If it's too good to be true...

We recently received a seemingly attractive offer to lease a commercial property that we manage - a 10 year lease with 2 x 10 year options. It was from "Bon Levi" a Western Australian "Fitness and Wellness" company who want to use the premises for "relaxation massage". According to the application, it is established in all the Australian states, will expand to New Zealand, and plans a February international launch for offices in Paris, London, Brazil, Mexico and Italy!

Upon closer inspection however, our suspicions were raised when we saw that they wanted 6 months rent free, and the application looked like it was written by someone who went to "scam school", with an immoderate number of words underlined or capitalised to make them look IMPORTANT.

We googled "Bon Levi" and found out that he is aka Ron Frederick aka "Ron the Con", one of Australia's most notorious fraudsters whose resume includes numerous convictions and jail time for fraud, stealing, breaking and entering, and aggravated assault! His speciality is setting up elaborate franchise operations that inevitably collapse, leaving investors with nothing. What amazes us is that even though he is so well known, he continues to use his own name and still manages to delude enough people to keep these schemes going.

20 Hindmarsh Square Adelaide - a flurry of activity

Settlements started happening at 20 Hindmarsh Square on 29 December last year, and we have been appointed as property managers for a significant number of investor purchasers. Most of the apartments we have listed are one bedroom apartments either overlooking the square or high up in the building with great hills views to the east.

The apartments are breaking new ground with rentals being achieved of up to $430 per week for 12 month leases on an unfurnished basis. This is a function of very strong market demand and a product that is premium quality.

The one bedroom apartments have generous sized balconies, and many have an ensuite bathroom, a guest powder room and a separate laundry/utility room. Residents have full use of a heated pool, steam room, gym and spa accessed at level 2 and located in the adjoining 5 star hotel.

The demographic trend for these apartments is young medical practitioners relocating from interstate/overseas or young professionals and post-graduate students from Saudi Arabia and the United Arab Emirates.

Click here to see more photos

Click here to see our rental listings in the building

Click here to see our sale listings in the building

The World's Tallest Building

The Burj Khalifa (formerly known as the Burj Dubai) officially opened last week, and measures in at some 828 metres over 160 floors!

20 Hindmarsh Square in Adelaide, which has also just been completed, is approximately 45 metres high. So even if you stacked 18 of them together, the resulting structure still wouldn't be as high as the colossal building in Dubai.

The Burj Khalifa sits as the centrepoint in an 11 hectare garden and contains over 1,000 apartments, a 160 suite hotel, 37 floors of offices and a 4 level club. The apartments were sold off the plan and apparently you can buy one now at 50% less than the price at the height of Dubai's property boom in 2007!

2010 Adelaide Apartment Predictions

Here we are at the start of a brand new decade, and the big question that interests us is: "What will happen to apartment values in the City of Adelaide over the next 12 months?"

Our educated guess is that the better quality apartments in the middle price range will increase by around 6.5% to 8%. This means that a well located 2 bedroom, 80 square metre, apartment with a secure carpark that sold for $470,000 in December 2009 could sell for around $505,000 in December 2010. A 110 square metre with 2 bedrooms, 2 bathrooms, secure carpark, storage cage, and a good size balcony in the same time frame could go from $650,000 to $705,000.

The macro factors that influence capital growth in the City apartment market include:

• Apartment supply. It looks like there won't be many new buildings completed during 2010 because developers are still having a tough time securing funds from the banks which are demanding a lot more equity contributions and very high levels of pre-sales. If supply of new apartment stock diminishes, price increases for existing stock can occur.
• A tight rental market. The rental demand for apartments in the city remains strong. It is underpinned by the international student market as well as the professional couples and corporates attracted by our vibrant city lifestyle, security, and the facilities offered by modern apartment buildings.
• Baby Boomers. Each year we see more of them coming into the City to live. The "lock and leave it" appeal of apartments, and the cafe lifestyle continue to be the strong drivers for this demographic.
• Good investor returns. Interest rates have gone up, but so have rentals, and buying an apartment as an investment is still a very big part of the city marketplace. This includes country buyers as a future city base or for the kids if they migrate to the city for uni at some time in the future.
• Consumer confidence. This is the feel good factor and our perception of how we feel about ourselves and our confidence in our economy. We are looking ok on this one but sentiment can change quickly and when confidence drops, people stop spending and buying apartments.