Amid one of Western Australia’s hottest real estate markets in almost two decades, and with coastal property a major driver, several short-stay apartment investments are being promoted in the South West.
Amid one of Western Australia’s hottest real estate markets in almost two decades, and with coastal property a major driver, several short-stay apartment investments are being promoted in the South West.
The major concentration of these projects is along Geographe Bay and includes: the Geographe Bay View Resort; Cape View Beach Resort; Abbey Beach Resort; Broadwater Beach Resort; and the Broadwater Bungalows Resort, which is to be re-branded Grand Mercure Resort following its recent sale to the Accor Premiere Vacation Club for $11 million.
Despite all the hype around this sector, the latter investment has already racked up a potentially significant loss for investors following its sale.
But promoters of these popular tourism investments – which typically offer a 20-year title on villas and a percentage of rental returns, paid quarterly, in exchange for a substantial capital outlay plus annual management and refurbishment fees – remain confident in the sector.
RE/MAX Advanced Realtors sales associate Russell Barker said some properties had experienced strong equity growth and rental returns. In many cases, he claimed, returns had been higher than those in Perth, notably during peak season.
The short-stay apartment market has had a chequered history, with original investors in past projects such as Hillary’s Marina caught by agreements that left them little room to manoeuvre.
Mr Barker said situations where investors became stuck with 10-year management contracts were no longer the norm, with three-, six- and 12-month contracts now commonly offered.
Australian Development Consult-ants director Greg Caird has been involved in the Cape View Beach Resort for five years and is now the development manager for its stage three release.
He claimed the values for its first two stages had more than doubled in some cases, matching the trend of property prices across the region.
The company hopes to raise almost $30 million from a 56-unit expansion, which includes pools and a bar restaurant, and is asking up to $600,000 for the highest-priced units.
Mr Caird said almost half of that stage had been pre-sold.
Busselton Land and Estate Agency partner Chris Rowe, who is licensed to re-sell apartments at the Abbey Beach Resort, said occupancy rates at the resort had averaged 66 per cent over the year, with strata investors sharing in 70 per cent of the revenue pool.
He claimed studios priced from $96,000 were averaging returns of $5,300 a year after strata and refurbishment fees were paid.
Larger units could expect to return about three times that amount.
Mr Rowe said there was a $1.8 million refurbishment fund for ongoing maintenance and upgrades to decor, gardens and amenities.
However, it’s not all good news from the South West playground.
Investors in the Broadwater Busselton Property Syndicate are reportedly counting their losses after the Broadwater Bungalows Resort was sold last week by Futuris owned Westralia Property Management to repay bank debts and accrued costs.
It is believed members will receive between 10 cents and 16 cents for each dollar of the $8.8 million they invested in the resort.
