site.

SAS Global, which later collapsed under the weight of its debts, was not successful, with the tribunal deciding that its larger building, up to 12 storeys in height, would have a “significant and detrimental visual impact”.

The tribunal ruling, delivered in March 2009, was followed soon after by the GFC.

Mr Dempsey spent the next two years refining his plans for the project.

The stage 1 development, with 51 apartments and four penthouses, is about 70 per cent sold.

Based on progress to date, Mr Dempsey expects to launch stage 2, with two apartment buildings and eight townhouses, later this year.


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