How can this happen in...

How can this happen in Australia?

http://www.theaustralian.com.au/business/property/city-in-desperate-search-of-tenants/story-fniz9vg9-1226861673229#

TWELVE months after the Reserve Bank of Australia issued a warning about a potential apartment glut in Melbourne’s CBD, signs are emerging the market is bloated with empty apartments.

According to new data, 20 per cent of apartments on the main boulevard of St Kilda Road are for rent, while in the heart of the city, where 12 per cent of apartments are empty, developers are pulling out all stops to find tenants.

Researcher SQM, which tallies the number of apartments for rent on a range of online portals, has also found rents for all apartments in the St Kilda Road area have dropped 21.2 per cent to an average of $564 a week over the past three years.

However, Biggin Scott Melbourne residential director Marcus Peters is optimistic about the market despite acknowledging that it is a tougher slog for CBD-based agents at the moment.

“It’s not like the suburbs. Where we have highs and lows in our business is when a couple of new towers come to the market. If there’s an influx of two or three towers, that puts a hole in the rental market,” Mr Peters said.

The area has also been popular with executives on contracts, often causing a “lumpy” market, with many tenants leaving at the end of their 12-month lease.

St Kilda Road’s apartment indigestion comes as thousands more apartments are under development or planned for the city.

In the CBD, Melbourne developer Brady Group has hung “apartments for rent” signs off the upper reaches of its completed towers. Sources said hundred of apartments were for lease in two of Brady’s towers.

China’s Far East Consortium Upper West Side also has scores of empty apartments in its CBD project. Brady Group and Far East Consortium did not return calls.

ANZ head of property research Paul Braddick said areas such as the CBD and St Kilda Road could become victims of oversupply.

“The question is whether we’ll get a repeat of what we saw in the middle of last decade where we did get a clear excess supply and that resulted in some fairly significant value downgrades,” he said.