Multi-billionaire Harry Triguboff has stopped construction of a serviced apartment tower in the heart of Melbourne and ditched plans for the development of others towers in Canberra and the western Sydney hub of Liverpool, saying it is too risky to pursue further hotel projects at this time.
The apartment mogul, and the owner of 20 serviced apartment complexes on the eastern seaboard, is instead redesigning the $150m serviced apartment complex he had planned in Canberra into a residential unit tower, while at Liverpool he will also convert the proposed $110m serviced apartment tower into residential apartments.
He is undecided over the fate of the serviced apartment complex in Melbourne’s King Street, on a site he bought for $29m last year, but he said the project was in the early stages of construction.
“It is too risky to develop serviced apartments, because I don’t know what will happen with the hospitality sector,” he said.
Triguboff, the founder of Meriton Apartments, closed half of his serviced apartment complexes at the height of the COVID-19 pandemic. He has since started reopening them.
On the apartment front, he said over the past month unit prices had started to increase by around 3%, particularly in the Sydney suburbs of Pagewood, Lidcombe, Dee Why, Alexandria, Zetland, Mascot, Parramatta, North Ryde and Rhodes. In Queensland, apartment prices were also rising marginally at Surfers Paradise.
Triguboff’s revelation of an increase in unit prices came as data house CoreLogic reported national values for apartments dropped 0.7% in July, easing by a total of 1.4% over the past three months.
However like the housing market, apartment prices are still up 9.5% over the past year compared with the prior year. But apartment rents in Sydney and Melbourne have fallen by more than 3 per cent since the start of April.
Triguboff attributed the rise in prices to the lack of stock.
He said the government was helping people wanting to buy new apartments and that was contributing to the price rises.
“Because of the low interest rates investors are back and (also) because of the assistance that the government is giving to first-home buyers.
“Investors are coming back in great numbers. The alternative to buying apartments is difficult to find. Banks pay little interest, the sharemarket is going nowhere, and the gold is at an all time high. Our apartments have not been strong for a long time, so are very affordable,” he said.
Triguboff said there was also an increase in the number of expats returning to Australia and buying apartments.
“But the most important reason is that production is very low. Probably about 50% of what we need. This is why the market will be strong.”
Triguboff says the economic problems were only temporary and the government was proving that it is concerned about real estate. “Stamp duty assistance, low interest rates, and low land values (which means less land tax) have been deliberately created by the commonwealth.”
This article originally appeared on www.theaustralian.com.au/property.
