Falls Creek snow bargains for the brave, beautiful and blinkered

Buying one of Morry Schwartz's 77 Falls Creek apartments, which sold for between $30,000 and $410,000 at the weekend's no-reserve auction, was the easy part.

Selling them down the track might be the challenge.

And not just because of the seasonality of the snow, the emerging climate change issues and the international competition for the snow dollar.

The sheer volume of the weekend offering will play havoc with the distant ski market destination’s property market for years to come, as it was at least three seasons’ worth of stock.

There's also the encroaching diminution of the apartments being on 40- to 50-year leaseholds.

To say nothing about the weekend’s realised prices being well below previous sale and or recent asking prices.

However following a $12.5 million sellout, Morry Schwartz expressed his satisfaction.

Minutes before the auction, Schwartz (pictured above waiting for bidders to arrive) had been telling friends there would be "pandemonium" given his innovative use of the Helmsman auction method, which is more typically for rowdy lifestock sales.

"We won't go out with a whimper," he suggested.

After a lengthy two hours 21 minutes the auction did almost fade away, but Mark Williams from Ray White Commercial, who was overseeing the auction, notes they extracted every possible bid that was within room, or on the phone.

Williams says there were been 20,000 visitors to the sale's designated website, with 1,200 interested parties who then made email contact with him and the conjunctional agent RT Edgar Alpine agent Christa Zirknitzer.

There were about 350 people at the auction, with some 300 registrations.

Pre-auction interest came from well-known Melbourne names, some long associated with the snow, that included Norbury, Ivany, Newton-Brown, Lasky, Marriner and Cellante. But many of the buyers were locals from northeastern Victorian.

The three properties developed over five years by Zacamoco, a joint venture founded in 2004 between Schwartz’s Pan Urban and Schwartz's son-in-law architect, Callum Fraser of Elenberg Fraser architects, had added 100-plus apartments to Falls Creek’s 4,500 beds.

Season 2011 asking prices from other vendors in the same complexes on the mountain would have suggested price outcomes of $85,000 to $700,000 at best.

Schwartz denies a report by The Age that Schwartz expected prices between $100,000 and $1 million.  But he was quoted as acknowledging he expected discounting: “But I don't think it will be dramatic,'' Schwartz adds.

The auction’s top sale was $410,000 for a 157-square-metre three-bedroom, three-bathroom St Falls West apartment, W102. Between June 2010 and May 2011, its income was $32,000 and its outgoings were $42,000. The cheapest St Falls West unit was $110,000 for a 64-square-metre one-bedroom, one-bathroom unit, which had a recent $36,000 income with $26,000 in outgoings.

Some 40 of the St Falls East and St Falls West block came with strict bidder registration requirements given they were in the managed pool.

Bidders were required to have annual $250,000 incomes or $2.5 million in net assets given they are being offered under an unregistered management investment scheme operated pursuant to Australian Securities and Investment Commission instrument 11-0572.

Those 80 pre-approved bidders were the well-dressed cashmere cardigan camp.

At the other end of the auction room was the snowboarding contingent, prepared to bunk it during the season.

The overall cheapest buy was $30,000 for a 13.5-square-metre unit in the Silverski complex. Silverski's lot 105 had $11,500 annual income and $9,300 outgoings.

Some 23 of the listings at the resort – which lies between an altitude of 1,210 and 1,830 metres – attracted at least 18 bids, with the most sought-after getting 35 bids.

There were also four commercial offerings.

The 235-square-metre restaurant fetched $150,000.

The 322-square-metre ski hire premises fetched $270,000, having been rented at about $32,800 gross per annum.

The 67-square-metre Huski food outlet fetched $125,000.

The 150-square-metre three-apartment Narrailla lodge with 60-square-metre basement fetched $270,000.

Many of the buyers were planning their next 345-kilometre trip from Melbourne next weekend, given it’s been the best snow fall in 30 years.

Most buyers no doubt had the cash, and therefore won't run into the hurdles of bank valuations and financing of National Park Crown land leasehold purchases, let alone within the new calibrated pricing scenario.

But buyers were given the names of six bankers with alpine transaction experience: ANZ Wodonga banker Kevin Wescott; Bendigo & Adelaide Bank Albury banker Michael Monaghan, Bendigo & Adelaide Bank Shepparton banker Jim Guilline; St George Bank Shepparton banker Keith Rae; National Australia Bank Richmond banker Scott Ewan and Bendigo Bank Private banker Nerida Killender.

Of course following the 60-day settlement there will be not much income until next July, given the apartments sit mostly idle, with year-round tourism still to really come to fruition.

The official snow season for 2011 began on the Victorian Queen’s Birthday long weekend June 13 and lasts until Sunday, October 2.