Established Brisbane apartment blocks have become a hot commodity, with local and interstate investors jostling to secure a foothold in one of the city’s most tightly held market sectors.
CBRE’s Jon Quayle said buyer interest has ramped up during April and May as savvy investors sought to lock in their capital ahead of potential changes to the taxation system, which had been proposed by the Labor government.
Post the unexpected Coalition victory, which had all but ensured negative gearing and capital gains tax regulations would remain untouched for the foreseeable future, Mr Quayle said buyer activity was continuing to increase.
This had been highlighted by the local and offshore buyer interest in a block of six units at 128 Racecourse Road, Ascot, which was being offered with price expectations of circa $3.7 million through CBRE in conjunction with local agent Jim Waller.
“There is no doubt that the spike in interest for apartment blocks earlier this year was spurred by the fear of changes to negative gearing and capital gains tax, with buyers looking to invest before any new legislation came in to effect,” Mr Quayle said.
“Surprisingly, while these controversial potential changes have now essentially been squashed, purchaser interest in established apartment blocks and in-one-line residential assets has continued to increase, with sophisticated investors attracted to the secure cashflow and easy maintenance.”
Mr Quayle said the next test of the market would involve a 100+ unit building held on one title, which was set to come to market in the coming months with a $45 million price tag.
While the campaign details were yet to be made public, Mr Quayle said the building had been developed by a private Brisbane family and would be the first of their single title buildings to be offered to the market.
“Many of the unit blocks we sell have a long history of family ownership,” Mr Quayle said.
“Much like multifamily assets in the US, they are often held for decades and passed on to future generations. New investors recognise that with the cost of capital at record lows, coupled with increasing land acquisition and construction costs, established apartment blocks present an attractive investment proposition, often with redevelopment potential when situated in prime locations that are otherwise built-out.”