PRESTIGE PROPERTY: THE BLUE SKY FACTOR PART 1
Written on the 25 January 2011
While Queensland’s prestige property market has lagged behind its counterparts in New South Wales and Victoria, those who invest now are likely to take advantage of upward opportunities. In this prestige property feature we speak with two experts who discuss the ‘blue sky factor’, key growth areas and holiday investments.
“Even though it’s been slower to get sales, values at around the $5 million mark have held up fairly well, but the ‘secondary’ prestige market between $1 million and $4 million has been most adversely affected, although it’s been stabilising in the last six months,” he says.
“We’re seeing a larger differentiation in the market for premium prime property, which has been more resilient than expected, which means buyers are less price sensitive to the vagaries of the market.”
He points to resilience in the traditional markets around Ascot and Hamilton, as well as riverfront properties in areas like Hawthorne, Bulimba and St Lucia.
But the biggest growth over the last decade has come from Newfarm, which Hulcombe expects to continue.
“It’s caught up a lot in the last decade and we’re seeing long-term growth there in both riverfront and non-riverfront properties, due to its proximity to the city, as well as its café precinct,” he says.
The comments are echoed by Hotspotting.com.au owner Terry Ryder, who says prestige riverfront properties in areas like Newfarm and West End will likely rise in value on the back of urban renewal.
“With their urban renewal processes they are investing in the construction of apartments, old houses will be knocked down, so riverfront houses are going to become rarer,” he says.
“With more scarcity comes more value, so they’re two suburbs to look out for.”
Ryder says Queensland’s prestige property markets have probably hit the bottom of the cycle, with strong growth expected in Hamilton in particular.
“As with prestige markets in other cities, these are volatile markets, so you have to time your entry and exit very carefully – they have graphs that look like rollercoasters, with lots of peaks and troughs,” he says.
“Brisbane is probably at the bottom of that cycle, and ready for an upward movement in that curve – it’s a good time to be looking.
“Hamilton has seen the renewal process with the removal of industrial uses that almost certainly will mean growth around that area, in fact all along the riverbank to Newstead.”
Ryder says Queensland’s prestige property market hasn’t revamped like Sydney and Melbourne yet because of delayed recovery, but this will likely change as resource and infrastructure projects come to fruition.
“But the prestige market is volatile and if you’re going to need to sell and it’s at the wrong time, a lot of money can be lost,” he warns.
“Projects that were on the backburner are now on the front-burner and that’s starting to generate economic activity and that flows into the value of real estate, while the prestige market is very sensitive to the economy and confidence.”
Prestige property takes the ‘sky blue factor’ in Ryder’s eyes, coming down to a simple equation of scarcity of genuinely rare property.
“It means the sky’s the limit with properties that have exclusivity,” he says.
While many property investors opt to buy their luxury mansions in Brisbane, there is always the option to buy your own getaway escape, if you’ve got the cash.
Luckily for the investor, these prestige markets have dropped off even further recently with hot spots such as Hamilton Island leading the way.
Another example is the Sunshine Coast, where canal-front and beachfront properties have fallen 20 per cent in value.
“Premium property is still tightly held but as to whether it’s a good time to buy, people still have to be a bit cautious,” he says.
“Brisbane is a more stable owner-occupier property market, as opposed to ones that are more discretionary getaways like Port Douglas, the Whitsundays, Noosa and the Gold Coast, which are more cyclical.”
Ryder says when it comes to exclusive property there are several enclaves that spring to mind, but one of the most notable is Magnetic Island off the coast of Townsville.
“Beachfront property in Queensland is not quite rare but absolute beachfront is, and I say that because a lot of real estate agents will say something’s beach front when you’re on the wrong side of the road, or you have to walk through a park,” he says.
“But the sort of property where you walk through your backyard and onto the beach is very rare. In Magnetic Island there is a lot of exclusivity and it’s a good place to look at — there are serious physical constraints, which mean you can get good upward value there.”
So whether it’s to buy in Brisbane or further afield, the sky is the limit for prestige property investors, while an exclusive market remains in reach for the time being.
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