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A $80 million AUD luxury development in Point Piper, Sydney, has been handed over to the banks after two of the companies for which property tycoon Michael Bezzina was associated, Caprice Pty Ltd and Pyoanee Pty Ltd, were place in receivership.
Located in Point Piper, Mr Bezzine was expecting to achieve $14 million AUD for the penthouse-style apartments, however, three of the apartments have allegedly exchanged for $10 million AUD each.
The development comprises waterfront apartments, each occupying an entire floor with balconies looking out to the Harbour Bridge and Opera House. They have four bedrooms, four bathrooms and a guestroom, as well as a jetty.
In September, one of Michael Bezzina’s company’s that developed the $100 million AUD Jade complex in Surfers Paradise, was put into liquidation. The company reportedly paid $17 million for the site six years ago, of which six out of the nine apartments have sold, one of which sold for almost $20 million, while the penthouse at the complex remains on the market for $22 million.
It is worth noting that the quality of Bezzina’s developments is outstanding, and his financial troubles should not be allowed to cloud the stunning properties that he has been involved in creating.
FYI: Read related articles on Sydney Property; or Luxury Homes; or Sydney Harbour
As the real estate market continues to struggle along and properties take longer to sell, Mansion Minders keeps up the homes whilst at the same time providing plush living quarters at a cut rate.
For example, a resident has to clean the pool like it’s their own, even though it’s not.
“Mansion Minder’s” are basically live-in house sitters for homes on sale, paying less than they would normally pay for their home, whilst living in a better property.
The rules are that the property must be kept spotless, disappear when required should the property needs to be shown by the broker, and move out in less than one month if it sells.
Mansion Minders are not renters but effectively sub-contractors (and thus without tenant’s rights). Instead, they pay the company what’s called a participation fee, which is about 25 percent of a monthly mortgage. The participation fee is based on the home price.
Further to our recent report of the NSW tax hikes to hit the property industry, now it’s been revealed that Queensland Premier Anna Bligh plans to impose a special tax on landholdings worth more than $5 million.
Under the property tax surcharge, part of a series of measures introduced as the QLD Government attempts to plug a $4.3 billon hole in the state’s budget over the next four years, landholders who own parcels of land will pay a 0.5% surcharge from 2009-10.
Sure to hit property developers hard at a time when the industry can least afford it, the decision will also likely cost 3500 jobs. It is important to recognize that the property sector employs one in seven workers in Queensland.
On top of the property tax surcharge, the Bligh Government has also raised vehicle registration costs by an average of 6.5% and delayed the abolition of transfer duty on core business assets by 18 months.
Whilst we are in no way suggesting that the Queensland Government shares similar brain cell(s) or genes than the hapless NSW government, what is concerning is the tendency of Australia’s fiscal “experts”, it would appear, to resort to anything but measures that stimulate and encourage innovation businesses and in turn the economy. Surely reducing land tax – a policy long championed by Australia’s real estate industry – would be a better option to stimulate the sector and economy.
Michael Marquette, Co-President of Marquette Turner Luxury Homes, states “Are the states tightening their belts, penalizing businesses and therefore consumers with the hope that the Federal Government will deal with the aftermath? Whatever it is, the economic credentials of those that run our States and Territories should be seriously scrutinized.”
Isn’t the relative basket case that is NSW – Australia’s most populous State – a good enough example of what not to do?
How’s this for short-sightedness: The New South Wales Government’s infinite wisdom to increase taxes by $3.6 billion AUD to compensate for their years of inept mismanagement of states coffers will have a huge impact on the property sector at a time when it can least afford it.
NSW Labor Premier Nathan Rees and Treasurer Eric Roozendaal plans to raise $680 million by increasing the land tax rate from 1.6% to 2% for properties over $2.25 million in land value, essentially a 25% increase, which will increase holding costs for land owners, discourage developments and lead to an increase in rental charges.
The flow on from this will lead to further job losses in the property industry, which is already shedding staff at more than one hundred per week.
We argue that this is not the time for tax hikes, but for the government to show some innovative thought, boost confidence and stimulate the economy. Or at least start spending NSW tax payers money wisely. But then again, given the churn of Premiers in the state and thus their lack of accountability, what do they care?
The world’s most expensive location for prime real estate behind Monaco, Central London has seen luxury home values fall for an eighth month. Such locales include Mayfair, St John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and the South Bank neighborhoods of London.
As recently reported by Bloomberg, in November the approximate average value of a house or apartment in the city’s nine most expensive neighborhoods fell 3.6 percent from October, according to an index compiled by Knight Frank. This represents the second largest drop since the index started in 1976. Furthermore, the figures show that property values declined 14 percent since the previous year.
Why is this? Quite simply, vendors are not holding out for emotional prices and are accepting that price reductions have to occur for a sale to be achieved.
Prime Central London real estate has taken longer to register declines seen elsewhere in London because of a standoff between sellers and buyers over price. That ended in September, when the bankruptcy of Lehman Brothers Holdings Inc. caused demand to collapse from those employed in financial services, traditionally the mainstay of demand for expensive homes.
Unsurprisingly, the worst banking crisis seen since the First World War has translated into job cuts and reduced bonuses, and in London it’s likely to get worse before it gets better, with as many as 62,000 finance-related jobs forecast to be lost in London by the end of next year.
Interestingly, the properties least affected by the fall in values are those worth more than five million pounds. With the pound sliding it becomes more attractive to wealthy overseas buyers (yes, they still exist) and given the uniqueness of many of the properties in this category, and how infrequently they come onto the market, they still are highly sought after.
Appreciating that for a buyer with US Dollars, a 15 percent property valuation drop equates to a 35 percent slide when exchange rates are taken into consideration, property in excess of five million pounds is great buying.
Continuing Marquette Turner’s theme of questioning what “Luxury is”, for this article we feature the largest Palace of the Sultan of Brunei.
The largest of the Sultan of Brunei’s four palaces, Istana Nurul Iman, is indisputably the world’s largest residential and administrative palace currently in use.
The palace is used for all State functions. It is both the seat of Brunei’s government and the location of the prime minister’s office. In addition to Audience and State Rooms, there is a Throne Chamber used for various occasions such as the proclamation of the Crown Prince and the annual Birthday Investiture.
At 2,152,782 square feet (200,000.0 m2) the palace has 1,788 rooms, 257 bathrooms, and a floor area of 2,152,782 square feet (200,000 m²). Amenities include 5 swimming pools, an air conditioned stable for the Sultan’s 200 polo ponies, a 110-car garage, a banquet hall that can be expanded to accommodate up to 5,000 guests, and a mosque accommodating 1,500 people. The palace was built in 1984 at a cost of around $400 million USD and has 564 chandeliers, 51,000 light bulbs, 44 stairwells, 18 elevators, and 13 (exterior) satellite dishes.
Furthermore, there’s a mosque for 1500 people, a banquet hall for 4000 guests, air conditioned stables for his 200 polo ponies, and 165 Rolls Royces, aeroplanes and helicopters.
The palace and its upkeep are funded by the oil wealth generated by Brunei, as are all of the grand structures in the country.
And even though the price of oil may have slumped, Brunei’s wealth still make perhaps the place to live right now, especially if long-term security is what you are after. Even though the people cannot vote, they pay no taxes, education and health care are free, everyone receives a pension, and the minimum wage is the highest in South-East Asia.
On the flip side, however, given the world’s massive reliance on oil and indeed the extravagance, and greed that it fosters, the extremes of rich and poor that are its result, is worth questioning what true “Luxury is.” I’ll leave that for you to define.
When most houses in the UK are losing value one home is actually increasing at an enormous rate. This house is the former home, and indeed the birthplace of soccer mega-star David Beckham, the property which should have a price tag of about £250,000 based on the local Leytonstone, East London market.
The three bedroom house, however, has been listed for sale for a staggering £850,000 and an offer of one million pounds has allegedly already been offered by an Australian collector of Beckham memorabilia.
If every property that Beckham ever lives in should turn to gold, imagine the huge theoretical increase in value to David and Victoria Beckham’s current home on San Ysidro Drive in Beverly Hills California, which they purchased for $18.2 US in 2007. (image courtesy of Microsoft Virtual Earth)
Experts suggest that the price of parking your car is, in general, inversely proportionate to the amount of office space available.* Therefore, due to a relative glut in commercial office space in Australian cities, we have some of the highest parking rates in the world!
Monthly Parking Rates (all in US Dollars)
- London City, UK $1,167
- London West End, UK $1,136
- Sydney, Australia $775
- Hong Kong, China $742
- Perth, Australia $610
- Brisbane, Australia $592
- New York, Midtown, USA $585
- Tokyo, Japan $552
- Stockholm, Sweden $509
- Dublin, Ireland $508
Therefore, particularly to all you Aussies, there’s never been a better time to look for a more economical and sustainable method for your work travel arrangements.
*the experts in this case are the Commercial Research team from Colliers International
It seems that no matter who you are, the credit crunch is snapping at your heals. And, as we seem to be hearing more and more each day, people from all walks of life are losing the battle.
Michael Jackson, he of the world’s biggest selling album of all time, “Thriller” (and on its 25th anniversary of being released) and (once upon a time) the undisputed King of Pop, has been forced to sell his ownership of his Neverland ranch near Santa Barbara in California.
Earlier this week, Jackson, 50, filed legal papers making the Sycamore Valley Ranch Company the new owner. Jackson, whose huge catalogue of hit records includes Billie Jean, Thriller and Man in the Mirror, has not lived at Neverland since he was acquitted of child molestation charges in 2005.
The property was bought in 1988 for $28 million and is situated on 2,900 acres, with a 14,000 sq. ft. main house
Jackson initially sought to turn into a fantasy land, and is ironically named after an island in the story Peter Pan, where children never grow up. He built a zoo and fairground on the 2,800 acre (1,100 hectare) property but it was closed in 2006 after Jackson failed to pay his staff or maintain proper insurance. It is not clear what will now happen to the property.
It’s difficult to watch the television, read newspapers or generally go outside of your home right now without being bombarded with negative news on the economy. The US economy is all but in recession, New Zealand is already in recession, Japan is in recession and as of today so is the United Kingdom.
The Governor of the Bank of England has predicted no growth in the UK in 2009 and believes that the recession will be as bad as the early 1990’s. The British Pound has hit a six year low against the Euro and inflation in the UK is currently at 5% (the target set by the Bank of England is 2%).
Deflation is now a real threat in the UK which can be just as concerning as inflation. Deflation refers to a general decline in prices, often caused by a reduced supply of money or credit. It can also be caused by a decrease in spending by Governments, consumers or investors. Deflation is simply put as a decrease in price due to decreased demand – therefore the decreased demand results in decreased production and increased levels of unemployment.
With this deflationary threat looming it is likely that we will see interest rates continue to fall with some economists predicting UK interest rates will drop to around 1%. The recent massive 1.5% rate cut in the UK and two consecutive monthly cuts in Australia (1% and 0.75% respectively) are sure signs that central banks have finally seen just how serious the current situation is. I believe it’s a perfect time to purchase property safe in the knowledge that interest rates are going down – this is a wonderful situation.
The Reserve Bank of Australia’s (RBA) decisions to decrease interest rates over the last few months were welcomed by borrowers and lenders alike, most recently with the 0.75% cut in October and the 1% cut in September.
The reality is, however, that most of Australia’s lending institutions have chosen not to pass on the full cuts, citing the increases in their funding costs.
This has left a gap between the fall in official interest rates and the rate reductions for a standard variable mortgage by most banks. The banks obviously have responsibilities to their shareholders, but the simple fact is that the RBA did not make these cuts out of a flight of fancy. The cuts were made with the intent that the banks would pass on the full rate decrease.
As the Acting President of the Real Estate Institute of Australia (REIA), Chris Fitzpatrick recently stated:
‘The banks really need to think about their corporate responsibility to their customers and pass the entire rate cut to where it is needed and where the RBA have intended the cuts to go, the people. The RBA does not cut interest rates without reason, they are doing what they see fit to take the financial pressure off households around Australia and to stabilize the economy while keeping inflation in check.’
Obviously, the increase in the banks “bad debts” have not helped, with exposure to companies such as the Lehman Brothers, Allco Finance Group, ABC Learning weighing them down. Bloomberg report that Bad debts jumped to A$930 million in fiscal 2008 from A$496 million a year earlier. Bad debts as a proportion of loans increased to 0.26 percent from 0.14 percent a year ago. Australian banks have investments totaling A$7.4 billion in troubled companies and it is predicted that Australia’s four biggest banks will record about A$7 billion in bad debts this year.
Quite simply, however, it is in the long-term interests of lending institutions that homeownership is affordable and an attractive investment option. The will have a positive effect on the overall Australian economy, which is something that right now is what everyone is looking for. Simon Turner
The City of Sydney and The State of New South Wales are both projected to grow by huge amounts in the coming years. As Australia’s largest state, and indeed the only one in recession, such growth could perhaps be the state’s saving grace and is certainly a rare bit of good news.
- 63% of NSW residents live in Sydney.
- By 2056 the population of Sydney is projected to reach 10 million.
- The NSW population is projected to increase from 6.82 million in 2006 to 8 million in 2022 and 9 million by 2036.
- By the year 2036, the NSW population will reach 9 million and there will be 3.7 million households.
- Sydney’s population is projected to increase from 4.248 million in 2006 to 5.98 million by 2036 (up 40%)
- The number of households in NSW is projected to increase from 2.65 million in 2006 to 3.72 million by 2036 (up 41%)
- The number of Sydney households will increase from 1.62 million in 2006 to 2.35 million by 2036 (up 46%)
- The number of lone person households is projected to increase from 646,500 in 2006 to 1.06 million by 2036 (up 64%)
The news is full of negative stories relating to the increasing cost of borrowing and fears about real estate values, as well as fears of their money being placed in anything other than a “mattress” account!
Therefore, now more than ever it is a home’s “WOW FACTOR” than can lead to a sale, and indeed a great one. Being sought after gives a massive increase to the amount someone will pay.
For instance, a recent London survey estimated that a “WOW” property in London can sell for as much as 10 percent more than a neighboring property in need of renovation.
Given the consumer’s ever increasing interest in Lifestyle magazines, and indeed Hotel designs with their relatively neutral palettes and sensual lights are increasingly being emulated in residential houses. Two particular features that are often mentioned by potential buyers are:
- strategically placed lighting, and
- an abundance of natural light.
London agents report that the larger the price tag, the more immune a property appears to be to the economic downturn, a sentiment that appears to be echoes throughout the globe.
The economic storm is penetrating every corner. The Bank of England’s Monetary-Policy Committee (MPC) has pulled of shock when most thought there are almost no surprises left: it has cut UK interest rates by 1.5% leaving them now at 3% – the lowest level since 1955.
The boldness should be commended, although it clearly demonstrates that they were shocked themselves by the rapidity of the UK’s contraction, as well as the global downturn. Though consumer-price inflation, at 5.2%, is high, the bank reckons that the collapse in commodity prices and the prospect of weaker growth means there is now a “substantial risk” that inflation will fall below its 2% target.
Furthermore, British GDP fell at an annualised rate of 2% in the third quarter, factory output fell for a seventh successive month in September, new-car registrations fell by 23% in the year to October, and house prices fell by 2.2% in October leaving them 15% lower than a year earlier. Things are indeed looking grim.
Also this last week the International Monetary Fund (IMF) revised its economic outlook stating that it envisages Britain’s economy shrinking by 1.3% in 2009, and that of the euro area by 0.5% – the European Central Bank has also just cut rates by 0.5% perhaps indicating that the ECB is not recognizing the global tsunami soon enough. Simon Turner
The Reserve Bank of Australia (RBA) has cut its key interest rate for the third month in a row as it attempts to prevent Australia’s economy stalling. The central bank trimmed three-quarters of a percentage point – or 75 basis points – off its key cash rate, reducing it to 5.25%, the lowest level since December 2003.
For a typical 25-year, $250,000 home loan, today’s cut if passed on in full by lenders will save the borrower $112.63 a month in payments or some $33,791 over the life of the loan.The move, announced after today’s monthly board meeting by the RBA, exceeded economists’ predictions of a 50 basis-points cut. Today’s cut brings the RBA’s cuts to 2 percentage points since the central bank reversed course in September, retreating from a 12-year high rate of 7.25%.
The RBA will be hoping that the big commercial banks will repeat last month’s feat of passing on the entire official rate cut to borrowers. Lower lending costs help spur the economy by encouraging more individuals and businesses to purchase houses or make other investments, stoking demand that in turn prompts more orders.
Almost all the latest economic figures point to a sharp slowdown in demand as the effects of the global financial crisis spread to Australia. Falling commodity prices are already dimming the outlook for the mining and export sectors. Retail sales shrank 1.1% last month from September, the largest drop since April 2005, as consumers start to pull back on spending.
House prices, another measure of the economy’s health, fell 1.8% in the September quarter, the sharpest slowdown since the 1970s, according to some reports.
Housing is becoming more and more attractive as an asset class as the year progresses. Opportunistic investors are in for a feast – especially those from abroad in countries with exchange rate advantages (United States, United Kingdom and the countries of the European Union using the Euro) – exciting times!
“THE key to our economic recovery is real estate values and consumer confidence. Real estate is the oil that fuels our economic engine. Generally, real estate is having a similar feel that we are seeing in the stock market today. Volatility!
- New home building starts are down to a trickle
- Interest rates are GREAT and will get even better in the coming weeks.
- Rentals are now commanding premium prices.
At some point, consumers will be the driving force that stabilises the real estate market, which will in turn send the message to the markets that the bottom of the market has been found.
In fact, Warren Buffet made a comment recently that when people bail out of the markets because of FEAR, he gets greedy. There are companies valued at 50% of their true value today. Warren Buffet is buying up these values with BILLIONS of dollars today.
Again, we will know the roller coaster ride of the markets is over when real estate hits the bottom and starts to the bounce back up. Pay attention to that event and you may well have timed the market perfectly to participate in some of the best values we will see for years to come.” Wise words indeed. Simon Turner
Figures released from the UK show repossessions of British homes jumped by a staggering 71% in the second quarter of 2008. The Financial Services Authority states that the number of homes repossessed was up to 11,054, an increase from 6,476 a year earlier as the increase in borrowing costs put greater pressure on borrowers’ ability to pay their mortgages.
Here’s some quick statistics on the current state of the US housing market:
- Foreclosure-related sales now account for up to 40% of all sales of existing US homes
- The median sale price for a new home has fallen from $US220,400 to $US218,400
- Home sales are down 33.1% in the past year
FYI: Use the currency conversion facility
Times are difficult – sale volumes are down and the process of selling your home is taking longer than it has for years. Today we have heard that Australia may be heading toward a recession – the first in 18 years! The US Federal Reserve has cut official interest rates by 0.5%, the Japanese Government has announced a $50 Billion stimulus package, the Chinese have cut rates by 27 basis points and we in Australia have only a few days to go until our Reserve Bank announces what it will do with interest rates.
My prediction is that the Reserve Bank will cut rates by another 1% and I wouldn’t be shocked if they cut rates by an even greater amount. At this point in time the real estate market is crawling along and anything that can add confidence to the market will be welcomed. The fact is that money (for those fortunate enough to have it) must be invested somewhere. The stock market is proving volatile and difficult and as interest rates are cut on home loans, so too will be the interest rates offered on cash deposits – property starts looking better and better.
Property has been the safest investment in Australia for more than 100 years and with our currency devalued against the US dollar, Euro, British Pound and the Yen there is an enormous opportunity presenting for vendors to sell their homes to foreigners. We at Marquette Turner Luxury Homes are excited about the opportunity to attract international buyers and as members of the Who’s Who in Luxury Real Estate, are working hard to showcase Australian Luxury Homes to a worldwide audience.
The best advice for vendors – be patient (although it will be difficult), trust your agent and most importantly choose the right agency to represent your home right from the start. It’s important to have the very best representation – our worldwide recognition is something that we are very proud of.