Penthouse living

Reproduced from Fairfax Domain
Author Ann Pilmer - June 27, 2007

Melburnians are increasingly swapping the purchase of land for air. In a turnaround from conventional wisdom that acquiring land was the way to go, today's urban property buyers are forking out for highrise apartments on footprints little bigger than a sizeable suburban block.

The ultimate purchase is literally the pinnacle of the building, that is, the penthouses and sub-penthouses at the top.

The newest penthouse at 150 Clarendon at East Melbourne was valued at $15 million last month. Top-floor places in Eureka Tower, Lucient, Yve, the Mercy hospital site, Freshwater Place, The Melburnian and the Domain in St Kilda Road usually trade in the high-million-dollar range.

But their owners are far from airheads. They're spending - and making - big money on these "islands in the sky".

A St Kilda Road penthouse-style apartment, for example, increased in value by more than $500,000 in a matter of months. Bought for $2 million in February last year, it was put back on the market twice, selling in May for $2.3 million, then in September for $2.6 million to a London-based buyer.

Penthouse specialist Robert I. Mitchelson of Icon Property, who handled all three sales, says highrise buyers tend to be 45-plus baby boomers who have sold the big family home and still want plenty of living space, but without the maintenance.

"The kids have gone, they are free to travel and have the money for such a lifestyle," says Mr Mitchelson. "They love the security of an apartment because they can lock it up and go and the body corporate will look after the maintenance. They free up their lives."

For many buyers, the penthouse becomes not just a home, it's a lifestyle. And financially, "there's not a better investment" than a good penthouse, says Mr Mitchelson.

"They're as scarce as hen's teeth because they can't be built without the block of lesser apartments underneath and there's not as much apartment building going on."

Mr Mitchelson says demand has always outstripped supply in his agency.

Canny buyers recognise the quality of existing buildings such as Eureka and realise that similar apartments in new developments will be considerably more expensive, reflecting the cost of living and increases in the price of building and land.

The penthouse is also seen as a prestigious buy.

When Eureka Tower was launched seven years ago, there was a rush to buy off the plan by investors keen to rub neighbourly shoulders with celebrities and the city's leading lights. Many of those apartments are now being resold.

Hocking Stuart's Brett Jarvis, a highrise apartment specialist, lives on the 60th level of Eureka Tower (sometimes called "towers" because it's effectively three highrise buildings in one) with wife Jill.

"I bought it way back and wish I'd bought more," he says. "We have a bedroom and a study and plenty of living space with views of Albert Park Lake, the Botanic Gardens, Government House and the yachts on Port Phillip Bay. It's something special. I give traffic reports to people coming to the football. You're 17 minutes from the airport and you can walk everywhere in the city so you don't need a car."

Mr Jarvis says any big apartment near the top of Eureka's 580 apartments on the 88 residential floors, fetches high prices. A penthouse shell on level 86 sold for $7 million. And a 320-square-metre apartment with 290-degree views on the 73rd level is for sale at $4.3 million.

Aside from the "million-dollar" views - which Mr Jarvis reckons more than make up for the price of the apartment - buyers like a big apartment with quality finishes. They are realising that quality comes at a price and because of rising costs new developments will be more expensive than existing ones. Mr Jarvis says good apartments on levels 50 to 60 in the Eureka Tower have jumped, from $100,000 to $600,000 and $700,000, since selling started seven years ago. A spacious 250-square-metre apartment on level 30, completed 21/2 years ago, would have sold at around $985,000 and is $1.4 million today.

He estimates apartment prices leap from $5000 to $10,000 a floor, depending on the view, and average $8000 to $10,000 a square metre.

A lot are bought by overseas buyers who find Melbourne's apartment prices very competitive on a global scale. Many former tenants are also buying into the building, and owners who bought on lower floors often buy higher up as they get used to the style of living.

Tim Blackett of Kay & Burton says a big problem is finding large, quality apartments for buyers selling the family home who don't want maintenance but still want space.

He says the right property with the right space, location, quality finishes, outdoor terrace and views will easily fetch from $10,000 to $15,000 a square metre.

For these buyers, says Mr Blackett, budget is secondary to finding the right property.



Bird's eye on the jams below

One of the best things about high-rise living - apart from the lack of maintenance - is that you can spot the traffic jams before you leave home. That's the view of Fiona and Bob (who did not want to include their last name).

Five years ago, the couple swapped an outer suburban house on two hectares with horses, chickens and dogs for a city penthouse on the 27th floor.

Traffic is not a problem for Bob, who is a property developer. His office happens to be on the ground floor of the building, and while he has a car, he rarely drives, preferring to use a bike for getting around the city.

After three years in their original three-bedroom apartment, the couple also bought the three-bedroom apartment next door and hired Ferntree Gully building company Rori Homes to renovate the two units into one big home.

Their grown children and partners also live with them, so residential space for six adults - and pet pooch Brando - was a priority.

The spaces are vast and include a family area, a formal space on a raised podium with a Versace couch, home theatre, and an entertainment area with a bar bigger than those in an average nightclub.

Fiona and Bob spent more than a $1 million on renovations, including $400,000 on electronics. Now, fibre optic lights around the base of the bar change colour at the push of a button and a television set drops out of the bar's rounded back wall.

The apartment also has three large bedrooms, four balconies (one with a gas barbecue and outdoor heater), gymnasium, five bathrooms, office, six car spaces and three storage cages.

The main bedroom includes a library and two bathrooms. If he doesn't watch the TV mounted on the wall, Bob can sit in his bath and look out onto Albert Park and St Kilda.

Stylish interiors aside, Bob says the penthouse is unique because of its size.

He's not in the market to sell but, if someone came up with $8.5 million, he says he might consider it.



Eureka! Loving the view from 49 floors up

Up-market apartment dwellers are notoriously shy of publicity, so Warren and Raelene Gainsmith of Gainsville Furniture were initially reluctant to tell their story. But they say they have the best of both worlds.

They still have their suburban home and, seven years ago, bought two apartments off the plan and rebuilt them into one on the 49th floor of Eureka Tower (pictured).

They combined the three- and two-bedroom apartments to get more living space and four bedrooms.

They use the apartment, which they moved into two years ago, during the busiest period for their business.

"Having a spot here has been fantastic. We're 30 seconds away from the business so I've cut down on travel time," says Mr Gainsmith, "and we've used the apartment as a display suite and now we've become specialists in apartment fitouts."

In their spacious apartment, with its lime green walls and aubergine carpet, mirrors are strategically placed to reflect views to Geelong, Albert Park, Port Phillip Bay and the helipad on the Yarra.

"You don't feel any movement," says Mr Gainsmith, who admits he won't let his young grandchildren on the narrow balcony without adult supervision.

The main bedroom, or parents' retreat, is a vast, angled space, dominated by a central leather bed overlooking the city.

"The city is lit up like a Christmas tree at night," Mr Gainsmith says. "You never get tired of looking at it. We put in a mirrored wall to reflect the lights of the Bolte Bridge, which gives the room a floating effect. "The sunsets are great, too, and there is always so much going on in the city," Mr Gainsmith says.

"On our days off, there is just so much more to do in the city. There's a great community atmosphere at Eureka and we've made some good friends here.

"They tell us the cost of building has gone up about 80 per cent since we bought. And in any future picture of Melbourne, you'll see the Eureka Tower like an icon." He's satisfied that the penthouse has been a "red hot investment".



What makes a great penthouse?

What exactly is a penthouse these days?

According to agents Robert I. Mitchelson and Brett Jarvis, definitions have become a bit elastic.

Once defined as the large, luxurious apartment at the top of the building, a "penthouse" now embraces any large apartment high up in the building.

A sub-penthouse used to be on the floor below the penthouse. Now it includes floors near the top of a tall building, with apartments offering penthouse-style trappings of spaciousness, luxurious finishes and desired location.

Buyers prefer apartments of more than 300 square metres, including plenty of living space. Formal rooms are not a priority and neither is a separate kitchen but sheltered, wide terraces and sweeping views are.

Ideally those views should be on the north-east away from south-west winds and fierce west summer sun.

Mr Mitchelson has had buyers fleeing winds - so strong in parts of Port Melbourne and Docklands that they have had to tie the outdoor furniture down so it didn't blow away - to the more sedate surroundings of St Kilda Road and Southbank.

Most buyers are not height-phobic, even in apartments with walls of floor-to-ceiling glass. "Some of the elderly might worry," Mr Mitchelson says. "But with time you don't even think about it."