Unless you’ve been living under a rock, you probably know that Queensland’s property market has had a less than sunny run lately.
A dark cloud has shrouded many parts of the Brisbane housing sector and Gold Coast real estate prices have fallen substantially in recent months as buyers look for their little piece of paradise elsewhere.
Some hefty discounting is going on
To highlight the issues facing Queensland’s most famous holiday haven, South Korean company Lotte Engineering and Construction, has been forced to slash the asking price of apartments in its $650 million Salacia project by almost half as the construction giant struggles to move its Gold Coast units.
Lotte is not the only casualty of the toppling Gold Coast market either, with receivers stepping in to discount apartment prices by a whopping 30 per cent in the Oracle Broadbeach tower last year, along with sharp reductions in the price of new apartments in many other failed projects in the area.
Lotte Engineering and Construction director Harrison Byun said although their apartment prices have been reduced by 40 per cent in response to only a quarter of the stock selling to date, the project hasn’t been a total loss for the South Korean based developer.
Launched in 2012, plans for Salacia Waters includes 470 apartments, as well as villas, shops, restaurants, pools, a gym and a 72-berth marina. These plans have been put on hold indefinitely though, with the company deciding to sit it out until the market improves.
According to a report in The Australian, the development is yet to move beyond the first stage, in which 131 dwellings were initially priced between $430,000 for an 87sq m unit and $3.1m for a 369sq m penthouse.
Six apartments were sold in the first week after the launch in 2010 for a total of $7.27m, and the company said sales had been in excess of $15m, with Lotte reporting the sale of a four-bedroom penthouse for $2.3m.
“We have not been immune from the market slowdown, but we have continued to see invigorated interest in our currently highly competitive price points, which have been revised to meet the market,” saud Byun.
How about an incentive to buy?
In an attempt to resurrect flagging sales in the project, Lotte is offering incentives for buyers such as free golf memberships, and is also engaging with local real estate agents to relaunch another of their Gold Coast apartment developments, Victoria Towers.
The $220 million complex, intended to cater for buyers over the age of 50 with facilities including an indoor bowling green, library and boutique cinema, previously offered apartments from anywhere between $400,000 to $1 million.
However with the relaunch it’s anticipated that prices will be cut significantly.
Lotte previously announced that it had targeted the Gold Coast because of the region’s strong population growth and Australia’s stable economy. Now though, the company joins a long list of developers who have been burnt by the area’s falling prices and waning buyer interest.
Some developers have pulled the pin entirely on their projects, whilst others have opted to rent out completed apartments rather than slash their sale prices.
No sign of improvement
Gold Coast property market analyst Bill Morris said the market had been flat since the beginning of the 2008 global financial crisis and showed no signs of improving, with 250 high-rise units selling annually, well below the average of 1,500.
He said there were 490 units for sale on the Gold Coast, and of those, 325 were luxury apartments priced at more than $700,000.
This glut of stock would not be such an issue for developers if there were willing buyers in the market. But as often happens when consumer confidence takes a dive, holiday and lifestyle areas such as the Gold Coast are always the first to lose favour.
So, is anyone interested in a bargain apartment that comes with sun, sand and surf? And don’t count on the Commonwealth Games to lift the Gold Coast market. It won’t!
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