Sensational-Adelaide.com

AdelaideGo wrote:Developers consistently quote very low building cost in the development application, because this is what the application assessment fee base on. The real cost for this building including interest will exceed $70 million.

Exactly . Happens throughout the building industry . The levies and Indemnity insurance is also based on the proposed costs, so why wouldn't you tone it down.

The $30M does not include marketing and sale cost, holding cost, interest paid, LAND, TAXES it is just the building. I believe that they are not going ahead with a development like these without at a minimum 30% profit margin.

If you think that you cannot sell something for 100M because it cost you 30-50M , you perhaps dont know a lot about business. Look at the bill of materials for an smartphone, its on the 100-300 mark, however people pay up to 1k easily for them, why it would be different for houses? It is just the scale that changes.

/\ /\ /\ Mate we were talking about the BUILDING COSTS alone . Not profit or loss margins, taxes or so on ...... Obviously the developer is planning on making a profit . Doesn't take a well rounded business man to suggest a business enters a venture want to make a profit

cmafra wrote:The $30M does not include marketing and sale cost, holding cost, interest paid, LAND, TAXES it is just the building. I believe that they are not going ahead with a development like these without at a minimum 30% profit margin.

If you think that you cannot sell something for 100M because it cost you 30-50M , you perhaps dont know a lot about business. Look at the bill of materials for an smartphone, its on the 100-300 mark, however people pay up to 1k easily for them, why it would be different for houses? It is just the scale that changes.

I think you might have teed off in the wrong forum. People on here are fully aware of these things.

FWIW I know of people who have built things basically at breakeven for cost to value. They were more interested in the cash flow

cmafra wrote:The $30M does not include marketing and sale cost, holding cost, interest paid, LAND, TAXES it is just the building. I believe that they are not going ahead with a development like these without at a minimum 30% profit margin.

If you think that you cannot sell something for 100M because it cost you 30-50M , you perhaps dont know a lot about business. Look at the bill of materials for an smartphone, its on the 100-300 mark, however people pay up to 1k easily for them, why it would be different for houses? It is just the scale that changes.

People have already pointed out that it seems like the claim was that 30 million was the total cost.

As for your analogy, that just backs up what was said, because the smartphone market is absolutely swamped with almost every manufacturer trying to fill any space they can find.

Does it really matter?? As long as it proceeds

Geeeeeezzzzzzzzz,

I am being bashed just because I disagree with this....

Nort wrote:Yeah, if $30 million could get you a $100 million dollar building then Adelaide would have a crane on every street corner right now.

Off course that what matters is that the construction goes ahead, I have bought one on the 23rd floor with views to the west... I very much believe that this is going ahead as per plan...

Nort wrote:

cmafra wrote:The $30M does not include marketing and sale cost, holding cost, interest paid, LAND, TAXES it is just the building. I believe that they are not going ahead with a development like these without at a minimum 30% profit margin.

If you think that you cannot sell something for 100M because it cost you 30-50M , you perhaps dont know a lot about business. Look at the bill of materials for an smartphone, its on the 100-300 mark, however people pay up to 1k easily for them, why it would be different for houses? It is just the scale that changes.

People have already pointed out that it seems like the claim was that 30 million was the total cost.

As for your analogy, that just backs up what was said, because the smartphone market is absolutely swamped with almost every manufacturer trying to fill any space they can find.

Cost of manufacturing can be very different to it's final value for many reasons:

• There's research and development involved. A computer chip from Intel that may cost $2 in materials and labour to produce, yet sells for $150. They're making back the $2 billion in research and development costs to design the product, plus need the money to fund the R&D of their next products. It's the same with cars, drugs, etc.
• There's sentimental value added on. Vintage movie props, baseball cards, etc are auctioned off for far more than what it would cost to remake them, because there's sentimental value in how they're used, what they mean, etc.
• You're selling more than just the product. For example, in real-estate you're often selling land + property. A house you can build for $300,000 may sell for $600,000 primarily due to the location or the land that comes with it.
• There's a limited supply. You can only produce 10 bird houses a week, but 100 people a week are interested in purchasing them at $20. So you raise the price, lowering the demand. If 70 people interested at $30, 50 interested at $40, 20 people interested at $50, 10 people are interested at $60 - it'd be wise to sell the bird houses at $60 each, because 10 is the maximum you can produce anyway. The same thing goes for congestion pricing for parking, highways, etc - the price is adjusted dynamically (the higher the price, the less demand there is) so it's only at 90% capacity most of the day.
• You just want to get rid of it. The item you're holding on to is taking up space, or is a liability (taxes, maintenance) so it's better to sell it at a loss than to hold on to it. Or, it's being used to secure a debt (a mortgage) and the person selling is only interested in getting their money back.

cmafra wrote:Geeeeeezzzzzzzzz,

I am being bashed just because I disagree with this....

Nort wrote:Yeah, if $30 million could get you a $100 million dollar building then Adelaide would have a crane on every street corner right now.

Off course that what matters is that the construction goes ahead, I have bought one on the 23rd floor with views to the west... I very much believe that this is going ahead as per plan...

Congrats. Did you get a 1 bedder or 2 bedder?

Off-topic, but my smartphone cost me $55 (outright, not on a plan) when I bought it in 2011. It's still perfectly good (android phone and does pretty much anything most smartphones can do).

I can't understand why anyone would pay $1000 for one!

Lightsview wrote:Congrats. Did you get a 1 bedder or 2 bedder?

Thanks, I`ve got a 2 bedroom. The sales agent told me that they will start very soon.

I heard from a valuable source that they only had a handful of apartments left, not 100% sure how many is a 'handful', but he said they have sold unbelievably fast.

cmafra wrote:

Lightsview wrote:Congrats. Did you get a 1 bedder or 2 bedder?

Thanks, I`ve got a 2 bedroom. The sales agent told me that they will start very soon.

So being near the top of this building, we expect to see lots of skyline shots from you.

Wow, things really do move at a snail's pace in Adelaide.

stronic wrote:Wow, things really do move at a snail's pace in Adelaide.

In regards to this development? Things seem to be moving at an extremely rapid pace - more so given the size of this development.

I would say the snail's pace applies to a wide range of other developments in Adelaide although several now seem to (finally) be underway also... Aria, Vision etc