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Adelaide shuns middle-brow apartments

Sep 23, 2013
High demand for penthouses in The Rowlands Apartments.

High demand for penthouses in The Rowlands Apartments.

The State Government’s move to abolish stamp duty for city apartments has had a limited effect, as high profile developments continue to struggle to sell.

Despite well-publicised launches, developments such as Sturt Street’s New Mayfield and The Rowlands Apartments, off Grote Street, have had limited success, while the site for Gouger Street’s proposed TangCheng development is being sold.

Developers say there is high demand for affordable one-bedroom and studio apartments, as well as high quality penthouses.

However, the mid-range market for two-to-three bedroom offerings is proving to be a hard sell.

A 160 apartment development, Vision on Morphett, is about six weeks from starting construction having sold more than half the apartments.

But Vision’s marketer Connor Holmes says it has been a challenging market.

“Stamp duty been of assistance but I don’t think the impact was quite as significant as people had hoped for,” Connor Holmes’ Justin Hazell said.

He said the biggest challenge in Adelaide was the low cost of housing compared to apartments.

“Traditional housing is still relatively affordable in those urban growth areas and probably if the government is serious about encouraging population increase in the CBD I feel they need to provide some further stimulatory measures to encourage greater market take-up rates.”

Urban Development Institute president Terry Walsh said upmarket apartments were selling well.

“We are now starting to see stock come into the market beyond students which are designed for second or third homebuyers who are seeing moving to CBD as an alternative to traditional housing,” he said.

“The appeal of apartments to students will always be there in Adelaide, but increasingly we are seeing more upmarket apartments such as the Conservatory on Hindmarsh Square, Palladium on Light Square, appealing to people who are looking to change their lifestyle as distinct from have low cost.”

The sales at Rowlands Apartments off Grote Street, built by Mandala Development, reflect this trend. Built first, rather than selling off the plan, the development has sold 38 of 93 apartments since its launch last year.

Chief executive Loris Rigon said sales of studio and one bedroom apartments had been strong, and the penthouse and spacious three bedroom apartments had sold out a year and a half ago.

Rigon said while the stamp duty concessions had enticed buyers back, it wasn’t the only thing getting them across the line.

“Good one-beds are still popular, we have really high demand for penthouse and three bed, two bed apartments seem to be a struggle but we are seeing some interest coming back.

“There is always competition; there are at least five other developers trying to sell off the plan and only one – ARIA down on Gouger Street’s West Terrace end, and that’s the only one under construction.”

He said the market had begun to shift in the past three months, with hopes that the low interest rates, a change in Federal Government and more open lending from the banks would spark further interest.

“We have a plan for the rest of this year and we expect the building will be sold by March next year.

“We would have already done another building in a good market – we do have another two sites; one is designed and one is under design so we’ll see where we go if we can move the rest of our stock.”

Ergo apartments, which is targeted at the affordable housing market, has started stage one construction.

Across the road,  at New Mayfield development, the website shows it has sold just 12 apartments in its first phase with more on hold, including the entire second floor.

 

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