April 8th 2009 “Over building” takes Magnetic prices down Magnetic Island's unit real estate market suffered a drop of approximately 43% from December 2007 valuation prices if last weekend's auction sale of three out of ten Blue on Blue units is any guide. About 120 people attended the auction held by Ferry real estate on Saturday morning at Peppers Restaurant. Of the ten for auction the three units which sold included: * Unit 223 a “dual key” which can be divided into two separate adjoining apartments with a total internal floor space of 87 square metres plus 19 square metres of balcony. In December 2007 the unit was valued at $535,000 but sold under the hammer on Saturday for $325,000 * Unit 832 a two bedroom, 89 square metre apartment with a 24 square metre balcony was valued in December 2007 at $725,000 but sold on Saturday for $405,000 * Unit 931 is a first floor, two bedroom apartment with an internal floorspace of 110 square metres with a balcony of 32 metres squared. In December 2007 its valuation was $745,000 but on Saturday it went for $420,000. Other units were passed in without any bids and one, formerlly valued at $1.05M, was passed in at $560,000 while another was passed in after an auctioneer's bid of $525,000. Magnetic Times sought comment from, Blue on Blue's developer, Eureka Funds Management, but their spokesperson declined the offer. While many see the poor sales as a reflection of the global economic crisis, last weekend the Australian Financial Review reported: “PRD Nationwide Townsville director Bruce Goddard says there is no doubt that overbuilding has affected Magnetic Island,” and, “'Two affected projects have been Pepper's Blue on Blue and Meridian's One Bright Point. 'The largest amount of excess stock is at Blue on Blue but there's about 30 units at One Bright Point.'” On January 3 this year another auction of Island properties was held by Smith and Elliot Real Estate. It included nine properties ranging from units at Nelly Bay harbour, harbourside blocks with marina pontoons, residential houses and blocks of land. At the auction no bids were offered for any of the properties and, since then, according to that agent's website, all bar one, which is “under offer”, are still for sale. Story and file photo: George Hirst To add your comment, or read those of others, see below

“Over building” takes Magnetic prices down

16 comments

Chris C April 8th 2009

Thanks for the low-down George. I agree about the over-build (yet another case of a blow-in not understanding the local market & a developer looking for a quick killing) (Abridged Ed)

mal hamilton April 8th 2009

Why am I not surprised?

george hewittson April 8th 2009

Such is life. Great timing with your article by the way!

Brian April 8th 2009

My comments are as a real estate agent with over 30 years experience and an owner of land on Magnetic. I agree with previous comments that the economic downturn has hit Island values hard. However, we should be glad so many developers invested huge sums in building on Magnetic in the first place. If we look at the other real estate on the Island, many residential blocks of land have remained unsold, or if sold, undeveloped. If more houses are built, they are either occupied or let, which provides more work and income for our local community. So what can be done? Why are so many blocks not built on? Using a block of land we own as an example - we intended a couple of years ago to build a home. We love Maggie and wanted to retire there, or at least, spend a lot of time on our favorite island. So what stopped us? Two factors - one was the huge cost to build. The other was the considerable fees charged by the Council and other professionals. Both are quite a bit higher than other parts of Australia. The answer to future real estate prosperity for Magnetic may be this: Perhaps Council, builders, developers and anyone else interested in prospering our Island, should cooperate in coming up with ways to offer incentives to attract people to build more homes on Magnetic. The spin offs would help many local people in the bigger picture.

Bill April 8th 2009

I have never been to an auction in Townsville where the property was sold at auction, and usually with no bids at all. I don't know how real estate agents are able to convince owners that it is an appropriate format - probably too much tv that shows a frenzy and the poor owner believes this to be the norm and will get better than market price. Properly priced properties do appear to sell, perhaps the ones at auction were overpriced to begin with. All real estate agents are interested in isturnover, and their claims that they will get you the best price possible is just sales talk. Unfortunately, you normally have to deal with them, even if you have concerns about their self-interest. Its a fact of life, but it is sad that statistics such as this could be to the detriment of current genuine sellers.

Jonboy April 8th 2009

I think I can remember comments from local residents predicting this scenario but without dragging it through the mire even more, what on earth can be done to overcome the tremendous impact this development has on Magnetic Island. Perhaps the planners ( who are they ?) will come up with a useful suggestion. I hate to say this guys...

Barbara April 8th 2009

When will they ever learn? Maggie didn't need this ugly type of development...certainly not to the scale it is. Why even think of putting in more homes when there are so many empty? To live on the island you require an income or to be an owner of the homes for luxury purposes...or rent...not a bad option. Considering the real world situation, not the fanciful real estate ideal, neither job security or excess cash is available and will not be for some time yet. Why would anyone want to buy at a high price right now? Not a smart time to sell, but maybe to buy, yes. It was noted that one block was already in a state of disrepair after the wet season and had not sold yet...who would want to buy those either?

Jill April 8th 2009

I don't think the problem is only overbuilding: it is the TYPE of building. I first came to the Island on a family holiday. We wanted somewhere that had scope for kids to play, observe wildlife, get rid of the energy that seems to build up in the nicest children once in a while - and which would not leave us impoverished for the rest of the year. The holidays we spent here have so many happy memories....picking up coconuts and opening them for breakfast.....seeing those little blue crabs which used to live at one end of Horseshoe bay, come out from their tunnels in the sand - but only if you stayed absolutely still and quiet.....playing with "beach dogs": a joy for children who could not have a dog at home. Sand, sun, sea - and a minimum of "tourist attractions". If you were thinking of buying a unit on the harbour, you probably want a whole lot more than that in a holiday destination. Night clubs. A casino, perhaps. A cinema. Why would you buy on Maggie to end up with something exactly like "everywhere else" except for the lack of all those money-extracting facilities? Please, everyone, stop thinking about more and ever more "development", and look at what we have that makes us different. In a few years all those baby-bonus kids will be itching for a really good family holiday, and I would hate to think that everything which helps make us the ideal place will have gone the way of the coconuts, the blue crabs and the beach dogs.

1st time buyer April 8th 2009

GREAT NEWS!

Chris C April 8th 2009

George To recast the abridged part of my earlier comment: I’m not surprised that punters have been slow to buy shoeboxes with west facing glass walls in the tropics, stacked on acid-sulphate landfill so as to create a wind tunnel around from a point where the cyclone winds channel before following the valley up Mandalay Ave. My faith in the home buying public has been restored - a little. Perhaps too the buying public have worked out that building little boxes of ticky-tacky on suburban estates in North-facing Horseshoe Bay is not worth the ever burgeoning cost of the air-conditioning they would need to live there?

chasmac April 10th 2009

Fascinated by Bill's concept of "properly priced properties" and the possibility of "better than market price" in a world wide recession. Owners who have got themselves into a situation where they must sell their property (more or less immediately) because they can't afford to own it anymore, must choose for themselves which method of selling will get them the best price in the available time. If the potential buyers are talking to real estate agents who else will a seller go to? Waiting indefinitely for a suitable cashed-up buyer to come along may not be an available option. The seller has this choice until they run out of time. When you've run out of money and then run out of time, what other selling option is available? It's then a buyers' market with different opportunities and a different price.

liz April 15th 2009

Not remotely surprised by this! I absolutely agree with Barbara, Jill and Chris C. If the developers bothered to conduct a little market research before dumping a thousand tonnes of concrete onto the once beautiful Nelly Bay, they would have realised that it was totally the wrong sort of development. As Jill says, its the priceless aspects of Magnetic Island that make it beautiful and a unique holiday destination - the unspoilt beaches, the quietness, the stunning bushwalks, the koalas, roos, wallabies, stunning tropical fish & coral reefs, unsealed roads intersecting with creeks, all adding to the adventure and mystery of the island. If the councils and the developers are not careful they will overdevelop the island and it will become a concrete monolith devoid of beauty or charm and inhospitable to local wildlife. That would be a shameful tragedy.

T April 28th 2009

Why is anyone surprised. Look at the state of the site through the eyes of the potential buyer. Its a mess. The hole at the harbor in front of Bright Point is an eyesore and evidence of a failed development with no cash to clean up the ruined site. Why would anyone pay any money for a view of a rotten hole in the ground, long abandoned and often a mosquito infested mess in the wet season. That and the boarded up abandoned site at Peppers are both unsightly and unsafe, and as such now also getting covered with graffiti that the developers won't even clean up. On top of that the area is just a supermarket and car park. There is nothing there - no cafe, no restaurants, nothing to do, no parkland, no shady place to sit and enjoy the remaining view, no way to actually enjoy the area. Anyone arriving there can't wait to get somewhere else. Who on earth would pay anything to live on a site like that??

Paul November 8th 2009

My wife and I just spent 3 glorious days exploring Maggie and getting away from the ratrace of Townsville. However during our many drives and walks around Nelly Bay and the marina area we were astonished with the huge number of vacant apartments at Peppers (where we stayed), One Point and all that land on the marina foreshores. It seems that poor old Maggie is headed down the same track as the Gold/Sunshine Coast debacle. What ashame, seemed like a nice place... once.

Peter October 15th 2011

.....yeah yeah,all the doom and gloom aside, could any kind person refer a real good builder to build at Horseshoe bay?...Maggie is tops for me, regardless of the neagative comments...and yes ...I do intend to live there one day!!

Annie April 22nd 2012

I recently visited glorious Maggie Island last week. It's been calling me for some time as I'm trying to get out of the slump I'm in in Cairns. Our northern beaches are still the best place to live, but as soon as you drive onto our one and only major road, one battles with the masses. Maggie remains the ultimate 'leave the rat race behind' environment, and although the ugly development looks totally out of place, I'm glad the place still holds it's 'local charm'. Perhaps at this stage of my life, I can be thankful for the slump in sales on over invested properties, I may still get a chance to invest for my simple retirement! So be it if investors and fat cats lose out, it's about time things turned around for the simple people, like me who wants to enjoy our incredible country, both now and for my future grandchildren. To own and live on Maggie would be a blessing for me, so enjoy what you have and can keep and I hope to be your neighbour one day! :)