Financial Review rich lister Tim Gurner sold 97 per cent of the apartments in a new Melbourne high-rise project in just two weeks after offering larger apartments to the downsizer market.
Mr Gurner’s Albert Place Residences on Bowen Crescent in South Melbourne originally featured 160 apartments, but was reduced to 140 after downsizers chose to amalgamate apartments to create large residences.
The resulting layout created eight half-floor residences all worth between $4.5 million to $5.5 million with the project generating total sales of $140 million.
Mr Gurner said he took a calculated risk by offering a third of the apartments in the tower, designed by Elenberg Fraser, as three-bedders to “test the scale and breadth of the downsizer market” but that it had “paid off in spades”.
“People have been talking about the downsizer market for years and I never believed it as we were not seeing it on the ground,” he said.
“However the last 12 months has completely flipped the apartment market demographic on its head and we are now seeing unprecedented interest from this market segment in particular.”
Mr Gurner said demand had been fuelled by a number of factors, including the “amazing rise in house prices which has seen many homes in Toorak, South Yarra and Albert Park literally double in value in the past three to four years”.
“Houses that were worth $3 million to $8 million in these suburbs are now worth $6 million to $15 million and this means wealthy downsizers have $6 million to play with now rather than $3 million from the sale of their family home,” he said.
While Mr Gurner has consistently rejected the view there are too many apartments being developed in Melbourne, he warned that new state government changes to stamp duty, which include the removal of off-the-plan stamp duty concessions for investors, would have a “large impact on the investment market without question”.
“It is my belief that sales to investors will come to a grinding halt for the next quarter, which the government will no doubt regret once they see the implications of their policies playing out in the market,” he said.
Albert Place Residences is due for completion in late 2019 and Crema Constructions is set to undertake the $55 million build.