impact of apartment oversupply

either at sydney or brisbane cbd
what will be the impact??
will the soft rental prices ripple out to middle ring subs and houses...

 

It would only be temporary while the vacancies are high. Once they get filled it tends to normalise over time again.

Imediate suburbs may be affected but it will depend on the extent of price reductions.

 

Some risk to purchasers of OTP not being able to settle as banks & valuers write down valuations.
Softer rents.
Higher vacancies.
I can't imagine why soft rental prices would ripple out to suburbs further out.

 

Also they probably cant service what they could when they signed OTP

 

I c, thats reassuring

 

I don't reckon.
Units are different to houses.
But, some house rentists might see some value in City units at a certain point I suppose.

 

Rents will drop to get the units filled. This will affect units further out when tenants find they can rent a brand new city apartment relatively cheaply, thus reducing rents for all units until the supply balances out with demand.
Marg

 

Personally I'm expecting a short term drop in rental prices but a long term gain for the city.
We've been trending this way for a while, here's a surprisingly reasonable article from a site that is potentially biased in favour of development:
Why Brisbane’s Perceived ‘Apartment Boom’ Is Actually Here to Stay | BrisbaneDevelopment.com

I'm hoping a combination of affordable housing & CBD commercial real estate lure a few more big players up from down south. 1-2 big orgs copying Tattersalls and moving up here would be really good news for a city that's really just a big country town. Tatts Group are the 3rd largest publicly listed company headquartered up here and they've only got 2-3,000-ish employees. An ASX58 or better company relocating up here potentially goes from being a small fish to one of the largest players. State Government have proven with Tatts that they are willing to play nice & make it worth their while too. Plus current state government is pretty strapped for cash, so anyone bringing a bunch of new decent income earners into the state to buy a few thousand properties and generate a few hundred mil worth of stamp duty is going to have a lot of bargaining power.

 

How do we know for sure there is an oversupply?
Don't quote the no. of cranes you see.

 

I think its more likely that they will attract larger foeign players rather than asx from mel/syd. Eg the big cruise ship operators, the US online travel giants, the large European logistics players etc.

 

Really? Here's one article, you could probably find 50:

Brisbane vacancies on the rise as oversupply issues hit three capitals

 

Sounds reasonable to me. And geez... if Tatts are one of your 3 largest listed companies operating out of Brissie... wow.
I work for CBA (headquartered in Sydney) and CBA has about 50k employees... obviously not all of them are in Sydney but a substantial proportion are...

 

Dont know if tatts is the biggest hehre...i would think suncorp most likely..maybe virgin ? ..
But anyway, dont forget that brisbane was, as little as 5 or so years back, pretty much a podunk town. So getting tatts, echo/star etc in that time till now is actually good growth in the corporate sector. This looks like to continue, but as i said above, i think it will be more intl players lookinh for a base for Australian operations rather than asx companies (syd/mel will fight till the end to keep them there).

 

I think the impact is Sydney is going to be alot more than Brisbane.

The cost of Sydney apartments are way out of kilter. For example in some suburbs the price of some 2 brm units are almost the cost of older houses. Typically apartment prices should be mo more than about 60% of the cost of a house.

 

Think you might have misread, Tatts is 3rd largest publicly listed. You're right though that Suncorp is #1. From memory they are currently bouncing between ASX16 & 17. There are still a lot of companies up here (Most big corps have a satellite office, tonnes of engineering too), but there is definitely potential to go from a relatively small (from a global or ASX perspective) player to being top 5-10 largest up here.. I mean the government were willing to give tatts an exclusive 2 year betting license + a bunch of other perks official and unofficial to relocate here & they've added 2b+ to their market cap in 3-4 years, so here's hoping they can lure a few others up here.

 

Anyway back to the Apartment supply thread...I feel that there should be some interesting opportunities to pick-up apartments that people can't settle on.

 

No, it was podunky when there was still Lang Park.
Once Suncorp stadium was built, the city became world class.

 

Disagree. Brisbane currently is not world class...its a wannabe world class.
In 5 years, its graduated from podunk to the country town it is now. In another 5 years, it will move up even more to a small but still rather insignificant city in its own right. In 10 years from now, yeah..then it might be a properly recignised player.
There should be good cg to be made for those who invest and be along for the ride.

 

Don't make me find those pics of the gondolas near Brekky Creek again!

 

I agree and I'm waiting for this! More interested in the stock developers hold on to... When they suddenly don't have the cash they expected to be able to move on to their next deals.

For any short term OTP there is probably not a lot of growth... You can't really negotiate the price as its already set... You may be able to score the sellers deposit to take over the loan- but I'm uncomfortable with that