The Block All Stars: Did it make a profit?

Four Bondi properties were up for auction on The Block All Stars this week, and the results have been heralded as a success for the contestants and the Bondi market. As investors, however, we know that the headlining numbers aren’t always what they’re said to be.

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Two million people tuned in on Wednesday to watch Channel Nine’s The Block All Stars.

For those of you who missed it, here are the results:

Phil & Amity (12 Tasman Street Bondi)
Announced profit: $295,000
Reserve Price: $1,345,000
Sold for: $1,670,000

Josh & Jenna (8 Tasman Street Bondi)
Announced profit: $275,000
Reserve Price: $1,375,000
Sold for: $1,650,000


Dan & Dani (6 Tasman Street Bondi)
Announced profit: $220,000
Reserve Price: $1,355,000
Sold for: $1,575,000

Mark & Duncan (10 Tasman Street Bondi)
Announced profit: $25,000
Reserve Price: $1,345,000
Sold for: $1,370,000

Unfortunately, the amount that the four Bondi terraces were initially purchased for has not been released. The properties were purchased in November 2011, and were held while development applications were lodged.

Ric Serrao, principal of Raine and Horne Bondi, who was involved in the first series of Channel 9's The Block, this morning told Smart Property Investment that he has heard of unverified estimates from $1.3 million to $1.5 million as the potential purchase prices.

Sales in the same area, found on PriceFinder, include 2 Tasman Street sold in September 2011 for $1,320,000 and 4 Tasman Street sold in November 2011 for $1,290,000.

According to RP Data, the median price for houses in Bondi sits at $1,400,000 with units clocking in at $650,000 (with 4 per cent and 5 per cent rental yields respectively).

“Pricing wise I actually think congratulations to the owners and the agents representing them as they are very good results,” Mr Serrao explains.

He says the auctions were, given the size of the accommodation and lack of parking, bullish and a good effort on the part of those involved.

However, he says, “I think from a profit point of view it’s very unrealistic.” This is particularly when considering adding in holding costs and the ‘true’ renovation costs.

Much of what was used during the show was “discount” appliances and labour.

“You become competitive because of the marketing and the concept is exciting, but I question whether the average person who buys and renovates a property can achieve this result [on their own],” he says.

Overall, when looking at the expenses of buying and selling (such as stamp duty and legal fees) as well as the architect fees that would have been required, “I don’t believe there was a true profit there.” In fact, he believes it may have even been a bit of a loss overall.

The market for Bondi itself is, however, exciting and he expects over the next two years with upcoming projects and a general transformation, more of an uplift in prices organically.

Kylie Emans, managing director of Beach & Bay Realty posted a blog on March 20th about the upcoming auctions.
“Would you buy a house built/renovated on The Block TV show? If so which one would you buy of this series of early 1900?s semis with no parking in Bondi? I have heard that one is at least hoping to achieve $1.6mil! Did I mention no parking?!” she wrote.

She also noted that the marketing generated by the show itself was something many property sellers in Bondi would be ‘envious’ of – with between 26,000 and 34,000 views on compared to standard views of 1,500 to 2,000 at the time of her posting.

At the end of the day, says Mr Cerrao, “It’s a good product with some celebrity hype behind it. If you’re a buyer you may want to be part of that publicity and excitement.”

It’s about fun and the experience, and the show isn’t necessarily about how the numbers stack up.

But, he says that it would be negligent to suggest that any buyer, with the usual resources and renovation strategies available, would be able to achieve a ‘profit’ of $295,000 with the same renovation.

- Did you watch it? Do you think they made a decent profit?

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