How quickly we forget…
A few weeks ago South Brisbane was named the No:1 suburb in Australia to invest in and also put forward as a preferred NRAS location ( we all know what I think about NRAS /blog/nras-are-you-kidding/ ) – so I thought it best to check this place out.
At first glance I was pleasantly surprised with South Brisbane, it has come along way, transforming into a new vibrant funky suburb.
The feel of the place had a touch of Melbourne to it (sorry if that offends).
When I first parked, I was hit with Sydney CBD sky high parking rates, only to be taken back by the forward thinking Brisbanians… i.e. that if you spend any $ amount in a small list of shops, the first 2 hours parking are free. So it was time for my coffee fix.
All due credit to Era coffee shop. Their customer service was exceptional, regulars known by first name and of course the coffee was spot on. It had its own little unique culture, and more importantly they swiped my parking card – all for a $3.70 cappuccino purchase. Now this may seem very tight of me, but the parking was $25 per hour or in my case, FREE!!! No wonder the shop was almost packed to the brim.
Not good news for the other coffee shops I saw nearby, I could see the tumbleweed rolling by…
Now with 2 hours up my sleeve, I hit the pavement to see what this place had to offer.
The streets were jammed packed with unit blocks, commercial & retail offices plus new construction projects. All the action appears to centralise around Melbourne Street, as once you walk a block away, the shops fade down, and it becomes more commercial, less funky. I expect that over time this will change as more high-rise units appear with retail shops on the ground floor.
The commercial and retail businesses will supply considerable employment for the area and only a few minutes walk is Brisbane CBD as well. Although I suspect that those who work in retail could not afford the high rents or mortgages being paid in the suburb.
So my overall feel on the suburb was a good one, however, did we forget that 20 months ago that Melbourne Street was all under water?
Remember that little event called the Brisbane Floods??? It only hit the news worldwide…
At what point did that huge tragedy fade away in everybody’s mind?
Or is it that we don’t think it will flood again whilst you own a property there?
Or was it that South Brisbane came away relatively unscathed in comparison to other suburbs?
Whatever the reason, it did happen and could happen again…
And remember, they were not as high as the 74 floods… only because of the Wivenhoe Dam expansion allowing it to hold 125% capacity. Had these walls not been extended, this flood would have been much worse.
Now sure the high-rise units didn’t all flood, but some of the ground floor units did and the car parks certainly required some scuba diving gear to get to your car, creating significant cost probably adding to strata fees for all the owners. The car parks had to have pumps installed to pump out the water and sludge.
The majority of this water was created by backlog in the pipes, as the storm water drains could not disperse into the river system because of the huge amounts of rain. But whatever the reason, it flooded…
Now looking at the suburb as a place to invest (other than the fact that it partially flooded) I am not seeing what these other property firms are seeing. Sure we have a high population growth, but this is purely because more medium to high-rise buildings are being constructed and people are moving into them. So the high population growth is offset by the high supply of properties being available. This in no way creates demand…
Another concern I have is that all the beautiful gardens, gyms, pools and lifts; these unit complexes look great, but as with all features these come at a cost in the way of huge strata levies… I’d like to see the Strata reports for a lot of these complexes… you should always be making this a part of your homework, this will give you a really clear picture of the total investment, and also a better idea as to whether the strata is under quoted to get the sales over the line.. remember, strata fees can and will go up each year, but by how much???
Personally, I am a non-believer if strata… it‘s an unnecessary cost. I own one property with strata and that is my office and guess which one is my properties is the biggest pain in the bum???
Lastly, the biggest concern I have with investing there is, when do they stop building these blocks of units. Will there be a gluttony of them… my instinct tells me yes.
If we look at South Brisbane on realestate.com and have a look at their current listings for the suburb and surrounding suburbs we get the following results:
- 878 units for sale
- There are another 464 units for sale in the Soleil plus 144 in Midtown not to mention a few hundred more in South Brisbane itself that have not settled
- 455 units for lease – this number has reduced, I have seen it at over 1400 when I decided to write a Blog on South Brisbane
This exact scenario has occurred in Melbourne in the Docklands area:
- 1733 units for sale
- 1874 units for lease
And don’t think Sydney has gone unscathed here in Pyrmont:
- 536 units for sale
- 617 units for lease
These numbers make for some great negotiating if you are a tenant and were looking to rent a unit in these locations. Not great for anyone who owns or looking to own a property there. No wonder some of the new developments are offering rental guarantees and free stamp duty to purchasers. In Melbourne you can get free holidays or a car…
On a final note, South Brisbane looks like turning into a great funky suburb, walking distance to the CBD… great for renting or buying your home for lifestyle reasons…but as far as investing my money into a property there, it’s a no go for me..