21/04/2011 - 00:00

Sales at Quadwest’s Elevation defy gloomy inner-city apartment trend

21/04/2011 - 00:00

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INVESTORS bought-up a parcel of apartments in Perth’s highest residential tower this week as they sought to capitalise on the city’s ailing apartment market.

Sales at Quadwest’s Elevation defy gloomy inner-city apartment trend

INVESTORS bought-up a parcel of apartments in Perth’s highest residential tower this week as they sought to capitalise on the city’s ailing apartment market.

A group of 37 apartments in the Elevation development was owned by Quadwest, which was put into receivership by the Bank of Scotland last month.

Receiver KordaMentha appointed Blackburne Property Group to sell the units and more than half are already under contract, according to managing director Paul Blackburne.

It’s a result that has prompted him to reassess Perth’s inner-city apartment market, which has been hit particularly hard by the global financial crisis and tougher lending criteria.

Mr Blackburne said the level of interest in the Elevation apartments was unexpected and, based on this initial response, he expected all 37 of the apartments to be sold within months.

“We had about 500 people through in a 24-hour period,” Mr Blackburne told WA Business News.

“It just shows the strong underlying demand in Perth if you set realistic price expectations and have quality product.”

The apartments were priced from $395,000 to $4.4 million for the penthouse, and it’s understood the properties have not been discounted for the receivership sale.

Blackburne expects to sell as much as 70 per cent of the Quadwest apartments by the end of April, with the balance selling in the next two to four months.

Despite the level of interest in the apartments, Mr Blackburne said he did not expect to see big price growth in the city market.

“I don’t think there will be significant increases beyond 4 or 5 per cent a year for the next couple of years,” he said.

“We’ve got strong property growth and the mining deals have been done, but it hasn’t flowed through to the broader economy yet.”

The state’s economic outlook is attracting east coast investors into the market, with Blackburne revealing that up to half of their current sales were coming from the eastern seaboard clients.

But there is no consensus across Perth’s property sector as to the outlook for the city’s apartment market, with many analysts less optimistic.

Property valuer Gavin Hegney from Hegney Property Group said the city apartment market would remain volatile for the foreseeable future, simply because it was such a small pool and there were so many major development projects on the drawing board.

“Our (apartment) market could conceivably double over the next seven years,” Mr Hegney said.

“In a more mature market, new developments wouldn’t have nearly as big an impact so, in the short term, it will always have volatility because of the shallowness of the market.”

Despite this assessment, Mr Hegney said there were some bargains to be had in the city.

“Fifteen years down the track, East Perth will be under way, the Northbridge Link will be in place and the city will have three or four pockets of apartments established,” he said.

“Investors need to look at the location they are going in to ... and find a precinct that suits their lifestyle.”

CB Richard Ellis director of residential project marketing Ian Tan-Kang was less confident about the inner-city market despite forecasting a likely shortage of units in the medium term.

He said buyers were on the hunt for a bargain but issues getting finance for apartments were still hurting the sector.

“The market is still pretty soft but there are still people out there looking for good buys,” Mr Tan-Kang said.

“There are some genuine problems with the banks ... and they are not lending to foreigners, which means they can’t get loans for Australian properties.”

 

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