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.

A work further in progress

When we last looked at this Wakefield Street apartment in August, it was just starting to take shape. Now it is just a couple of weeks from completion, and some of the finishes can be seen in the bathrooms and kitchen. We can imagine that it will soon be looking like some of the other apartments in the building.

It has a contemporary architectural design that captures fabulous light and a cooling breeze due to its flow through north/south aspect. The City views from the roof deck and the eastern hills views are also really special.

The building is well over 10 years old now but remains quite unique in its warehouse style of central city living. The podium landscaping and garden is looking superb, and the community of owners are to be congratulated for the efforts put in to create a stunning garden focus.

It is just moments from a great cup of coffee at Bocelli, and confirms the old real estate adage: "Location, Location, Location"!

Going Green

Buchan Lee, with one of our favourite developers, recently attended a Capital City Committee forum. It was called "Adelaide As A Sustainable City" and a large number of 'green' topics were canvassed by some excellent speakers.

It started out with an introduction to green transport - using microalgae as biofuel, and the environmental benefits of electric vehicles. Then came a powerful and insightful talk which postulated that there is no point in having smart technology if we aren't smart about using it. For example, where is the real benefit in having a mobile phone which can turn off your air-conditioner at home? The speaker exposed issues around shallow marketing claims regarding sustainability, explaining that using older and simpler (but less 'sexy') technologies such as opening windows can be far more effective in reducing power usage and waste.

The forum then moved on to our area of interest - property. One of the speakers was John Culshaw, the developer of Point Boston - a Port Lincoln project that we were involved in for much of 2007. John explained the sustainable features of this exciting and world class land development. The water recycling technology for this project is truly amazing.

"Green roofs and Green walls" was a topic delivered by Graeme Hopkins that we found of particular interest. Buildings can look stunning when they incorporate plants and grasses as "living" roofs and walls. This is an architectural movement that looks like it is taking off and something that Adelaide should embrace in a big way. Apparently they can reduce energy use, improve air quality, and reduce the summer heat that builds up around a business district while at the same time attracting fauna such as birds and assisting in water recycling. The talk gave us the germ of an idea which we have decided to pursue with Council....watch this space for updates if we pull it off!

Falling in love with Hindmarsh Square

Named after the first Governor of South Australia, Rear Admiral Sir John Hindmarsh (1785 to 1860), this beautiful location is building up a complement of apartment buildings around the edge of the park, giving it a 'Central Park' feel. It started with the Mantra building about 6 years ago, which now operates as an all suite hotel with a smattering of owner occupiers and long term tenants with most of the apartments in the hotel letting pool.

This project was followed up by the Conservatory complex - a genuine mixed use building incorporating a retail ground floor, 2 levels of carparks, several floors of offices, and upper storeys containing around 60 apartments with great views over the square.

In the north eastern corner of the square, 2 more buildings are currently under construction. The Crowne Plaza Hotel, and 20 Hindmarsh Square are both nearing completion.

20 Hindmarsh Square will add another 89 apartments to the square's housing stock and we are reliably informed that the project is now virtually 80% sold. It is a 16 level building with ground floor retail, carparking, and 13 levels of 1 and 2 bedroom apartments all with balconies overlooking the square or east toward the Adelaide Hills.

The Crowne Plaza will be a 5 star hotel run by the well-known Intercontinental group, containing 308 rooms and suites. The spa, steam room, gym and pool are all available to 20 Hindmarsh Square residents as part of the package. We are sure that the restaurant, conference facilities and retail space will all add to the amenity and attractions of Hindmarsh Square.

We hope that the trend of high quality apartment projects continues, and we think the Rear Admiral would agree!