Eureka blockade: apartment sales slump hits city projects

MELBOURNE'S apartment sales downturn has hit the city's two largest projects.

Eureka, the 566-apartment, 92-storey skyscraper Grocon is building at Southbank, is a year behind schedule and has 134 unsold apartments more than five years after going on sale.

Australand's Freshwater Place will be completed on time in February or March next year, but of its 535 apartments, 219 are still for sale, even though they have been on the market for about three years.

While both developers deny either project is in trouble, the lack of sales is further evidence that the inner-Melbourne market is clearly oversupplied, with 2600 apartments due to be completed over the next year - 1090 of those before Christmas.

Central Equity, the largest apartment developer in Southbank and broader Melbourne, has already pulled the pin on further towers, while agents claimed this week that there had been a 'discernible' drop in sales inquiries over the past month or two.

'It's very quiet, perhaps the quietest I have ever known it,' said one seller, who did not want to be named but who has specialised in apartments for 10 years.

At Eureka, selling agents Hocking Stuart have sold 43 2apartments, settling 320 of them with a total value of about $200million.

Most, according to Eureka spokesman Benny Aroni, a high-profile lawyer and brother-in-law to Eureka third-owner, businessman and property investor Tab Fried, are between levels 24 and 64 of the building.

That means the Eureka developers - Grocon, architect Nonda Katsalidis and Mr Fried - still need to find buyers for the most expensive apartments, at the top of the 300m tower.

These include entire floors, which can be bought as shells, on levels 85 to 87.

Prices range from about $6.5 million to $10 million.

Mr Aroni said apartment sales had started in August, 2000, and in a perfect world most, if not all, would have sold by now.

However, he said the developers had had to contend with negative market sentiment and "valuations that have gone backwards".

Mr Aroni said he did not think the year-long construction delay had affected sales.

Meanwhile, apartments continued to be sold at a rate of about one a week, and he remained confident that once the building was completed, either in February or March , sales would pick up.

Few Eureka re-sales are advertised on the internet, with about 20 owners all seeking higher prices than they paid off-the-plan.

One level 41 owner who paid $960,000 in November, 2000, is attempting to sell for $1.2 million.

At Freshwater Place, apartments have sold at a square metre rate up to $10,800, but it's the scarcity of buyers, rather than what they are prepared to pay, that's hampered Australand.

Australand's national apartments manager Rob Pradolin said that while sales had slowed, that was because many owner-occupiers were reluctant to buy off the plan.

Mr Pradolin said he was very confident sales would turn around.

"When they see the finished product they're going to realise that there's nothing like this available in Australia," he said.