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Inner city bounces back

OPTIMISM appears to be returning to the inner city apartment scene with the level of inquires in the $500,000-plus market increasing during the past month.

But agents agree that even a solid finish to the calendar year can’t turn around what has been a disappointing 2001.

Asset Special Projects director Tim Willing, who is involved in several projects, including the warehouse conversion at 569 Wellington Street, said the industry suffered a difficult period following the tech crash on the stock market last year.

But people now have taken stock of their financial position and feel confident enough to make a dwelling purchase.

While the bulk of purchases used to come from investors, it is now owner-occupiers who are pushing sales.

Mr Willing said he had noticed a change in the way people decided where to buy an apartment.

“At one time people used to say ‘we have to live in Subiaco or we have to live in Mt Lawley’. That has now been lost,” Mr Willing said.

“People are not saying that they have to live in one suburb. Everyone is saying that they want to live a certain way and there are a number of suburbs that offer that.”

Agents agree that sales have been fairly lean in East Perth, with an oversupply of listings.

“Three months ago supply (in East Perth) was certainly outstripping demand. It seems to have tightened up now,” Mr Willing said.

Figures from the Valuer General’s Office indicate that about 100 fewer apartments were sold in East Perth in 2000 compared with 1999.

East Perth apartment sales for 2000 amounted to $37.4 million – well down on the $56 million worth of sales in 1999. This year is shaping up to be even worse, with only 35 sales worth $10 million thus far, compared with 132 for the 2000 calendar year.

Real Estate Institute of WA public affairs director Lino Iacomella said while sales fluctuated in the different suburbs from year to year, it was often a question of where supply was on the market rather than demand that determined where sales occurred. He said that helped to explain the high number of sales in East Perth in recent years, which has a large number of apartment developments on offer.

While the selection criteria for buyers does not necessarily take into account the suburb, buyers are very choosy and look for a point of difference in the property which makes it unique and easier to resell.

Not everything is selling well, however.

“They don’t just want the run of the mill, two-bedroom apartment,” Mr Willing said.

“They are looking at quality, style and location.”

There is still a risk for selling agents that they could be locked into selling a ‘bad egg’. For this reason agents also tried to be selective when deciding what projects to back.

“There is a lot of stock that we won’t take on. You’ve got to be mindful of taking on projects,” Mr Willing said.

Mirvac-Fini sales and marketing director Peter Gianolli said sales at the Panorama apartments on Terrace Road, East Perth, had been extraordinary, with 85 of 114 apartments averaging about $700,000 each already sold. This was despite the fact that construction was not due to be completed next April.

Mark Hay Reality Group principal Mark Hay said that, while East Perth had been off the boil for the past 12 months, the sales slump was not restricted to East Perth. Sales had fallen across the board, he said.

Finbar International Limited, developer of the Bluewater apartments in South Perth and Boas Gardens on Wellington Street, serves as a pointer to how tough it has been for some developers.

The publicly-listed Perth company reported this week a 46 per cent decline in earnings to only $16.2 million, while profits after tax dropped 28 per cent to $2.04 million.

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