Fairy Power

Sydney Morning Herald

Saturday January 12, 2008

Susan Wellings

Despite often being on leasehold land, buyers pay mega millions for a slice of paradise.

It's everyone dream: a stunning apartment with glorious views out to the ocean, a marine reserve out front with diving and snorkelling, and beaches to the left and right, one a sheltered stretch of sand with calm water, the other with spectacular surf.

Impossible? No. Available? Yes. And affordable? Aye, there's the rub.

Manly's Fairy Bower, the small peninsula above Marine Parade between Bower Lane and Shelly Beach, was once a largely overlooked area, with rambling old houses and rundown blocks of flats, but it has emerged as one of Sydney's premier real-estate hot spots.

Despite much of the patch being leasehold - owned by the Catholic Church - apartments along the water have been setting price records of about $8 million, with new luxury developments creating an unprecedented level of interest, from Australia and overseas.

"We call it the Vaucluse of Manly," says Manly Professionals principal Michael Melani. "There are a lot of international buyers now for those properties down there, people looking for a Mediterranean, outdoor lifestyle. It's a north-facing beach protected from our terrible southerlies and while it's away from the hustle bustle, it's still close enough to the beautiful cafes and restaurants of the area."

A ROMANTIC REVERIE

Twenty years ago, penniless student Matt Savage proposed to his girlfriend on the sands of Fairy Bower, so-called, says Manly Historical Society's Terry Metherell, because of the "magical" and romantic qualities of the rocky bushland gully and creek than once ran down to Cabbage Tree Bay. Enchanted by both the place and her suitor, the girlfriend accepted and the couple vowed that one day they'd try to live there.

"But we never thought we'd ever be able to afford it," says Savage, who used his student loan, intended to get him through the last six months of uni, to buy the engagement ring. "It was just such a beautiful place and we both loved it."

However, they didn't have enough money until Savage had established a successful career. He and his wife Lisa then found they had a choice of either oversized houses requiring lots of maintenance or small flats in rundown blocks. As a result, the former lawyer turned property developer decided to buy land and build his own dream homes instead. He has completed one luxury apartment complex and he's just about to start work on his second low-rise, high-concept development on the waterfront, at 110 Bower Street. It's on the site of a soon-to-be-demolished old block, just 50 metres up the road from his first development, at 92 Bower Street, where two of the three leasehold apartments sold for $8 million and $7 million respectively. He kept the third.

The new site will have four spacious, four-bedroom apartments, with 180-degree views over the marine reserve, Shelly Beach, Fairy Bower surf break and the ocean.

Designed by architect Vince Squillace, they sit 10 metres above the water on the cliff face, and the six levels are built of sandstone, recycled timbers and copper cladding, with stone tiles, boat deck-style floors, large decks and no common walls (see above). "They're like a stack of houses, rather than apartments," Squillace says. "They're also a bit more contemporary than those at 92."

On sale for more than $7 million, they are due to be finished in about 18 months, says RPM Group agent David Poppleton. "It's on Sydney's only ocean marine park, apart from Clovelly," he says. "And this is a much more pristine environment, which is not built up at all."

Savage is convinced others will love living in the area as much as he does.

"Fairy Bower is the eastern suburbs of the North Shore but with a north-facing beach over the ocean instead of the harbour," he says. "I've never understood why it was so undiscovered for so long. It's unique in so many ways."

LEASEHOLD V FREEHOLD

One of the reasons Fairy Bower had been slow to take off is because much of the land is owned by the Catholic Church, which has a leasehold arrangement with property purchasers. That has doubtless put off buyers in the past due to the lack of secure tenure.

"The majority of land there is owned by the Church," says Andrew Reynhout, a director of agents LJ Hooker, Manly. "But the leases are quite secure."

Leases were first offered for about 150 sites along Bower Street, Fairy Bower Road and College Street in 1915 for a few thousand pounds. Now, leasing provides a much better income for the Church, which offers 17-year extensions on leases for the $150 million-plus worth of property it owns there. Each renewal costs 20 per cent of a property's freehold value including any improvements undertaken.

On the plus side, however, that works out to be just 1.17 per cent a year - and, with apartments, there's no land tax to pay, says Manly agent Anthony Walls, chief executive of Max Walls International. The units at 92 Bower Street, for instance, were sold with a lease until 2064, which includes two renewal options. Those at 110 are freehold.

"But then you look at the capital gain of property at Fairy Bower," Walls says. "It's phenomenal. One property, at 44 Bower Street, went in 1994 for $550,000 and I've sold it five times since, the last time for $4.2 million, completely untouched. At one point, this area had the highest capital gains in the nation."

The market at Fairy Bower is extremely strong, with no premium being offered these days for freehold over leasehold. "I wish there were," Savage says. "We tried to get the valuers to say there was a price differential so we could negotiate harder with the church on the lease terms for 92 but they said there wasn't."

A STRONG MARKET

Independent agent Matt McEwan says the market for homes at Fairy Bower has rarely been stronger. Over Christmas, he had a modest, 90 square metre, two-bedroom, one-bathroom apartment to sell in a 1960s red-brick block on Bower Street. "Because it was Christmas, I listed it only on the net but I had inquiries from New York, China, Singapore and Hong Kong," he says. "I then sold it to the second person who looked at it, for $1.3 million - just because of its position."

Data from Colliers International shows the average price of a unit in Fairy Bower last year was $912,334 compared with $559,000 for Manly and $380,000 for Sydney. The median price of a Fairy Bower house was $1.9 million compared with Manly's $1.3 million and Sydney's $488,000.

"Units resold in Fairy Bower in 2007 have achieved an average of 11.6 per cent price growth per annum for investors," says Colliers research analyst Alison Timchur. "Average price growth on resale hit a high of 28.6 per cent per annum for units resold in 2001."

RP Data's research director Tim Lawless says: "Like most of Sydney's coastal suburbs, the Manly property market has outperformed the broader Sydney marketplace."

BIG AND BOLD

110 Bower Street comprises four freehold apartments ranging in size from 325 sq m to 365 sq m. The ground-floor unit has a private pool and all homes feature spacious decks and balconies, landscaping and state-of-the-art technology. Strata levies have yet to be set. Offers of more than $7 million to David Poppleton, RPM Group, phone 0404 888 363.

'PRICEY BUT WORTH IT'

The first time American Bill Anthes caught the ferry to Manly he was absolutely charmed by the pod of dolphins that played around the stern of the boat. None of the other passengers took any notice, so he assumed it was a daily occurrence and decided Manly was the place for him.

Thirty-five years later and still happy to be living in Manly, he has rarely seen the dolphins since. "But it is one of the best places to live in Sydney," he says, laughing. "I love it here."

After moving around Manly, in 1986 he paid $220,000 for a unit in a freehold block between the two new Fairy Bower boutique apartment developments. With improvements, it is valued now at about $4 million.

"It's a very pricey area but it's worth it," says Anthes, 58, who has retired from the technology industry.

"I live right on the beach, looking directly out to the headland, without anyone in front."

He says Fairy Bower to the CBD is only 12 minutes by Jet Cat or longer but more restful on a regular ferry ride.

© 2008 Sydney Morning Herald

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