[CAN] 123 Flinders Street | 135m | 39lvls | Mixed Use

[spiller]

I hope this gets the go ahead and eventually is built, something different for Adelaide, no doubt. Someone posted earlier saying this is the most interesting/best proposal Adelaide has ever seen (or something along those lines)? Not to live in the past, but 20-22 Currie St still holds that title, by a long way. As I said, I like the design and hope to see it go ahead as it's different and of good scale for the area it's proposed for. "Iconic land-mark" however? No. As above, it lacks height (which is not the be-all, end-all), and is not quite interesting enough to be in the category of smaller iconic structures. I put this ill-labeling down to a typical Adelaide media puff up...nothing we aren't used to!

[AG]

I wonder how this project can be financially viable, considering that the developer is claiming that it will cost $120 million. For obvious reason, developers always give a low end figure (often without counting the cost of fittings) when they submit for DA approval.

In the paper, they are saying that the apartment price ranges between 300k and 1.2 million. Base on an average price of 800k (which is absoutly high end for Adelaide), the gross revenue they are going to get from the 120 odd apartments will only be just under $100 million. The 4 levels of commercial and car parking just can't make up the difference.

This project is not going to go ahead even it is approved by DAC, unless of course the developer is not doing it for the money.

Rental income.

[AtD]

I wonder how this project can be financially viable, considering that the developer is claiming that it will cost $120 million. For obvious reason, developers always give a low end figure (often without counting the cost of fittings) when they submit for DA approval.

In the paper, they are saying that the apartment price ranges between 300k and 1.2 million. Base on an average price of 800k (which is absoutly high end for Adelaide), the gross revenue they are going to get from the 120 odd apartments will only be just under $100 million. The 4 levels of commercial and car parking just can't make up the difference.

This project is not going to go ahead even it is approved by DAC, unless of course the developer is not doing it for the money.

Using numbers from the Savills website and making absolute guesses on floorspace: 4000 sqm of premium grade office space would fetch between $16 m and $22 m in the Adelaide core. Each 1000 sqm of retail on the ground would fetch between $2 m and $6 m. Add the car park on top of that. But I take your point, these numbers I pulled out my arse wouldn't give much change after a year's interest.

[AdelaideGo]

I doubt that they are in for the rental income. Consider interest opportunity cost is at least 10%, while rental yield is only four.

[Waewick]

I wonder how this project can be financially viable, considering that the developer is claiming that it will cost $120 million. For obvious reason, developers always give a low end figure (often without counting the cost of fittings) when they submit for DA approval.

In the paper, they are saying that the apartment price ranges between 300k and 1.2 million. Base on an average price of 800k (which is absoutly high end for Adelaide), the gross revenue they are going to get from the 120 odd apartments will only be just under $100 million. The 4 levels of commercial and car parking just can't make up the difference.

This project is not going to go ahead even it is approved by DAC, unless of course the developer is not doing it for the money.

Using numbers from the Savills website and making absolute guesses on floorspace: 4000 sqm of premium grade office space would fetch between $16 m and $22 m in the Adelaide core. Each 1000 sqm of retail on the ground would fetch between $2 m and $6 m. Add the car park on top of that. But I take your point, these numbers I pulled out my arse wouldn't give much change after a year's interest.

premium office space varies from $350-$450 psm so $700k to $900k p.a for each floor (depends on gross or nett)

for a fully leased floor space the investor would be paying somewhere around the 7.5 = 8% mark top in interest costs.

if we take the the lower end on a Nett basis that would put the value of each floor around the $9.3m mark (assuming a solid yield) for each 2000m2 floor.

So on the basis of a 65% lend the investor is only going to be paying 450k p.a - leaving plenty of room for outside costs and even a bit of debt reduction. The key is purely getting the 35% equity! (which developers can build a portion in).

Now I have simplified it some what but that is the basic principle - so if you can lease 4000m2 of space your going to have an asset worth around $18m giving you an income of $1.4m to service the $900k in interest costs.

The developer would be getting their funding based on the overall build cost of the development - there interest rate would still only be 8-9% tops as well, remembering they only pay on what they draw.

For a building of that scope $120m build costs doesn't seem that outrageous - I would be thinking however that the costs are more likely to be $90-100m, they will be overstating it based on old information and not current market prices (good AUD, competitive market etc)

[AdelaideGo]

I wonder how this project can be financially viable, considering that the developer is claiming that it will cost $120 million. For obvious reason, developers always give a low end figure (often without counting the cost of fittings) when they submit for DA approval.

In the paper, they are saying that the apartment price ranges between 300k and 1.2 million. Base on an average price of 800k (which is absoutly high end for Adelaide), the gross revenue they are going to get from the 120 odd apartments will only be just under $100 million. The 4 levels of commercial and car parking just can't make up the difference.

This project is not going to go ahead even it is approved by DAC, unless of course the developer is not doing it for the money.

Using numbers from the Savills website and making absolute guesses on floorspace: 4000 sqm of premium grade office space would fetch between $16 m and $22 m in the Adelaide core. Each 1000 sqm of retail on the ground would fetch between $2 m and $6 m. Add the car park on top of that. But I take your point, these numbers I pulled out my arse wouldn't give much change after a year's interest.

premium office space varies from $350-$450 psm so $700k to $900k p.a for each floor (depends on gross or nett)

for a fully leased floor space the investor would be paying somewhere around the 7.5 = 8% mark top in interest costs.

if we take the the lower end on a Nett basis that would put the value of each floor around the $9.3m mark (assuming a solid yield) for each 2000m2 floor.

So on the basis of a 65% lend the investor is only going to be paying 450k p.a - leaving plenty of room for outside costs and even a bit of debt reduction. The key is purely getting the 35% equity! (which developers can build a portion in).

Now I have simplified it some what but that is the basic principle - so if you can lease 4000m2 of space your going to have an asset worth around $18m giving you an income of $1.4m to service the $900k in interest costs.

The developer would be getting their funding based on the overall build cost of the development - there interest rate would still only be 8-9% tops as well, remembering they only pay on what they draw.

For a building of that scope $120m build costs doesn't seem that outrageous - I would be thinking however that the costs are more likely to be $90-100m, they will be overstating it based on old information and not current market prices (good AUD, competitive market etc)

I thnk $900k interest pa is too low. Base on 9% interest rate as you stated, 900k is only enough to cover 10 million debt which should also represents the construction cost. With an optimistic 80% efficiency, the developer need to build 5000m2 in order to yield 4000m2 of net leasable area. That means the average construction cost per sqm is $2000, probably not enough for a grade A commercial building.

Anyhow, looks like commercial is a relative small portion of this development, as someone in this discussion mentioned earlier, this project will probably make or break base on its residential components. Again, back to what the paper suggested, I wonder how much living space I will get for $300k, hopefully more than a 30m2 shoebox, otherwise it just confirms my earlier statement that this project is financially not viable.

[AtD]

There's an article and render in today's AFR. The apartments range from 50 sqm to 85 sqm in two towers. The building will have the usual gym, pool, spa, a cinimea (???) and three roof gardens. The developers will rely on both Australian and overseas investors.

[AdelaideGo]

There's an article and render in today's AFR. The apartments range from 50 sqm to 85 sqm in two towers. The building will have the usual gym, pool, spa, a cinimea (???) and three roof gardens. The developers will rely on both Australian and overseas investors.

While a 50m2 apartment selling for 300k can still barely be called reasonable and is "on par" with the current market price level in Adelaide, 85sqm for 1.2 million is completely out of the price range that our Adelaide residents are willing to pay. Have this developer really done his reasearch? Just like the wave apartments, the developer builds it for her ego rather than money, the result is that none of the 4 apartments are sold after the building is almost completed for a year.

[Ben]

There's an article and render in today's AFR. The apartments range from 50 sqm to 85 sqm in two towers. The building will have the usual gym, pool, spa, a cinimea (???) and three roof gardens. The developers will rely on both Australian and overseas investors.

While a 50m2 apartment selling for 300k can still barely be called reasonable and is "on par" with the current market price level in Adelaide, 85sqm for 1.2 million is completely out of the price range that our Adelaide residents are willing to pay. Have this developer really done his reasearch? Just like the wave apartments, the developer builds it for her ego rather than money, the result is that none of the 4 apartments are sold after the building is almost completed for a year.

Who cares. Does it effect you if the developer make little or no money? just be positive for the investment in our city and state!!

[Howie]

Paul just wanted to set the record straight on a few things written here:

There are 156 apartments in the project. 120 is not correct.
There is one tower not two, and the red brick telstra exchange will be demolished.
The M$120 is the total sales income, not the build cost.

Cheers.

Howie

[Ho Really]

Anyone know the building's green credentials?

Cheers

[UrbanSG]

Some positive reporting for Adelaide in today's Australian:

Chinese developer leads the way
Sarah Danckert
From: The Australian August 18, 2011 12:00AM

Datong Australia chairman Jin Liang says if Chinese developers can smell an opportunity to make money in Australia, they will come.

DOWNTOWN Adelaide isn't necessarily the Australian equivalent of the wild frontier, but the city of churches has managed to draw a company that says it hopes to be the pioneer for other Chinese developers.

Datong Australia chairman Jin Liang has filed a planning application for his company's first project in the Adelaide CBD, a 22-level, 153-apartment tower at the corner of Flinders and Pulteney streets.

"Datong hopes to be a successful example to other Chinese companies," Mr Liang said.

"(Our project) will enhance the opportunities for Chinese companies in Australia. Datong will be the pioneer."

The building will become the tallest residential tower in Adelaide and Mr Liang said the company had more developments planned for the city.

In much the same way that Perth's apartment and office market took off ahead of the mining boom, Datong sees Adelaide benefiting from BHP's planned $30 billion expansion at its Olympic Dam uranium and copper mine 550km north of the city.

Mr Liang said BHP's mine played a part in Datong selecting Adelaide as its entry point into the Australian market.

"BHP's mine will bring long-term social and economic benefits to the region. Datong will be watching events at the mine very closely," Mr Liang said.

However, it is not just Adelaide's future economic potential that drew Datong to the city.

Mr Liang first came to Australia in 2004 as a tourist and said he was deeply impressed with the beauty of the city.

Now he is impressed with the ease of doing business there.

"The government of South Australia is encouraging investors, and the procedures here are professional and transparent," Mr Liang said.

"There is a real sense of opportunity for future development."

And while not declaring Adelaide unique on that front, Mr Liang said setting up business in other Australian cities was not always so straightforward.

"In some places, it's not so easy," he said.

Mr Liang also has investments in a medical products company and a wine business, as well as extensive interests in commercial property developments.

But it wasn't just the money to be made in the property market that drew Mr Liang into the industry in the late 1980s.

He said creating buildings that people could live in, work in, shop in or simply enjoy was a great way of demonstrating his personal values as well as his business values.

Mr Liang is heavily involved in social and political initiatives in China's Yunnan province, including his role as vice-president of the Yunnan Women's Association to Alleviate Poverty, among many others. He is also a member of the People's Congress of Wuhua in Kunming City, the capital of Yunnan.

Mr Liang said he had spent a considerable amount of time building Datong into a major residential, office and retail developer in the company's home province of Yunnan. And he has other ventures, including a planned tourism development in the north of the country.

In total, he has invested in, developed and managed more than 14 projects across China.

The 2.1 million square metre Zhaotong residential, commercial and mixed-use project in Yunnan is expected to be completed in 2014 at a development cost of 6 billion yuan ($877 million).

Zhaotong is of a scale that would make most Adelaide developers blush, but beyond their $120m high-end development on Flinders and Pulteney streets, which will also include office and retail space, Datong is not necessarily looking to build on that scale in either Adelaide or Australia at the moment.

"China needs big-scale developments. Here, the developments will be smaller, of course, but still very high-quality," Mr Liang said.

However, he added that it really depended on whether there was demand for those sorts of projects.

So does that mean Adelaide and other Australian cities will now face a rush of development from high-end apartment and retail developers such as Datong?

"If Chinese companies can smell the opportunity in Australia, they will come," Mr Liang said.

"Datong believes there is a gap in the market. There are not that many apartment buildings of a very high standard in the current market, and we definitely think our innovative design will serve demand."

Datong's 123 Flinders development will comprise 153 residential units, 60 per cent of them on the corners of the building, rather than the standard 25 per cent, to increase the level of cross-ventilation and natural light in the apartments.

The building will include three roof garden areas with trees and plants, as well as a pool, gym, spa and cinema.

Apartment prices will start at about $300,000, with larger two-bedroom residences expected to fetch about $1.2m.

[Howie]

The 2.1 million square metre Zhaotong residential, commercial and mixed-use project in Yunnan is expected to be completed in 2014 at a development cost of 6 billion yuan ($877 million).

Just wondering, can anyone find a link to this development?

[Howie]

I found a picture of one of their developments.. not sure if this is the one being referred to in the article though.

[AdelaideGo]

Website for DaTong's projects in China, written in Chinese.

http://www.yndtdc.com/main.asp