Developer Gurner has managed to settle around $200 million worth of apartments in their high-rise FV project in Brisbane, just days after calling for settlement of the first 520 apartments of stage one.
FV, managed by Mantra Group, leased 80 apartments before settlements commenced, producing rental yields of approximately 5.2-7.5 per cent. The settlement result enabled Gurner to pay back a $180 million loan from ANZ.
The result for the Gurner project inevitably blew a lot of wind in director Tim Gurner’s sails, who said the project’s settlement success and rental demand should quell recent concerns regarding the changes to the major banks’ foreign lending policies in 2016 and a perceived Brisbane oversupply.
“People have been discussing Brisbane’s property market like it’s the end of the world as we know it,” Gurner said.
“The constant reports about Brisbane’s market are way too simplistic and alarmist when the reality is, quality apartments are settling well, they are leasing well, generating good rents and achieving solid resale prices.
Of the 651 apartments released in stage one, only 110 had been purchased by foreign buyers.
“We are seeing more foreign buyers settle in cash rather than through bank finance as they seek to navigate the complex lending requirements, so this is not deterring them from settlement,” Gurner said.
“We have been saying for years that any talk of oversupply has been grossly overstated, due to analysts looking at the number of projects granted permits, rather than the number that actually start construction.
“The reality is, due to the tightening of bank lending, construction price rises and foreign investment changes, almost none of those permitted buildings have been built.
“The Brisbane off-the-plan market literally came to a grinding halt about 12-15 months ago and by 2019 there will be virtually no new supply coming to the market and we will be talking about an undersupply again,” he said.
Gurner’s three-tower, 981 apartment FV project features resort-style facilities including a sunken pool, gym, private dining areas, an expansive sun-deck and concierge services as some of the key amenity aspects attracting their appeal. Gurner said he spent an additional $8 million on upgrades.
“Like any market, quality product focused towards owner occupiers, with high quality apartments, amenity and services are doing really well and will always generate more demand than those that don’t have a point of difference,” Gurner said.
The project’s third tower, “No.1”, is currently under construction and due for completion in mid-2019.