oc | Wednesday 13th November

So it was quoted $1.5m and it sold for $2.65m. So it was quoted $5m and it sold for $7.6m.

Wow – where is the ? No – these were older !

3 @ 22 Powlett Street (Nathan Waterson). Art Deco – but not a classic in the sense of its finishes as it was renovated by Hudson Conway in the late 80’s. The 8 in the block have seen consistent growth since 2000 and the latest result of $2.650,000 on a $1,400,000 to $1,500,000 quote means that growth is now akin to good land.

The Melbourne market is changing on certain older-style apartments in certain blocks.

In the late 2000 teen years (2015-2019) it is becoming feasible to get good capital growth and a good home on 20 year old plus apartments without actually owning any land. However, good apartment blocks are the exception (can show you plenty with almost no growth) and it requires a fair degree of due diligence and experience to sieve the good (capital growth) from the not as good (poor capital growth). If you think new buildings, state of the art appliances, off the plan stamp duties, glossy brochures and excel spreadsheets are the keys to investing well in the apartment area then I’m sorry, but you are dead wrong.

3 / 22 Powlett  – What happened and why? Volcano and many didn’t get a chance to bid.

Let’s declare – our client was the underbidder on this one and we know you are going to find this hard to believe but we said stop. Congratulations to the winning bidder – you bought a good home albeit at a price we didn’t see coming.

The brief: Mal is this any good? My reply: yes. Client response: Ok let’s buy it.

Our pre-auction advice: The apartment block is one of the rare birds that has seen consistently good growth for a 20 year period (long enough time frame for me) AND it has great PPP’s.

The agent quote we said is very conservative, based on sales at 4@22 and 7@22 in the $1.65m – $1.75m. We think this will attract very strong interest from the local Anglo market with deep pockets and we can see value around $2m based on the fact it is an A-grader AND the upwards push this market has shown since Election Day.

In our pre-auction advice we did say this auction would set a new high watermark, it’s just we were a bit shy on the eventual flood level finish.

The auction: Volcano – 4 bidders with an opening bid of $1,600,000.

Some quiet recalibrating and instead of a $20,000 bid as called for by Nathan, it was a $100,000 next bid. Strong bidding and excellent bid suggestions from Nathan (we must have been like giving candy to a baby rather than taking it away – as everybody seemed to just follow the auctioneer’s suggestions).

It did take some time to get to $2,000,000. It took some more deep breaths from three bidders to get to $2,300,000 and meanwhile, the crowd must have thought they were watching a movie wondering how it would end.

So let’s be clear this was no fluke or bidding anomaly – there were 4 separate bidders at $2,000,000 – Powlett was unrenovated – that is 3 times the value they were selling for around the GFC.

About this time I was asking our client how he felt – at $2,300,000 we still had three bidders, so it was still a market norm – not an outlier between two.

By the time we got to $2,400,000 and then $2,600,000 and finally $2,650,000 I was thinking this is not where we should be and our client agreed. Nathan Waterson had a good crowd to work and he worked it well.

So $2,650,000 for 135 sqm in need of a cosmetic update = $19,629 per sqm.

Wow. 75% over the top end of the quote.

Just a lazy 60% growth in 12 months. Tikety-boo!

Exactly $1,000,000 over the $1,650,000 purchase price of a similar apartment in the block last year.

This new market (started Election Day 2019) is building a real head of steam on the A-graders and Powlett was/is a blue chip A-grader.


Penthouse 193 Domain Road   – What happened and why?

This is one I visited for a client but to be honest I couldn’t see the freight at $5,000,000.

Yes, it’s a highly regarded block – Robyn Boyd apartments opposite the Tan – but at $5,000,000 that meant the asking price for the shell only was $30,300 per sqm for the 165 sqm (agent measurements) …

But wait, it’s not worth $30,300 per sqm when the best brand new apartments are trying it on @ $25,000 per sqm.

I was so right, it’s not worth $30,300 for a shell – it’s actually worth $46,000 per sqm because that is what Mark Harris / Dean Gilbert secured in a two-person bidding war last month, when it eventually sold for $7,600,000. I was actually so wrong, what do I know about apartment per sqm prices?

Well Hello Dolly! $7,600,000 for a piece of fresh air and admittedly a brilliant view – 18 stories up and there was another buyer next to them heartbroken.

Wow and more Wow.

Question: Is the market back on A-graders?

Answer: Do I really need to get back to you on that one?

Penthouse 2 Trawalla Avenue   – What happened and why?

OK, this is one where I/we only got half beaten up and we bought it.

We really, really liked this little beauty and we bought it in an EOI against competition (since organised sale of their existing Toorak home through Marcus Chiminello – very professional and well-run campaign with a solid result.) Anyway, back on Trawalla – great location – Penthouse – one of three – modern look but actually a few decades old and in need of a cosmetic renovation.

This was a real ding dong multiple buyer battle (albeit below the initial price suggestions), whilst newer, fresher apartments sit idly by attracting dust, rather than offers.

It sold north of $6m for $16,560 per sqm.

So there are three apartment examples – two penthouses and all A-graders of the highest order, selling between $16,5o0 and $46,000 per sqm. What’s $30,000 per sqm between friends!

Some apartments growth dynamics are not what they used to be – however many are still growth dogs.

As we say in the videos below – spreadsheets and glossy brochures mean little as growth indicators – its all about demand and supply.

Price is important, but as the PPP’s above show, there is an apartment X-factor you need to recognise if you want to buy good potential growth.

 

Off-markets are seemingly getting a bad name – saying a home is Off-market is like saying something is natural or low sugar or low fat (what does that really mean?). Many homes seem to be spruiked as Off-market when really they are not – they are pre-auction or not really for sale yet. However, the agents think let’s get a few punters through by saying its Off-market.

Having said all that, some Off-markets are real (if you know how to find and decipher) and we are buying and selling (management) a number of Off-markets. Hopefully, you find this video informative and thank you for the bouquets and brickbats on the others – they are enjoyable to make.

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