Banyan Tree snubs ‘overpriced’ Sydney, Melbourne

Luxury Singaporean hotelier and developer Banyan Tree Group chose Brisbane for its first $150 million residential development in Australia, saying Melbourne and Sydney sites are overpriced.

Construction of the Banyan Tree Residences Brisbane, to be built on a near-waterfront site on River Terrace, Kangaroo Point, starts later this year after the company won approval to develop 76 apartments over 10 levels including four penthouses, most with rooftop infinity pools and private garden terraces.

Banyan Tree chairman Ho Kwon Ping says Brisbane was selected for the Singapore-listed company’s Australian apartment debut because the city features later in the property cycle than Sydney and Melbourne.

We have (also) looked at the historical gap of pricing between Sydney, Melbourne and Brisbane and that gap has increased significantly

“Sydney and Melbourne was the first choice, but people have been skittish about the rate of price increases in Sydney and Melbourne and that is a deterrent to foreign investors,” Ho says.

Until recently, Sydney house prices have been growing at 14% a year annually while Melbourne has produced 10% per annum growth over the past few years according to CoreLogic and Moody’s Analytics.

Deals continue: Singapore ramps up Australian logistics raid

“We have (also) looked at the historical gap of pricing between Sydney, Melbourne and Brisbane and that gap has increased significantly,” Ho says.

He says Melbourne and Sydney are overpriced, adding that “if there is going to be a correction, if we bought the land at the peak we would be in trouble”.

Among the features at Banyan Tree Residences Brisbane will be an infinity pool.

Meanwhile, Banyan Tree has designed its luxury apartments on the Brisbane River for Australia’s ageing population.

“Our project is not tailored that much to international investors, it is tailored to Australians with an ageing population. There is more growth potential demographically speaking for people wanting a warmer climate. Many will go to the Gold Coast but most people want to go to the city to ­retire.”

Ho will not reveal prices for the Banyan Tree Residences but says there will be a price premium with the residences featuring 24-hour concierge service, a rooftop garden with private function space, barbecues, daybeds and an infinity pool.

Sydney and Melbourne was the first choice, but people have been skittish about the rate of price increases in Sydney and Melbourne and that is a deterrent to foreign investors

“We chose Kangaroo Point because it’s a location that is extremely amenable for residents and the letting pool,” he says.

“You have a superb view of the city, you are not in the middle of a highly urbanised landscape, you have the whole park and you can cross to the city by the ferry.”

But it hasn’t all been smooth sailing for Banyan Tree, which last week posted its “worst loss” ever of $27.5million for the full year.

“It is the worst loss because we have restructured the hotel ­operations,” Ho says.

“We basically took a lot of voluntary writedowns … at the operating profits level we are quite healthy.”