Plzzzz Help Me!!! - Docklands

J

jaysingh84

Hi Folks,

I have researched beyond the capacity of my limited brain on whether I should buy an IP in Docklands but still end up where i began

FYI ppl its my 1st IP...OTP for 500k...in Lacrosse Docklands ( Telstra Dome Precinct).http://www.lacrossedocklands.com.au/

From your vast experience can you please tell me what do you think of such an investment.

I acknowledge that Docklands hasnt done well in the past with an oversupply in the market. However, I reckon things are changing since the govt. is also investing in infrastructure and its likely to become the next best thing.

There are pros and cons but I need to decide which outweighs the other and therefore i need expert opinions plzzzz...

I am tired of looking at past figures, tired of the endless sales pitches...I just want plain hard facts...and realistic prospects on future capital growth...


Any comment/feedback/suggestion/opinion ...anything at all would ensure good karma for u i guess.:D ... hehe
 
The major downside risk I see is that:
- docklands / southbank has alot of high paid city execs
- we are entering a period of slowing profit growth, reduced bonuuses, etc
- these jobs then become particularly vulnerable at such times

This is on top of all the ususal stuff - high body corp, low land comp, etc
 
For the Docklands, I suggest and existing property will be by far a lower risk than OTP.

With exisiting properties, you know the following (which you do not in otp):

1. quality of building / material/ finish/ construction/ longevity
2. no markups - market price, no paying agents, marketers/promoters, developers (you could be paying up to 30% more than the "true" market resale vale - just like a brand new car)
3. body corp pricing and history (eg problem residents/owners)
4. views you will get

Cheers,

The Y-man
 
Thanks Dis and YMan for your response.

I think your right in the sense that an existing property is better than OTP. However specifically for this property,regarding the ponts you mention, see my comments in blue.

1. quality of building / material/ finish/ construction/ longevity
Lacrosse will be developed by award wining designers pan urban and halim group. They have already developed watergate, which is getting good reviews.
2. no markups - market price, no paying agents, marketers/promoters, developers (you could be paying up to 30% more than the "true" market resale vale - just like a brand new car)
I bought a list of last 50 sales in Docklands and found that similar properties were going for the same amount i am paying.
3. body corp pricing and history (eg problem residents/owners)
Body Corp is pretty cheap ($2500)
4. views you will get
From the design, it seems that i can actually view the insides of telstradome from the balcony of an apartment that i selected.

Considering these factors, do u think its a good buy?
 
Jaysingh, what do YOU think are the cons? You must think there are some cons or you wouldn't have asked the question.
Alex
 
jaysingh84 said:
Thanks Dis and YMan for your response.

I think your right in the sense that an existing property is better than OTP. However specifically for this property,regarding the ponts you mention, see my comments in blue.

1. quality of building / material/ finish/ construction/ longevity
Lacrosse will be developed by award wining designers pan urban and halim group. They have already developed watergate, which is getting good reviews.
2. no markups - market price, no paying agents, marketers/promoters, developers (you could be paying up to 30% more than the "true" market resale vale - just like a brand new car)
I bought a list of last 50 sales in Docklands and found that similar properties were going for the same amount i am paying.
3. body corp pricing and history (eg problem residents/owners)
Body Corp is pretty cheap ($2500)
4. views you will get
From the design, it seems that i can actually view the insides of telstradome from the balcony of an apartment that i selected.

Considering these factors, do u think its a good buy?
Click to expand...

1. How have you determined this? You will need to find previous projects and either speak to owners or residents, or visit one during an open to see how they are. Who is the buildin subcontractor? Will it be the same one?

2. ok, but as per pt 1, make sure you are getting similar quality. What we are talking about here is can you here the next apartments toilet flushing at night, what brand of aircon units, type of heaters on pools (if applicable: electric or gas?), type of gym equipment proposed (if applicable), brand of garage door openers (don't laugh, they cost a bomb and can be a dog to maintain), staffing (security), etc etc....

3. BC fees are an estimate only and can NOT be struck until completion and the first BC budget set. This is an estimate only, and seems to be about $1k too cheap.

4. If you're happy with it ok. May limit tenancy due to noise etc. Alternatively you may get yobbo tenants....

At the end of the day, these are my opinions only, and happy to be proven wrong. The only way for either of us to find out, would be for you to go ahead and purchase it..... :)

Cheers,

The Y-man
 
Just to step back and look at the "bigger picture", a 2BR apartment in a building by the same developers is currently:
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=46947484&s=vic&tm=1205718153

A house in Northcote (inner City) same-ish price rnage
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=72228612&s=vic&tm=1205718422


A house in Narre Warren (outer suburb) for the same-ish price range:
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=104645208

Cheers,

The Y-man
 
Thanks for all your comments guys...Appreciate it a lot.

The best thing I like about this kind of a deal is that I pay 10% now and 90% after 2.5 yrs. At the wage that i earn, I cant afford a 500k property in a present scenario.

@Y-Man
Thanks for the analysis on other suburbs however the cost of this one is 500k.

The main thing that worries me is that at the time of settlement (in late 2010)whether the bank would value the property at less than what I am paying for right now.

Does anyone else have similar experience in Docklands?
 
jaysingh84 said:
The best thing I like about this kind of a deal is that I pay 10% now and 90% after 2.5 yrs. At the wage that i earn, I cant afford a 500k property in a present scenario.

The main thing that worries me is that at the time of settlement (in late 2010)whether the bank would value the property at less than what I am paying for right now.
Click to expand...

Even if the bank values the property at the purchase price when it settles (and that's a BIG risk, especially in this market with the credit crunch), how exactly do you plan on servicing the loan in 2.5 years if you can't afford to service it now? Do you expect a significant jump in your pay in the next 2.5 years, and why do you expect this? If you don't expect this, how exactly do you plan on getting the loan to settle? Are you thinking of flipping this before settlement?
Alex
 
jaysingh84 said:
The best thing I like about this kind of a deal is that I pay 10% now and 90% after 2.5 yrs. At the wage that i earn, I cant afford a 500k property in a present scenario.
Click to expand...

My thoughts are - why not buy a property you can afford now, or invest indirectly in property trusts? As Alex says, what if you can't afford it in x year's time? You'll lose your deposit and may get hit for non-settlement fees etc etc.

Have a chat to a broker, to see what your "real" range is.

Cheers,

The Y-man
 
@AlexLee
I am expecting a good pay rise within the next 2.5 yrs.
Besides, I am banking my chances on getting a reasonable CG by the time I settle in 2010...There are always Ifs and Buts though.

@YMan
Thanks for the links again.
Firstly my main objective is CG. So outer suburbs are out of the question.
Secondly, I am not sure that the Carnegie property u mention would give me enough yield on top of CG, as compared to Docklands.

In docklands, you can rent a 500k (2B, 1B, 1CP) with good views for more than $500 P.W.
Not sure if the property mentioned by you can do the same.
I would expect CG of Carnegie to be better than Docklands in the next 5 yrs however the other way around after than.

What do you and others think?
 
jaysingh84 said:
@AlexLee
I am expecting a good pay rise within the next 2.5 yrs.
Besides, I am banking my chances on getting a reasonable CG by the time I settle in 2010...There are always Ifs and Buts though.
Click to expand...

And if you don't get the CG, and/or if you don't get that pay rise....... there ARE a few economic clouds on the horizon, Jay, if you've been reading the papers.
Alex
 
alexlee said:
And if you don't get the CG, and/or if you don't get that pay rise....... there ARE a few economic clouds on the horizon, Jay, if you've been reading the papers.
Alex
Click to expand...

I have control over my payrise. Unfortunately cant say the same about CG.

Looking at the initiatives taken by the Govt. and truckloads of commercial and retail investments being made in Docklands, it definitely feels like the place to be.
What i have heard (Not Documented) is that there is generally 15 applications vying for renting 1 apartment in docklands.
Probably the CG wouldn't be as much till the supply of apartments diminishes. I am looking at that point in time to be crucial for my investment.
 
jaysingh84 said:
.
Probably the CG wouldn't be as much till the supply of apartments diminishes. I am looking at that point in time to be crucial for my investment.
Click to expand...

Crucial point - I am not so confident that the supply of apartments in the area will stop any time soon, as they keep builing these 300 unit blocks one after the other... and as silly as it may sound, each one is newer and better than the one before.

It's what happened to us when we bought OTP in Southbank in 1998. By the time it finished in 2001 (in a rising market), our valuation was no higher than when we signed the contract.



Cheers,

The Y-man
 
Everytime another 300 plus apartment block goes up in docklands you lose more of your scarcity value, from the view of my office window there looks like plenty of space for more complexes in docklands, and it now has that big horrible wheel in the middle of it.

My next purchase was to look for a flat in flemington or footscray particularly anything close to central footscray. This area imo has heaps of potential for growth it has a diverse population, good shopping, markets, schools, universities, great resteraunts and its 5 minutes from the CBD. There is talk of extending the tube to central footscray as well.

http://www.realestate.com.au/cgi-bin/rsearch?id=footscray&a=qfp&cu=fn-rea&t=res&q=Go

I looked a bit at Docklands but big apartment blocks make me nervouse for some reason im no expert though just giving my advice
 
There are currently 10 pages of dockland apartments for rent. Why not ring some of the agents as a prospective tenant and try to negotiate lower rents and ring as a prospective landlord and ask about vacancies, realistic rentals.

OTP is great in a rising market but you would want to be 150% sure you could hold it if need be and had extra funds in case the valuation doesn't shape up. And if you think it is possible that it might not value in as high as purchase price upon settlement then why exactly would you want to buy it as an investment??!!

Can you afford to settle it and have it vacant for some time?
 
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