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Luxury on the Sunshine Coast: Is Apartment Investing Still Worth the Hype?

The Sunshine Coast is about to welcome an exciting new development that promises to elevate the region’s luxury accommodation scene. A $150 million property development fund, 7EVEN Capital, has been launched to help deliver a boutique hotel in Caloundra, marking one of the Sunshine Coast’s first true luxury hotel offerings.

With an eight-storey design by Fraser and Partners, the proposed 77-room hotel is set to feature a rooftop lounge, pool, and panoramic views of Bulcock Beach, alongside ground-level amenities like a café and reception.

While projects like this spark interest and buzz, they also spotlight the broader conversation around apartment investment. Does the allure of luxury developments overshadow the risks associated with investing in apartments? Let’s explore.

The Appeal of High-End Developments

Luxury developments like this boutique hotel are undeniably appealing. Their prime locations, top-tier amenities, and promise of exclusivity often attract investors hoping for high rental yields and significant capital growth. The involvement of a globally recognised brand like Marriott International only adds to the prestige, further enticing those looking to capitalise on the Sunshine Coast’s growing popularity.

But when we step back and examine the broader apartment market, the picture isn’t always so clear-cut.

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The Hidden Risks of Apartment Investment

While luxury developments may seem like a sure bet, apartment investments come with unique challenges that are often overlooked.

1. Oversupply Issues

Many Australian cities, including parts of Queensland, have seen a significant increase in apartment construction. This has led to an oversupply in some markets, reducing demand and driving down rental yields. Luxury apartments may be more immune to this trend, but they’re not entirely insulated.

2. Strata and Maintenance Costs

Investing in apartments means committing to strata fees and ongoing maintenance costs, which can significantly impact returns. Luxury developments, with features like pools, lounges, and rooftop amenities, often come with even higher costs.

3. Limited Land Value Growth

One of the key drivers of property value is land appreciation. However, apartments typically involve minimal land ownership, meaning their growth potential is tied more to the building itself—which depreciates over time—than to the land it occupies.

4. Market Volatility

Luxury developments often rely on investor demand rather than owner-occupier interest. This dependency can make the market more volatile, as it’s heavily influenced by factors like interest rates, lending policies, and economic conditions.

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