International buyers are drawn to the exclusivity of waterfront properties, keeping them in high demand. This, with a lack of supply, will see prices continuing to rise. Our friends at YachtStyle look at selected examples in Sydney, Auckland, Phuket and Samui.
Sydney, Australia
Record sales aplenty as the property market goes on an upswing.
By Sophie Kalkreuth
From the dramatic white shells of the Opera House to the steel arches of the Harbour Bridge and the yachts dotting the bay – Sydney’s harbour is one of the world’s most iconic. Waterfront homes, particularly those located just east of the city in Darling Point and Point Piper, comprise some of Australia’s most expensive real estate. They also epitomise the waterside lifestyle, with access to boat berths and beaches just minutes from the Central Business District (CBD).
Sydney’s real estate market is currently on an upswing. In 2013, Australia’s residential property market recorded the strongest annual growth since 2009, and Sydney house prices rose 15.2 per cent according to property information company RP Data. The city also recorded a strong top sale price of US$51.8 million, according to Christie’s Great Estates’ 2014 Luxury Defined Index.
“The luxury property cycle, having bottomed in 2012 from a high in 2008, has steadily improved over the last two years with several record sales being achieved,” says Ken Jacobs of Ken Jacobs-Christie’s International Real Estate, in Sydney. “We handled the two biggest sales in Sydney last financial year (1st July 2013 to 30th June 2014) at prices of AU$37 million and AU$32 million.”
Housing supply in Sydney is restricted by geographical limitations, zoning regulations and limited land release. This is one factor driving price growth – developers have reportedly started converting outdated office buildings into luxury projects to meet demand. International investors, particularly Asian buyers, are also driving sales. Although local buyers still make up the majority of sales in Sydney – second-home buyers represent only 25 per cent of the luxury market – there were several significant sales to Chinese buyers in 2013, including the city’s top sale, a US$51.8 million estate on the waterfront.
“Sydney’s close proximity, safe economy, world-class lifestyle offerings, and relaxed cultural atmosphere are an incredible draw for overseas buyers looking for an accessible link to Asia,” Jacobs says.
Crown Group, a Sydney-based developer, launched Sky by Crown and Viva by Crown in 2013, and foreign demand accounted for 20 per cent of its sales. According to group CEO Iwan Sunito, Sydney has benefited from market cooling measures in Asia. “(Flat) prices in the CBD are 30 to 50 per cent less (than) an equivalent location in Hong Kong or Singapore.”
The highest prices are achieved by waterfront properties with picture-postcard views of the Bridge, Opera House and Harbour, although sales prices vary greatly depending on the property. “It is important to stress that talking rate per-square-metre on Sydney waterfront properties can be very misleading as there are wild variations due to location, view, contour, aspect, facilities, etc.,” says Ken Jacobs. “Compounding this is the lack of vacant land, so in the majority of cases, if a buyer wants to build a new home he needs to buy an existing home and demolish it.”
At Point Piper, for example, prices can range between AU$18,000psm to AU$30,000psm for waterfront homes that have been demolished, and AU$20,000psm to AU$39,000psm of improved value for established homes. These rates drop significantly outside of the super prime areas.
In recent years, new-build condominium projects have also reported strong sale prices. Apartments at Buckhurst at Point Piper sold for between AU$9 million and AU$13 million when the market was at a low. The project includes just six apartments of around 380sqm. At Pacific Bondi Beach, a waterfront development at one of Sydney’s trendy eastern beaches, two adjoining penthouses sold for AU$21 million. Some new waterfront projects are currently being developed at Barrangaroo, the site of a new casino.
Looking ahead, property analysts expect continued, albeit more moderate, growth in Sydney’s luxury sector. ‘’Unless there’s a big rise in interest rates or the economy crashes, both of which are very unlikely, we’ll see further gains in the super-prime property market,” says Shane Oliver, chief economist at AMP capital. However, the intensity of demand seen in 2013 is unlikely to persist this year, says John McGrath, CEO of McGrath Estate Agents. “My guess is 5 per cent to 10 per cent growth in prices this year, but certain market segments will perform better than others,” he says. In particular, he expects that ‘lifestyle markets’, those close to the city and beaches, will continue to see price rises.
Market Summary
- In 2013, Australia’s residential property market recorded the strongest annual growth since 2009.
- Sydney house prices rose 15.2 per cent in 2013, while apartment prices gained 11.6 per cent. Price growth in the luxury sector is fueled by low supply and strong demand from foreign buyers.
- A Chinese national was behind Sydney’s top sale of 2013, a US$51.8 million estate on the waterfront.
For Consideration
- 112 Wosleley Road, Point Piper
- Five-bedroom contemporary home with harbor views and 30m of exclusive harbor frontage, including a private jetty. Designed for a flowing indoor/outdoor lifestyle, pool and terrace, high-end fittings, cutting-edge security.
- Price on application.
- www.kenjacobs.com.au
- 3 Lindsay Avenue, Darling Point
- Frank Lloyd Wright-inspired property on a prime 1,725sqm site with views from Double Bay to Manly. Five bedrooms with balcony access, 3.5 bathrooms. Master suite with limestone spa en-suite. Parking for four cars. Capable of mooring a 100 foot vessel.
- Price on application.
- www.kenjacobs.com.au
Auckland, New Zealand
Limited supply and strong migration flow to sustain prices of luxury waterfront housing.
By Sophie Kalkreuth
Auckland may not have the dramatic harbor of Sydney or Hong Kong, but the city does offer a beautiful coastline with beaches, cliffs, quiet coves and plenty of waterfront homes. The city’s property market has been gaining momentum, too, driven by a shortage of homes, low interest rates and an open-door policy that has encouraged overseas investors.
“Auckland has been in strong demand across all sectors with the increase in overseas interest, particularly from Asia,” says Charlie Brendon-Cook of Luxury Real Estate Limited. “Investors are coming to us specifically from Singapore, China, the UK, America and Russia. There are still some attractively priced properties in outstanding locations. The Bay of Islands, in particular, remains one of the best-kept secrets. However, it is being discovered.”
Homes around the city are also becoming increasingly expensive by world standards. Average prices in Auckland were up 14.3 per cent year-on-year in March 2014 – a 4,000sqft luxury home near the city now goes for upwards of NZ$3.5 million. And prices are higher along the waterfront. Depending on the quality, size and location, prices for waterfront properties average around NZ$4,278psf.
Rapidly rising prices in New Zealand, particularly in Auckland, brought a note of caution from the International Monetary Fund in April. “The concern is that people start expecting prices to continue to increase and therefore they jump into the housing market now because they worry they’ll be priced out later and that puts even more upward pressure,” said Brian Aitken of the IMF.
In October 2013, The Reserve Bank of New Zealand introduced restrictions on high Loan-to-Value Ratio (LVR) lending, which caused sales volumes to drop, but only slightly. “Sales volumes are still below the level seen before the LVR restrictions came into effect in October 2013, but do not appear to be falling any further — in fact June sales were only 2 per cent lower than in the same month last year,” says ASB Bank economist Daniel Smith.
He says a dip in new listings suggests the flow of homes coming onto the market remained fairly low. “Supply constraints have eased slightly over the last year, with total listings currently around 14 per cent higher than a year ago. That has been due to a slight decline in sales and a small lift in listings. The key words there are ‘slight’ and ‘small’ – the number of homes on the market remains exceptionally low by historical standards.”
Smith says that he expects prices to continue to rise in the Auckland region driven by strong migration flows and limited supply, though not at the pace seen over 2012-2013.
“There are a number of mixed messages in the NZ property market currently,” says Joe Telford of Sotheby’s International Realty. “But although the growth has slowed over the past six months there is still a high demand for quality property in the Auckland market.”
Waterfront property is particularly coveted and Telford says values still remain high and growth remains strong in key waterfront areas such as Herne Bay, Mission Bay, Saint Hiiers, Devonport and Takapuna. In Herne Bay, for example, there are less than 100 sales per annum. “The lack of stock and high demand drives growth,” he says.
International buyers are also driving prices up, drawn to the exclusivity of waterfront estates in Auckland and the lifestyle and access to water. “A large proportion of our inquiry on waterfront property comes from international purchasers,” says Telford. Unlike many other countries, New Zealand doesn’t have Stamp Duty or Capital Gains Tax, although some restrictions do apply for foreign property ownership. For example, property that is classified ‘sensitive’ by the Overseas Investment Office (OIO) requires an Overseas Investment Application (OIA) for non-new Zealand residents.
This does not often apply to waterfront homes, says Telford. “Most central waterfront property in Auckland does not require an OIA as very few properties are larger than 6,500sqft, which is the threshold for waterfront to be classified as sensitive,” he adds.
Waterfront homes will always be in demand, Telford adds, and he expects growth will continue in line with the rest of New Zealand’s property market. “It is impossible to create more waterfront property and this is the greatest advantage of owning what is considered the best real estate in Auckland.”
Market Summary
- Average house prices in Auckland were up 14.3 per cent year on year in March 2014. However, property prices cooled slightly during April with sales down around 15 per cent over the same time last year.
- Properties over NZ$500,000 continued to sell well, with 547 homes sold in this price range during April, echoing the sort of figures achieved over the summer.
- Growth remains strong in key waterfront areas such as Herne Bay, Mission Bay, Saint Hiiers, Devonport and Takapuna where supply is limited.
For Consideration
- 17 O’Neills Avenue, Takapuna, Auckland
- Waterfront property located on 1,303sqm site with views of Rangitoto Island from all three levels
- Includes four bedrooms, four bathrooms and two parking spaces
- Located a short drive over the Harbour Bridge to Auckland City
- Price on application. Ref# BSA10245
- www.auckland.nzsothebysrealty.com
- 35-39 Beach Road, Castor Bay, Auckland
- Located on a cliff top on the Peninsula between Milford and Castor Bay
- Includes 1,000sqm floor plan, 6 en-suite bedrooms, home theatre, pool, Jacuzzi, outdoor living area
- Asking price: NZD$8,800,000 Ref#NZE10153
- www.auckland.nzsothebysrealty.com
Kamala, Phuket, Thailand
Luxury waterfront market regaining its lustre.
by Alex Frew McMillan
Phuket and Koh Samui have always held plenty of attraction for foreign buyers of villas, although in theory they are not able to buy landed property in Thailand.
Along the ‘Millionaire’s Mile’, a pitted road along Phuket’s west coast, near Kamala Beach, villas run to US$8 million or more. A quick search for the road’s name always yields a smattering of properties on the market. In fact, the high-end real estate market in Phuket is already showing an early trend toward stable growth and transactions have increased with major real estate players receiving multiple enquiries from around the world on a daily basis. By the end of 2015, it is estimated that more than 50 new luxury properties are set to be developed. This island is becoming the most demonstrated and vibrant luxury resort real estate market in Asia — fast overtaking others such as Bali.
Among these projects, the MontAzure development in Kamala has been called Phuket’s most ambitious resort residential project since the Banyan Tree Group launched Laguna some 25 years ago.
On a site that boasts a unique natural setting, MontAzure will be sensitively developed to offer 13 unique private luxury estates, 70 low-rise beachside residences, and will offer luxurious hospitality features such as a lifestyle retail centre, retirement and wellness facilities, sophisticated beachside dining and entertainment venues. The developers have engaged a team of world-class master planners, architects and designers. The project is a gem of rare quality, a place where untouched tropical forest gives way to a 250-metre stretch of soft sand, shaded by mature Casuarina trees.
The first phase of the development offers buyers a range of 13 expansive luxury estates, each set on generous land plots ranging from 4,900sqm (52,700sf) to over 10,000sqm (107,600sf) in size. A trinity of design talent was engaged to craft these exceptional homes — the doyen of modern Thai architecture, Lek Bunnag, Balinese interior design legend, Jaya Ibrahim, and Tierra Design’s Martin Palleros who also master planned the entire development.
Each estate will feature a private swimming pool, complemented with a children pool and Jacuzzi. Residents can also relax in privacy with private outdoor bathtubs and shower areas on the master bedroom pavilions’ wide verandahs. The roofs feature decks with lawns and covered dining spaces are accessible via a private lift. A wide variety of indigenous and planted tropical plants and trees decorate the beautifully landscaped garden, coupled with the breathtaking views of Kamala Bay, making the development a safe haven away from the hustle and bustle of the city.
Buyers can customize the interiors of the villas to their preferences. Beyond their luxurious private estate, owners have privileged access to the beach and a range of exclusive amenities and services offered at the MontAzure Residents’ Beach Club. The wider development will also feature a range of integrated hospitality components to ensure that residents’ requests and lifestyle needs are met with efficiently.
Market Summary
- Foreign buyers remain attracted to Phuket and Koh Samui villas, although in theory they cannot purchase landed property in Thailand.
- On the ‘Millionaire’s Mile’ along Phuket’s west coast, near Kamala Beach, villas run to US$8 million or more. Sotheby’s International Realty lists several beautiful Phuket properties, including a four-bedroom property in Ao Makham, five kilometres south of Phuket town, for THB165 million (US$5.2 million).
- Bill Barnett, Managing Director at hospitality consultancy C9 Hotelworks, highlighted that Phuket is on a strong upward swing for high-end luxury real estate. Major infrastructure improvements and continued strong tourism growth are drawing institutional investment and creating a strong desire amongst the ultra high net worth community globally for luxury villas, particularly those with celebrity designers involved.
- CBRE Research shows that more than 50 new high-end properties are set to enter the market by the end of 2015.
MontAzure, Phuket
On a site which boasts a unique natural setting, MontAzure will be sensitively developed to offer unique private luxury estates, low-rise beachside condominium residences, as well as luxurious hospitality components such as a lifestyle retail center, retirement and wellness facilities, sophisticated beachside dining and low-key entertainment venues. The first phase of the development offers 13 expansive luxury estates, each set on generous land plots ranging from 4,900m2 (52,700sf) to over 10,000m2 (107,600sf) in size.
Koh Samui, Thailand
In its infancy, but growing.
by Alex Frew McMillan
In Koh Samui, Knight Frank tracks around 420 villa units in a market that the brokerage says is still in its infancy. Some 89 per cent of the villas on the island are in private hands, many of them near Cheong Mon, Chaweng and Bophut beaches, the main tourist hangouts. Maenam and Lamai beaches are up-and-coming and more peaceful, but still a short distance from the action.
Knight Frank says 55 per cent of the villas on Koh Samui are still on the market, with the most popular in the THB20 million to THB40 million (US$630,000 to US$1.25 million) per villa range. “Villas in this price range typically included hillside locations, providing panoramic sea views, and some distance to the beach,” the brokerage notes.
An example is boutique luxury villa estate, Samujana, which has a collection of 25 luxury hillside villas. The development first opened in March 2012 as Koh Samui’s most exclusive and discrete luxury villa estate. Positioned in the most sought-after location on the island, Samujana offers complete privacy, just a few minutes’ drive from Samui International Airport. Set in a hilltop location, just walking distance from the beaches of Choeng Mon and popular Chaweng, the award-winning villa estate overlooks a coral cove, giving each villa uninterrupted sea views and private beach access.
All the villas have been designed by Asia’s celebrated Gary Fell of GFAB Architects – each sensitively constructed in harmony with the natural rock outcrops and vegetation with a contemporary spacious design and boast large en suite bedrooms, living spaces and dining areas, state-of-the-art kitchens, dedicated parking and private infinity edge pools.
The stock market is now watching the results of major developers in Thailand to give some guidance for the direction of the market. That may well be under way. For instance, Land and Houses, one of the country’s biggest developers, saw profits rise 20 per cent compared to 2013 in the second quarter of 2014, and sales grow 26 per cent. Condominium sales were higher than the expectations of analysts such as Thanatcha Jurukul and Nithi Wanikpun at Nomura. But they’re still expecting condo transfers to be delayed, so the analysts are projecting only a 5 per cent growth for this fiscal year for Land and Houses.
Single detached homes also picked up, which could suggest improved sentiment. But the analyst team still has a “neutral” rating on the stock – often interpreted as meaning sell the stock – while they wait to see if the rebound can be sustained and if the management comes out with predictions of longer-term growth in sales. They believe the developer Quality Houses looks best set as the main developer of landed property.
Samujana, Koh Samui
Samujana villa estate is a collection of 25 opulent villas, for sale and rent. All villas feature large private infinity pools and unobstructed sea views. Perfectly perched on a hillside overlooking a coral cove, the villas offer three to eight bedrooms and are ideal for families, friends and couples. It is conveniently located just minutes from Koh Samui International Airport and Chaweng Beach.
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