2011 - what's in store

7 interest rate increases in little over a year played a large part in ensuring that the local property market softened considerably towards the end of 2010. Add this to the significant downturn in international student demand due to the Australian Government's changes to visas, financial burdens placed upon students, and a strong aussie dollar, and the result is that the prices for apartments have slipped somewhat.

However, we are optimistic that the current malaise could be reversed very quickly. Resources, defence and education are still the 3 big games in town and we have heard that big things will happen in 2011 which will translate into a turnaround in demand for city apartments...

More mixed use buildings

Following on from our earlier features on mixed used buildings, last month saw 2 transactions in other mixed use buildings. We sold a top floor 2 bedroom Mantra apartment for $500,000. This 80 square metre apartment had a wrap around balcony and overlooked Hindmarsh Square with the Adelaide Hills in the background.

We were also instrumental in acquiring a 3 bedroom apartment in the building known as 22 The Square, which is part of the Garden East project sitting between the Rundle Street East Cafe Precinct and Grenfell Street. Our client paid $825,000 for this large apartment with 2 carparks and we facilitated foreign investment approval for the transaction.

We love doing these kind of deals in the city and equally love sitting down with our clients having cappuccinos in the ground floor cafes situated in these buildings while we are doing the deals!

Wakefield Street sales activity

We had a bit of activity in the building with our company selling apartment 31 for $830,000 and apartment 14 transacting for just under the million dollar mark in the past few weeks.

We think apartment 31 is interesting because we have been following it since the beginning of its fitout (see these stories) and it was the first apartment to sell to a buyer who wants to exclusively use the space for business purposes. The marketing company felt that the apartment matched its creative business perfectly by providing the ideal environment for the staff and principals. We were thrilled as we designed the spaces for residential, home office or studio/office uses from the outset and it's great to see when this versatility is recognised in the market place.

We have just listed another 2 apartments in the building both priced in the $800,000's and both offering stunning work/life environments. The volume of space offered by double height floor to ceiling space is something that needs to be experienced to be fully appreciated. Both apartments can be seen privately. Click here for more details.

Changing of the guard

Congratulations to our new Lord Mayor, Stephen Yarwood - a 39 year old town planner and city resident who appreciates that a city like ours needs people ... lots of people .,. living, working and occupying really great spaces in really great buildings.

Counting the dollars

We just settled the $460,000 sale of a 2 bedroom apartment in the South Building of our development at 4-8 Charles Street Adelaide (aka 223 North Terrace). This apartment was originally bought off the plan for $305,000 in October 2006 and we managed the rental since that date for the owner.

As it quite conveniently turned out that it was both bought and sold in the month of October, we thought we would "run the slide rule" over his 4 year investment. The initial rental was $365 per week in the first year and this was periodically increased to $450 per week as at October 2010.

So if we add his gross sale profit of $155,000 and his rental income of $85,900 this totals $240,900, equating to a gross return of some 79% on the initial $305,000 investment.

We encourage all of our readers to buy an apartment in the City of Adelaide ... hopefully from us : )

Free Parking (As long as you don't have a car...)

We noted with interest that research by the City of Sydney Council (as reported in the Australian Financial Review) shows 1 in 3 households across the Sydney local government area do not have cars. This means that planning authorities and developers are now re-thinking how many carparks need to go into new apartment buildings.

In Adelaide the conventional approach to apartment buildings has been to provide 1 carpark for a 2 bedroom apartment and 2 carparks for a 3 bedroom apartment in a building designed to attract owner occupiers (like 223 North Terrace). For buildings designed with the international student market in mind (such as the iPad in Waymouth Street) no on-site carparks are provided, and serviced apartment buildings (for example the Mantra on Hindmarsh Square) have relatively few carparks.

As carparks cost over $50,000 each in a multi-storey apartment building, savings can be made now that the city dwellers are starting to give up their cars. Developers will focus more on spaces in the building for bikes and scooters and possibly for carshare companies. Apartments without car spaces will be more affordable, and more affordable apartments will mean more sales and an increase in the city's population with less traffic congestion!

Wakefield Street attracts the celebrities

This ground breaking development was once home to radio presenter Jodie Blewett, and we were pretty excited a couple of years ago when we leased one of the apartments to 2 of the stars from McLeod's Daughters - Matt Passmore and Luke Jacobz.

Then we sold an apartment in the building to Amber Petty, another radio personality, and we thought that was pretty cool. But when Princess Mary visited Amber and stayed over, there was so much public attention with the national press gathered around the foyer area that we don't think it can ever be topped!

We have just sold one of the top level apartments for well in excess of $800,000, and will have 2 more for sale very soon. Now we just have to figure out how to include "Danish royalty stayed here" into our advertising. Just kidding!

New York! New York!

If any of our readers or their friends are moving to New York they should check out this apartment.

It's being sold by a lovely New York couple who own one of the apartments that we manage in the Conservatory. They are moving to Adelaide to live in the near future so now is the time to talk a deal with their New York agent!

http://www.barakny.com/listing_details.aspx?listingid=785571

City Housing Diversity

We spend a lot of time around high-quality modern apartment and townhouse buildings in the Square Mile during the normal course of our business of developing, selling and leasing our clients' properties. However, the city also has a long history of providing accommodation to people that the private property market can't accommodate, particularly lower income groups of all ages. We think this is important because a city's vitality depends on the diversity of its residents.

One of the most recent housing initiatives is "Common Ground Adelaide Ltd". Set up by the SA government and private sponsors, this organisation aims to provide good quality affordable rental housing to low income people and those at risk of homelessness. It mirrors the not for profit common ground project in New York founded by former Adelaide "thinker in residence" Rosanne Haggerty.

Their first project was completed in November 2007 and is known as "Common Ground on Franklin". It consists of 39 units (15 one bed and 21 studios) built above the central bus station.

The second project rapidly nearing completion is the re-habilitation and extension of a heritage listed building in Light Square which will contain 60 self contained apartments, Common Ground's head office, communal facilities, and health/welfare/vocational support services for residents.

Miami Car Park - 111 Lincoln Road

There are many examples of how a piece of architecture (usually museums/art galleries or other institutional buildings) can lift the profile of a city in some significant way. This Miami Florida building by Swiss architects Herzog and de Meuron demonstrates that even the humble car-park can be a "show-stopper".

It contains 330 carparks with 11 shops and 3 restaurants at ground level, with more shopping on the fifth floor and a roof top restaurant.

Compare it with our Central Market car-park, and perhaps we could also use an inspirational piece of architecture to add another dimension to this cosmoplitan precinct - it would be a magnet for tourists.

Mixed Use Buildings

It doesn't seem that long ago when Peter was advising the owners of Ruthven Mansions at 15 to 27 Pulteney Street on the feasibility of selling off the apartments on separate strata titles while having a retail arcade in separate ownership at ground level. This all seemed so novel (not to mention risky) back in 1993!

Ruthven Mansions was built in 1911 and was a very early venture in apartment living in the City of Adelaide. This obviously fell out of fashion it later became home to the Government Chest Clinic in 1953 and was then refurbished in 1980 by architect John Chappel to operate as an apartment hotel.

Now mixed use buildings are quite common place, because multiple uses are often the most economic use of expensive city land. According to the Adelaide City Council the city population in 2010 is 21,000 and forecast to increase by another 20,130 over the next 21 years. This means that many more mixed use buildings are going to be built and we hope that they involve some new and exciting architecture!

Click on these links for more information on real life examples of mixed use buildings in the city:

223 North Terrace

23 King William Street

Mixed Use Building - 223 North Terrace

Construction on this building commenced in 1969 as a next door carpark for the South Australian department store John Martins. The iconic store closed in 1998, but the North Terrace car park remained to service the new David Jones store which opened in its place.

The Haywards, a wealthy merchant family that owned "Johnnies" had originally planned to build an international hotel on the rooftop of the carpark. The structure was designed with additional reinforcement to take the extra weight, and the lift shafts were strategically positioned so that they could be extended.

In 2001, Buchan Lee in consortium acquired the air rights above the car park and developed the "Martin Towers" apartment project, which later became known as "223 North Terrace". Construction of the 2 apartment buildings (the "North Tower" and "South Tower") commenced in 2003. The transfer zone of the existing carpark roof between the 2 buildings was developed into a recreational area with a lap pool, spa, sauna, gym and skygarden while the sub-basement of the carpark was set aside for apartment resident parking.

In addition to the carpark and apartment mix, the third use of the building is retail shopping, with many shops in the ground floor arcade joining Rundle Mall, as well as several fronting to Charles Street and North Terrace.

Mixed Use Building - 23 King William Street

This is a heritage listed building which was built for the AMP Society in 1936 and was completely refurbished and converted a couple of years ago from its office use into studio, 1 and 2 bedroom apartments focussing on our growing international student market. Re-branded as UV Apartments (University Village), the building also contains 4 common area facilities incorporating TV lounge, reading room, study room and a games room.

The ground level is mostly taken up with an interesting tea room, restaurant and martini bar called Saldechin.

SA leading the student market

We thought we would check in with our friends that market our education products internationally, and it looks like our state is doing pretty well in terms of growth rates when compared to the rest of the country.

South Australia's current market share (ytd March 2010) is 5.9%, and the same time last year it was 5.5%. This is a 0.4% increase in commencements compared with 0.3% nationally. Indian students have increased 11.5 % in SA, with a decrease by 1.9% nationally.

Now if only we can get the Crows and Power to perform as well against the other national sides!

Altitude

We listed some of the Altitude apartments for rental just had our first look inside the building on the old Balfours site in the North West precinct of the city. A few years ago Buchan Lee sold a portion of the area which housed all of the company's distinctive blue vans in between deliveries of their yummy pies, pasties and famous frog cakes. Our friends at Urban Edge acquired it and developed part of the site with townhouses and divided land into blocks for buyers to build their own townhouses.

Another developer has recently completed the 18 storey Altitude building, which is the first in a series of towers planned for the site. The inspiration was the towers of San Gimignano in Italy - a "pin-wheel" design was used with the lifts ascending through the centre of the tower and apartments radiating from the central point maximising the views for all apartments. The glass bottomed swimming pool on the sixth floor protrudes from the structure over the courtyard below, which should make for exciting swimming! It was not quite ready when we visited, but we will bring you photos as soon as we have access.

Inside the Torrens Building

A contact of ours recently invited us to look through the rejuvenated interiors of the stately Torrens Building on Victoria Square. Built in 1879 as a Government building and named after Sir Robert Torrens (South Australia's third premier and pioneer of the world renowned Torrens Title system for transferring land), its beautifully antique exterior appearance matches its historical background. The Australian Heritage Database describes it as "the best remaining example in Adelaide of Italian Renaissance or Neo Classical style with a Palladian composition".

However, the ultra-modern fitouts within tell a completely different story. The building originally housed many State Government departments (including the Land Titles office where Peter used to work!), and was later used by community service groups after a 1999 refurbishment. As we blogged earlier, the major residents now are 3 prominent international universities - Carnegie Mellon, Cranfield University, and University College London (UCL).

The most recent upgrade was done for the UCL School of Energy and Resources campus. It is appropriately sponsored by Santos and boasts stylish furniture, contemporary fittings as well as the latest technology - computers, projectors and audio equipment allowing collaboration and combined lectures with other campuses in Great Britain. UCL is ranked in the top 5 universities in the world and has a global reputation for teaching and research with 20 nobel prize winners among former students and academics.

Urbane, Urbaner, Urbanest

Urbanest ("Urban Nest") is a 17 level building under construction on the corner of North Terrace and Bank Street, and will be the city's latest addition to the student accommodation business.

The developers and operators are saying it will be ready to occupy at the start of the 2011 university intake and it comprises of 488 rooms and studios with the rentals starting at $225 per week which includes internet, electricity and insurance.

This accommodation product differs from other student buildings in the city because it offers clusters of between 4 and 6 bedrooms around a shared living space and fully equipped kitchen. These secure bedroom spaces have ensuite bathrooms and are about 13 square metres in size. There are also premium rooms at the top floors, and studios which are fully self contained but cost more money to rent.

Park Terrace Gilberton

The former Channel 7 Studios site in the near city suburb of Gilberton has an extensive frontage to Park Terrace and a rear boundary to the River Torrens. Zoned residential, the location and size give it fabulous development potential, although parts of it have up to 8 meters of fill.

It has taken a long time for a project to be started, as the site has been vacant (except for the ducks) since 2007 when Channel 7 relocated to Hindmarsh.

Now it looks like it is finally all happening with demolition of the old buildings under way and said to be finished by the end of June. Apparently there was an approval for 56 dwellings and 9 courtyard blocks which lapsed, and now there is a current approval for 12 blocks.

We'll keep watching the site to see what evolves...

Transforming Walkerville

The vacant Department of Transport buildings in the heart of Walkerville look as though they will finally be transformed into 2 by 10 storey residential apartment and hotel buildings consisting of some 300 apartments and a 100 room boutique hotel.

The site was sold to Victorian developers last year for around $10 million, and it has been reported that they are going to spend $100 million transforming these early 1960's office buildings into modern contemporary style apartments. The site has some great attributes including fantastic views and a position within a very desirable suburb.

It's a pity that the Government didn't sell this site together with the adjoining site fronting to Walkerville Terrace (now a great big hole in the ground - apparently it was sold to different developers who are having financial problems), as car parking could be a real issue in the site's redevelopment.

Then and Now

223 North Terrace Adelaide comprises of 111 apartments in 2 buildings built over the old John Martins carpark. This Buchan Lee project was completed in the last quarter of 2006 and we manage around 45 apartments in the buildings for clients.

We thought it would be interesting to examine the rental growth since completion, so we picked a typical 2 bedroom apartment in the South building as an example. It was first leased on 23 September 2006, and was just rented to its 3rd tenant a couple of weeks ago. The 79 square metre 2 bedroom apartment is rented with a car park and on an unfurnished basis.

It first rented for $375 per week ($247 per square metre per annum) and current rental is $480 per week ($316 per square metre per annum) both for a 12 month lease period. So in a period heading towards 3 and a half years, this is an increase of 28%. Hopefully for the landlord this growth will continue for the next 3 and a half years - a 28% increase over the current rental would be $614 per week!

A work completely progressed

The fitout of Apartment 31/237 Wakefield Street Adelaide has finally been finished. Earlier 'in progress' photos of the apartment can be viewed here and here.

The building itself was completed about 10 years ago, and many of the spaces were sold as empty shells - giving buyers the opportunity to have absolute creative control over apartment interiors. Apartment 31 was purchased as a shell but never completed internally because the original buyer decided to stay permanently in Western Australia and instructed us to sell it for him.

Our good friend Graham at the design and development company Urban Edge took up the challenge, and the result is simply stunning. The 3 bedroom apartment extends over 2 levels and a roof deck, giving it fabulous city and hills views. With well over 200 square metres of space, some of the striking features include:

• Solid spotted gum timber floors and cavity sliding doors
• Full height frameless door jambs
• Integrated Miele appliances in a kitchen of stainless steel and solid american rock maple benchtops with telescopic power outlets and Paco Jaanson d38 mixer taps
• 2 hand made spiral staircases with stainless steel balustrades and Pirelli rubber treads
• Custom made cabinets and floor to ceiling tiling in the bathrooms and ensuite
• Laundry chute from upper bathroom to lower laundry

It is an exceptional apartment with an abundance of natural light and a delightful double height living space balanced with private and large bedroom accommodation in a wonderful iconic building.

Click here if you are interested in purchasing this apartment.