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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.

Simon Turner

FYI: Read related articles on Sydney Property; or Luxury Homes; or Sydney Harbour

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“Bailout” has been named as the “Word of the Year”, being the word that has been searched the most in online dictionaries and has become suddenly infused into daily language.  “Turmoil” was up there too!

Things may be worse than they were perhaps a year ago, but please take a moment to think of all the good things.  During this Thanksgiving holiday – an American institution that surely everyone throughout the world should recognise – be thankful for what you’ve had, what you are, and what you can be.

One of the phrases Marquette Turner has coined is “Luxury is…” – this week we share with you some comments people have shared with us.

Please enjoy the stories in our blog, or you can go straight to the e-magazine.  We thank you!

Michael Marquette & Simon Turner

“As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.” John Fitzgerald Kennedy

Without fear nor contest, the following listings of Marquette Turner Luxury Homes have received a price reduction in the past week, with the explicit consent of the owner.

Woollahra

Stockton

Merewether

Corlette

Simon Turner

FYI: Read related articles on Luxury Homes; or Buying Real Estate; or Investment

I read an article today on the Domain blog in Australia (owned by Fairfax Media) and I cannot believe the total rubbish it conveyed to people. I am so disappointed that I feel forced to discuss it. We can all recognize that someone has done well for themselves – we can praise and applaud that – well done John McGrath – to a point. We can also recognize when they have said something that is too hard to comprehend. So much as to make it simply unbelievable and it has to be discussed.

In a world that is missing realism at times and where the base expectations of the population are set according to media, lies – half-truths at best it is important to point out what is totally ridiculous. Not only do people feel inadequate but they lose sight of reality, feel unsuccessful and like in this case downright ill-informed.

John McGrath, founder of McGrath Estate Agents, stated in a recent blog that property in Australia fell into one of three bands. The Lower End (below $750,000), the mid range ($750,000-$3 million) and the upper end ($3 million to $30 million).

The pure facts are these. Anyone kidding themselves to think that $3m is mid-priced is either lying or living in a fantasy land. The facts are simple – 3.65% of all residential property in Australia in 2007 sold at or above $1million. In other words 96.35% of residential property sold was sold at or less than $1 million. $3 million is NOT mid priced – not in Sydney, not in Regional Australia – not anywhere in Australia. The information is so poor that it needs to be quickly corrected.

I’m not questioning that John McGrath has done well for himself over the years – but that simply does not excuse information that is blatantly incorrect. Since John McGrath has become a franchise agency, seeking to compete with the likes of LJ Hooker and Ray White, it is laughable that he should set such benchmarks given that the majority of the properties for sale through his franchise offices in New South Wales are of “the lower end”.  I’m sure this isn’t the message his agents are conveying to their clients.

Why point this out? Simply people are given so much information that cannot be backed up by evidence and those that are unaware of the reality can at times feel inadequate. What do you need to do to be successful? What have you done wrong? How can you possibly achieve that? The reality is very different to the perception.

I am disappointed that John McGrath would publicly say something that is simply wrong – he is smarter than that and it concerns me that many people will read his material and question themselves thinking he is telling the truth – Shame on you John McGrath.

Michael Marquette

FYI: Read related articles on Luxury Homes; Buying Real Estate; and Michael Marquette

This week we present stories such as Luxury Home Sales in Sydney: The Truth and Fiction; The Beckham Effect, where we look at David Beckham’s very first home and what it’s on the market for as well as his current home in California with Posh Spice-wife, Victoria; we also look at the cost of parking your car in some of the most expensive cities in the world; you can customize your bathtub for a pretty penny; and our WISE GUY shows why the Australian dollar suddenly has run out of friends.

And lots, lots more.

To read the latest e-magazine: CLICK HERE

“Be a fountain, not a drain.”
Rex Hudler

Part 2 of a 2 Part Investigation

The low sales volumes that we have seen in 2008 have resulted from fear, necessity and pride. Each has played a role in reducing the number of sales.

In so much as fear has contributed people are always cautious during times of upheaval or unrest.

Economically it has been a minefield of a year with Sydney property prices generally being stable or heading south. The stock market has shed billions of dollars and nervous investors and even more nervous fund managers have either panicked or halted all activity to see where it would lead – we certainly have a good idea of that now.

As interest rates increased early in 2008 many people feared that the return of Labor to the Federal Government would bring devastatingly high interest rates and therefore chose not to buy – again they played a wait and see game.

Vendors, convinced that the economic bliss was sure to continue refused to accept lower prices from buyers and the number of unsold properties has increased as the year has gone on. The financial turmoil has seen companies tightening their belts and in some cases withdrawing benefits, bonuses and international transfers.

This has greatly affected the number of “Private Brokerage” level sales and has played havoc with the top end Luxury rental market. Without companies paying absurd amounts of money to house executives the demand for top end rentals has all but dried up – with Luxury Landlords accepting massive cuts in rental amounts, moving back into properties or simply leaving them empty (Not very smart in most cases).

The final and least understood factor that has resulted in decreased “Private Brokerage” level sales is the age old problem of pride. The uncertainty that the year has provided has caused many would be vendors to reconsider plans to sell in case they were seen by family, friends, colleagues and competitors as potentially having financial problems.

It has been reported in Sydney newspapers that journalists were waiting to see which Luxury Homes were put on the market as this may have been an indicator that a company or associated interest was struggling and in need of cash. It is amazing what people will do out of pride and emotion has played a huge part in the decreased sales volumes we have seen.

Fundamentally Sydney is well positioned. It has stunning natural beauty and there is a low rental vacancy rate and net immigration is quite high putting further demand on housing in the city. This should see the market steady and confidence return in 2009, however we cannot ignore the differences between average or low end property and Luxury “Private Brokerage” Sales.

Michael Marquette

Click on the link for PART 1

FYI: Read related articles on Auctions; Luxury Homes; and the Who’s Who in Luxury Real Estate

SNOBS – standing for Social Networking for Opportunistic Businesswomen – has featured our very own Michael Marquette in the inaugural installment of “Work it Baby“.

Dubbing him “The Real Estate Man“, SNOBS recognizes Michael’s achievements in a fun and lively interview, his first since being awarded the prestigious title of the World’s Most Outstanding Rookie by the Who’s Who in Luxury Real Estate.

Simon Turner

FYI: Read the SNOBs article, read about Michael, or read about the Who’s Who Awards

It is time to speak out loudly about what is happening in Sydney’s real estate market.   Clearly it does vary from suburb to suburb and looking at the Luxury end of the market there has been a slight reduction in price in some areas. Properties at the very top end (over $10M) are holding their price. It has been quoted that the share market collapse, job losses and the disappearance of assets is having an impact on housing prices in Australia with some people being forced to market their properties.

It is vital to understand that Australia is a prosperous nation which is not in recession or even close to a recession. Australia is continuing to grow (at a reduced forecast of around 2%), unemployment is very low, inflationary conditions are improving and the Australian Banks seem to have buffered themselves to a large extent from the mess that many other Banks around the world succumbed to.

This is not the carnage the press would like us to believe. Sales volumes are down and some people are choosing to sell and others need to sell (not terribly different to any other time) – If people can sell, they will.  If they can’t, they will weather the storm.

Some real estate agents (I will not name them) have been quoted in Newspapers as saying that they have reduced prices on properties from $1.5m through to $6.5M.  The question which needs to be asked here is, “By how much were these properties overpriced by the real estate agent initially?” Many agents and vendors over price property (Again I ask what has changed?). In any market overpriced property needs to have price reductions and this is true of any period in time.

Earlier in the week Michael Marquette stated: “Real estate is the logical asset class at the moment. In a difficult time on the stock market it has been consistently proven that people turn to property. Australian property will be attractive to people overseas like never before. The country is holding together, real estate has not collapsed and our lower dollar makes for some excellent buying opportunities for people living in countries like the UK and the United States. I believe a lot of American money will be attracted to Australia and it makes sense that it is invested in property”.

Christine Watson

apartments.jpg Sydney is the only Australian capital city failing to build more detached houses than apartments, a new study has shown.

As new home-building figures plummet to their lowest levels since the late 1950s, economists warn that apartments and townhouses will dominate housing in Sydney as we build fewer and fewer freestanding homes.

Melbourne, on the other hand, built 19,100 houses last year, more than three times the detached houses built in Sydney during the same period, according to BIS Shrapnel figures. Brisbane built 11,700 houses.

Sydney is the only city in Australia that builds more apartments than houses – in every other city houses dominate new dwellings

Housing Industry Association report that Sydney’s shift to apartment development has happened as more people prefer to live in the inner city. The other factor was Bob Carr, who said Sydney was effectively shut for business in the 1990s and created a compulsory push towards high density.

Another issue inextricably linked to this issue is Sydney’s infrastructure. As Marquette Turner frequently state, until Sydney corrects its poor infrastructure trend, home ownership – in this case detached dwellings – will become increasingly out of people’s reach.

Simon Turner

It’s hard to believe that Easter is here already. The year is flying through and we are all coming to terms with the economic conditions that are upon us.

Rental properties are extremely scarce and returns for landlords have increased significantly. This is bad news for tenants and the new reality is causing pain for many people. Demand for property in Sydney fuelled by immigration has ensured that we continue to sell homes although prices have remained steady in areas like the Eastern Suburbs and Lower North Shore.

The lack of infrastructure connecting Sydney to Regional cities like Newcastle is containing the population growth to the State capital. This has not assisted prices in Newcastle and other Regional areas and a real focus on growth and infrastructure provision throughout all of New South Wales from the State and Federal Governments is required. A bullet train between the two cities and an International Airport in Newcastle would stimulate enormous investment outside of Sydney and would provide housing and lifestyle options for thousands of people.

I would like to thank everyone for your support throughout the year so far and on behalf of Simon Turner, Christine Watson and the Marquette Turner team I wish you a very safe and enjoyable Easter.

Michael Marquette

Craig-y-Mor, a Sydney home in the Eastern Suburbs with views of the Opera House and Harbour Bridge, has been sold for A$32.4 million ($31 million), a record for an Australian residence.

The five-bedroom property was sold by businessman Ben Tilley who bought it from stockbroker Rene Rivkin in 2004 for more than A$16 million.

Craig-y-Mor, which isn’t on the waterfront, is located in the eastern suburb of Point Piper on Wolsely Road, the same street which saw home sales for A$25 million and A$18.5 million in the fourth quarter of 2007.

There is such a limited supply of properties like Craig-y-Mor that when they do come onto the market they sell for such impressive sums.

The previous Australian record, a property called ‘Tahiti’ in the neighbouring suburb of Vaucluse, was bought by South Africa’s Krok family in September 2007 for A$29 million.

Luxury properties in the city are showing “no signs of strain” following a rise in interest rates to their highest in 12 years.

AUSTRALIA has one of the least affordable housing markets in the English-speaking world and it is not just hurting young people wanting to buy their first home, new research shows.

The AMP-NATSEM (The National Centre for Social and Economic Modelling) report – released today – reveals the dream of home ownership is fading for many people.

House prices have jumped 400 per cent between 1986 and 2007 while income has risen just 120 per cent.

The report – Wherever I lay my debt, that’s my home – compares the 1995-1996 housing situation to the latest available data from 2005-2006.

Disposable income

It showed households needed 7.5 times their annual disposable income to buy a typical house in 2006, up 53 per cent from 1996 when households needed five times their disposable salary.

“Buying a home has always been a great Australian dream but it is fast becoming out of reach for many,” managing director of AMP Financial Services, Craig Meller said.

“Even those who may have been in the housing market for an extended period are likely to be feeling the strain.”

State by state

NSW is the country’s least affordable state, with homes costing 8.3 times annual disposable income – up almost 40 per cent on 1996 figures – while the Northern Territory is relatively cheap at five times disposable income.

Western Australia isn’t far behind NSW at 7.45 times annual disposable income after a 63 per cent surge in 10 years, while Tasmania saw the biggest jump, up 65 per cent to 6.1 times annual disposable income.

Compared with other English speaking industrialised countries, Australia has one of the least affordable housing markets with nearly 90 per cent of areas surveyed considered severely unaffordable.

Western Australia’s Mandurah is one of the most unaffordable places surveyed, ranked sixth behind centres such as Los Angeles and San Diego, in the US.

Queensland’s Sunshine Coast is ranked seventh least unaffordable while the Gold Coast and Sydney both ranked 11th.

Young and old

But it is not only the younger generation which is suffering from crippling housing affordability.

The report shows that older generations are taking more debt into retirement with more than twice as many people aged over 60 still paying off a mortgage compared with the same age group in 1995-96.

This group also experienced the biggest jump in housing stress which almost doubled to 9.5 per cent in 2006 from 5.3 per cent in 1996.

Outright home ownership has also dropped during the past decade to 34.3 per cent from 42.9 per cent and most notably in the 45- to 59-year age bracket to 35.8 per cent from 54.4 per cent.

The report found that in 2006 only one in 20 Generation Y households (15-29 years) own a home.
They also have the highest levels of housing stress, at 35.3 per cent.

Among Generation X households (30-44 years) housing stress accounted for 31.8 per cent, compared with 18.8 per cent of baby boomers (45-59 years).

Recent first home buyers, understandably, are the most vulnerable to housing stress, being the group with lowest incomes and faced with the highest house prices, putting 62 per cent in housing stress.

“This report clearly confirms what everyone has been saying about the booming housing market – more needs to be done before the great Australian dream of home ownership becomes unattainable for too many,” NATSEM director, and co-author of the report, Professor Ann Harding said.

Home loans are likely to become even harder to get because analysts underestimated Australia’s reliance on the now-shaky securitised mortgage market, and business borrowers could be foremost among those feeling the mortgage squeeze.

Around 13% of Australian home loans were security backed – shorthand for mortgages packaged together and sold on the sharemarket – in late 2007, according to the State of Play: the Australian Mortgage Industry report by The Sheet and Infochoice.com.

The market buyers for securitised mortgages have all but disappeared since the US sub-prime crisis triggered a global credit squeeze.

And that, according to The Sheet’s Ian Rogers, means Australia could now be left with a $23 billion dollar gap in mortgage funding.

“There is an enormous supply shock coming through in the home loan market,” Rogers says. “A whole list of lenders who were the most dynamic force in recent years are now doing a lot less lending and some have disappeared.”

It is non-bank lenders that are most involved in securitised mortgages that have felt the pinch, with RAMS and Mobius disappearing and the likes of Bluestone Group, Liberty Financial and Heritage Building Society winding back their lending.

For borrowers, Rogers says, the upshot is that the tighter lending conditions banks have applied in recent months are likely to continue or get even worse.

“Tighter lending conditions are something people will have to get used to,” Rogers says. “No deposit loans will be practically impossible to get. Low deposit and low doc loans will be harder to get and more expensive, and there will be fewer choices of provider.”

And the squeeze could hit business owners the hardest. The higher amount of the average mortgage from non-bank lenders – $300,000 vs $220,000 overall average – suggests they may have been used as de-facto business loans, Rogers says.

“The average size of loans from these non-conforming lenders was well above average and I’m sure they were really business loans or jumbo investment loans people that people were accessing because they were easier to get,” he says.

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