• The Australian
• March 19, 2016 12:00AM
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An apartment construction site at Fortitude Valley, Brisbane.

Brisbane real estate agents reckon off-the-plan apartment sales in the Queensland capital will be harder to achieve this year and unlikely to eclipse the record numbers of last year.

Despite this, developers are proposing fresh apartment projects in Brisbane’s central business district, partly spurred on by the strong sales being achieved by projects right across the city.

More than 5330 off-the-plan apartments sold last year in a record for the sunshine state capital, up 30 per cent on 2014 figures and almost four times the unconditional apartment sales recorded in 2010.

However, Brisbane’s off-the-plan apartment market began slowing in the December quarter with 1300 units selling at an average price of $613,631, radically cheaper than similar residential offerings in Sydney and Melbourne. Unconditional sales dropped 7 per cent in the quarter compared with the September quarter, with 2208 new residential apartments remaining for sale across the inner Brisbane market, translating into more than five months’ supply.

“There is an expectation that 2016 will be a tougher 12 months than 2015,” says a Place Advisory report into inner Brisbane apartments.

“Construction prices are set to have the biggest impact on Brisbane residential development, either forcing prices to rise and reducing sales rates or squeezing end profits for the developer.

“With council elections and a looming federal election the southeast Queensland property market will definitely see some peaks and troughs.”

Two-bedroom units in inner Brisbane were the most popular off-the-plan purchases for owner-occupiers and investors in the December quarter, accounting for 63 per cent of transactions, with most sales negotiated between $550,000 and $750,000.

The largest shift in the market has been the growing popularity of larger two-bedroom apartments over cheaper one-bedroom stock.

One and two-bedroom apartments accounted for most sales, with three-bedroom apartment sales totalling just 6 per cent.

“The level of one-bedroom transactions declined further in the December quarter 2015, representing only 32 per cent of the total sales in the past three months,” Place Advisory says.

“The one-bedroom versus two-bedroom recorded sales volumes have been the largest recognisable shift in the past 12 months — the same period in 2014 saw one-bedroom sales total 50 per cent of the quarter’s transactions versus 49 per cent two-bedroom transactions — which was also representative of the surrounding quarters.”

The Oxley & Stirling building by Aria was one of Brisbane’s best performers during the quarter with 215 unconditional sales, followed by Capri at Newstead Central and Utopia Space with 98 sales each and stage two of South City Square with 97 sales.

Despite the plethora of unsold apartments, developers are attracted to Brisbane with 11 new projects released during the quarter totalling 1893 apartments.

Last year produced the highest number of transactions in Brisbane. “Consistent sale prices were achieved, the rental market softened as major apartment buildings began to settle and the investment market continued to drive sales despite owner-occupiers beginning to re-enter the local apartment market,” Place said. Last year, the average sale price was $595,253, up 4 per cent on the average sale price achieved in 2014.

The most sales in Brisbane’s CBD during the December quarter were at Skytower, with the balance divided between Sunland’s Abian and the Midtown.

CBD sales averaged $928,279 in the quarter, the highest of any Brisbane precinct. Brisbane’s CBD recorded 837 unconditional sales during 2015, almost 50 per cent more transaction in this precinct than 2014.

Apartment sales in Brisbane’s inner north averaged just $566,327 during the year with Newstead Central’s Capri Tower and Utopia Space the top performers, registering 98 sales each.

South of the Brisbane River sales were extremely strong during the quarter with 791 unconditional sales. But there are 34 individual projects on the market.

Unsurprisingly most stock sold during the quarter was two-bedroom apartments, at 62 per cent of transactions.

There are more than 21,000 apartments in Brisbane that have not yet gone on sale. These are in the planning stage and the likelihood of them making it to market depends on finance and risk.

New construction is planned around the inner north east, from the CBD to Fortitude Valley up to Newstead and the West End-South Bank peninsula of the Brisbane River, including Woolloongabba.

Place Advisory says 72 per cent of all inner Brisbane’s new apartment stock will be developed in these regions.

Offshore-backed PDS Australia recently unveiled a $1 billion project called Queen’s Tower for its site at 545 Queen Street in the CBD.

The building will have world-class design and luxury residences, premium short-term accommodation and a new shopping and dining precinct, PDS Australia executive chairman Sameh Ibrahim says. His group is moving rapidly on the project after picking up the site from a GPT fund for about $84 million last year.

It will have much shorter timeframe than the Brisbane Skytower project, which has transformed the landscape for apartment projects in the city.

The forthcoming development of that landmark, and the success of Sunland’s Abian tower, which sold out last December, has shown the shift among apartment builders and buyers, who have shown a willingness to back new projects.

After a false start by developer Austcorp before the global financial crisis, AMP Capital and private developer Billbergia are forging ahead with the 90-storey Skytower, which will comprise 1128 luxury apartments.

Strong pre-sales, with more than 80 per cent of units dealt with, has boosted confidence.

Now the offshore developers that swooped on a series of sites across Brisbane are expected to set the pace. Their projects could drive a jump in the supply of new apartments, potentially tipping the balance towards apartment buyers.

Big names include Singapore-listed Aspial and Chinese group R&F Properties. Fresh from winning approval for a 91-storey tower — the city’s highest — at 30 Albert Street at the end of last year, Aspial put in plans for another apartment skyscraper last month.

It has now proposed a 91-storey tower at Margaret Street that almost adjoins the successful AMP and Billbergia project, which will sit at 222 in the same street.

Meanwhile, last year R&F launched a $400m apartment complex in South Brisbane. Brisbane 1, a 30-level project of 600 apartments, is its first venture in Australia, and it has several more projects to launch.

Locals are also proposing new towers.

Aria Property Group submitted plans for its maiden residential tower in Brisbane’s CBD. The tower, at 171 Elizabeth Street, will rise 80 storeys and is planned as a big statement by a group known for its boutique apartment blocks.

Other local players also are notching up high sales rates in their projects.

Last weekend Metro Property Development launched Brisbane Apartments, recording 170 unit sales valued at more than $97m in the first six hours.