Adelaide Investment Suburbs

[Scarlett09]

Hi All,

Just wondering what peoples thoughts are on some Adelaide areas for investment, such as:

Para Hills - what is access to the city like from here?
Enfield - same question re access to cbd? What is public transport like?

What are these suburbs like?

If there are any local Adelaide people out there your thoughts would be greatly appreciated!

I have really just started researching and looking at maps and real estate websites.

 

[Corey Batt]

Para Hills is 20 mins to the city down Main North Rd, Enfield around 15 mins.

Less time for both if you don't get any traffic.

Buses and trains for both, however the Gawler line is only really useful for those hugging the western ends of those suburbs.

Both areas aren't that far for CBD commutes, whilst not being considered inner suburbs.

Enfield has grown substantially in price already and has been cut up left right and center with subdivisions. It used to be a very working class area full of housing trust, but that's mostly gone now. Nearby Northfield, Clearview etc have all gone up substantially in price also.

What is your investment strategy? Are you looking for cashflow, capital gains, development potential?

 

[Scarlett09]

Thanks CJay

Both suburbs sound like they are well located to Adelaide city (not long commute times).

This will be our first investment property. We are looking for something with strong cashflow as it is our first. We have a 7-10 year + timeframe. We like the idea of property with large blocks of land for possible development in future ( but I guess everyone else does too!).

I have seen much commentary on the southern areas around Hackham, but these areas look far from the cbd for our risk profile......but I probably need to do more research on these areas, the prices are lower.

 

[Brady]

Access for both are fine, pending the occasional accident and what not.

You should be able to find some reasonable cash flow properties in Para Hills, I think Enfield as likely moved in the last 5 years.

I don't mind either suburb in the 7-10 year time frame you provided.

I would ensure that you are purchasing a property on a larger block they still are out there, that you can develop later. Do you best to ensure that the holding costs are minimal and if you can get cashflow+ would be great.

Both have low vacancy rates <2% with a decent property you should always be able to get a tenant quiet easily.

I prefer Ingle Farm over both these suburbs though.



I like Hackham West, vacancy rate <1% for more then 5years which in return has good rental yields. Decent sized blocks, doubling of express way should mean ~35mins each way pending traffic. Awesome beach nearby

 

[LoneWolf]

Cjay, would like to get your thoughts on SA

With a focus on CF and medium to long term (7-10 years) CG
Where would you recommend investing in SA

 

[Corey Batt]

Hi LoneWolf,

I won't comment on the Southern side of Adelaide, as there are people better versed in the opportunities present down there. East and West IMHO are CG plays with higher end developing opportunities to boot.

This pretty much leaves the outer North. You can hit the 5-6% yield mark pretty consistantly with most properties north of Grand Junction Rd, and a lot between Regency Rd and GJ Rd, but 5-6% isn't cash flow in my (or banks) opinions.

My basis for cash flow is 7% gross on purchase price as being neutral, 8-10% being early CF+. On that basis that narrows it down to the Playford Council suburbs.

I bang on pretty hard about the opportunities present within the Playford council (read Elizabeth, Smithfield, Davoren Park), where you can achieve 8-10% yields if you purchase well. These areas all have substantial growth indicators, low entry points and sustainable growth for both rents and CG (past performance also far beyond the av. for Adelaide). Vacancy rates are quite tight.

Negatives of the area:
Stigma (going with time, much like Salisbury has lost a lot of it's 'ghetto' attributions.

Bad tenants. Every tenant isn't bad, but you have a higher % of welfare recipients, drug users etc. A lot of the issues with tenants is dramatised in my experience, I know of just as many issues being had across many other suburbs. Just something to keep an eye on however.

So to recap, if you're looking for CF+ I'd be inclined to look in the Playford area, or if you're risk averse and want something which 'looks nicer' at the expense of yield, try Salisbury, Paralowie and the lower price range North Eastern suburbs (Redwood Park, Ingle Farm, Para Hills etc). You generally won't be ahead in cash flow, but a lot of properties should present a cash flow neutral scenario.

Once again I've not touched on the Southern side of Adelaide as I wouldn't do it justice. There are yield opportunities down there also, looking at Hackham and the likes.

Hopefully that helps, somewhat.

 

[Ninobart]

Hi,

at the beginning of this year I purchased a property in Elizabeth Park with a descent sized block. Paid $165,000 for it but probably could have pushed it down a bit lower with a rental return of $250 per week. The northern areas are supposed to undergo a face lift so hopefully my investment pays off.

 

[LoneWolf]

Hi LoneWolf,

I won't comment on the Southern side of Adelaide, as there are people better versed in the opportunities present down there. East and West IMHO are CG plays with higher end developing opportunities to boot.

This pretty much leaves the outer North. You can hit the 5-6% yield mark pretty consistantly with most properties north of Grand Junction Rd, and a lot between Regency Rd and GJ Rd, but 5-6% isn't cash flow in my (or banks) opinions.

My basis for cash flow is 7% gross on purchase price as being neutral, 8-10% being early CF+. On that basis that narrows it down to the Playford Council suburbs.

I bang on pretty hard about the opportunities present within the Playford council (read Elizabeth, Smithfield, Davoren Park), where you can achieve 8-10% yields if you purchase well. These areas all have substantial growth indicators, low entry points and sustainable growth for both rents and CG (past performance also far beyond the av. for Adelaide). Vacancy rates are quite tight.

Negatives of the area:
Stigma (going with time, much like Salisbury has lost a lot of it's 'ghetto' attributions.

Bad tenants. Every tenant isn't bad, but you have a higher % of welfare recipients, drug users etc. A lot of the issues with tenants is dramatised in my experience, I know of just as many issues being had across many other suburbs. Just something to keep an eye on however.

So to recap, if you're looking for CF+ I'd be inclined to look in the Playford area, or if you're risk averse and want something which 'looks nicer' at the expense of yield, try Salisbury, Paralowie and the lower price range North Eastern suburbs (Redwood Park, Ingle Farm, Para Hills etc). You generally won't be ahead in cash flow, but a lot of properties should present a cash flow neutral scenario.

Once again I've not touched on the Southern side of Adelaide as I wouldn't do it justice. There are yield opportunities down there also, looking at Hackham and the likes.

Hopefully that helps, somewhat.

Thanks Cjay for the run down.
I was already inclined heading towards Playford, just want to hear it from a local voice

 

[Logica]

Good summary about the North CJay!

Myself, I've done fair bit of work down south from Happy Valley to Hackam and Morphett Vale. It's pretty much impossible to get 8% + yields down there. However, 6%+ is achievable. I guess suburbs like Morphett V or Woodcroft are far 'nicer' family-friendly and much more pictoresque than Elizabeth. It's a question of lifestyle and proximity to great beach, Flinders Uni etc.
Happy Valley / Abrefoyle park are a further notch up. I've recently bought a house there for a client (4+2, convenient location to shops and schools) for $349k which is getting close to $400pw rent = 5.8% yield.

Re larger blocks for a subdivision (original subject raised by Scarlett09), my favourite suburbs are in Marion council, close to Brighton and Glenelg.

Cheers, Paul

 

[Adelaideian]

http://www.adelaidenow.com.au/realestate/buying/homes/story-fndbmulp-1226657007690

Good article about Southern suburbs. Makes for a good argument South V North. What a lot of northern advocates are missing is that the Holden factory is dead in the water long term affecting many many jobs in that area around Elizabeth. Seaford, Christies, Noarlunga, Moana you on are on some magnificent beaches with a lifestyle V northern suburbs!!! Sure the yields might be a bit better North but CG is where it is at IMHO. For that reason go South on 700 to 800 sqm dev potential and walking distance to beach. With new rail line and 2 way freeway coming its a no brainer.

 

[atti]

sorry had to ad that adelaide is unique city isnt like other large cities so 20 mins drive to cbd and 10 kms with in cbd rule does not apply.

you need to research more on demographics of the area.

if you are looking for CG and yeild i recommend suburbs like underdale and torrensville heading to thebaton way.

something 370-430 i can see rentals going up significately in the future as henley beach rd is getting super busy nowdays...

something in coming is it is all long west, adelaide cant go west any more urban sprawl so likely 10 years time prices will double. at the least there is lots of potential in these suburbs as alot of seniors overseas etc students flockin to thebaton college.... vacancies rates here is reallly low...

 

[jim1964]

Seaford, Christies, Noarlunga, Moa...el for work would be a disadvantage for sure.

 

[Corey Batt]

One BIG problem these areas face is employment.All well and good to have a nice beach on your doorstep,the the long travel for work would be a disadvantage for sure.

Indeed. The Southern Adelaide has a job deficit, with there being not enough jobs available in the area to sustain the population size. Hence why the expressway duplication becomes so important for commuters.

The constant constraint of commuting times will be a contributing factor to people upgrading away from the area, which doesn't create that competition needed for rapid appreciation of property asset prices.

 

[strongy1986]

Indeed. The Southern Adelaide has a job deficit, with there being not enough jobs available in the area to sustain the population size. Hence why the expressway duplication becomes so important for commuters.

The constant constraint of commuting times will be a contributing factor to people upgrading away from the area, which doesn't create that competition needed for rapid appreciation of property asset prices.

I don't mean to be rude but how can you be so pro Elizabeth and have doubts on what are aesthetically much nicer areas that are a fraction further distance from the CBD as Elizabeth

You said no jobs? Ok well what jobs are there around Elizabeth? Factory jobs on minimum pay will not lead to capital growth

The beach wins out in every Australian city. I'm not sure why you guys in Adelaide think it will be any different. Particularly with an ageing population and retirees who want the lifestyle location

Grange, Semsphore, Largs Bay - they weren't always expensive suburbs!

 

[Corey Batt]

I don't mean to be rude but how can you be so pro Elizabeth and have doubts on what are aesthetically much nicer areas that are a fraction further distance from the CBD as Elizabeth

You said no jobs? Ok well what jobs are there around Elizabeth? Factory jobs on minimum pay will not lead to capital growth

The beach wins out in every Australian city. I'm not sure why you guys in Adelaide think it will be any different. Particularly with an ageing population and retirees who want the lifestyle location

Grange, Semsphore, Largs Bay - they weren't always expensive suburbs!

Because aesthetically pleasing and good investment aren't necessarily the same thing. Distance for people down South is much more detrimental than North, as a large number have to commute to the CBD. I think you'll find a lot in the Outer North don't have much need to go to the CBD so this is not as much of an issue.

Jobs, ok:

Australian Head Quarters of BAE Systems Australia
DHL
Inghams
MTU Detroit Diesel
Coles Distribution Centre
Cape
Rocla
Kimberley-Clark
Lockheed Martin
DSTO
RAAF Edinburgh inc. 7th RAR Mech Battalion
Lyell McEwin Hospital
SCT Logistics Freight Terminal
CPC

These are just some of the big boys who are in the immediate area. There are a bucket load of SME's and other Nationals/multinationals moving into the area. I didn't even include any Holdens related jobs in this list.

I have many clients who work in these facilities, and I can tell you that the majority of the pay brackets for floor staff that I provides services to are in the 60-80k range.

I had a tenant look at a property I own yesterday, she's a lawyer.

But once again, I've told you that my strategy has no interest in rapid CG appreciation. But all the Federal, State, Local gov and private interests are making the CG more and more likely.

 

[Adelaideian]

Adelaide Investment Properties

Well said Strongy1986, this is something they seem to be forgetting. Not only in Australia but around the world beachside/water locations the CG outperforms other locations hands down. Where do wealthy people live, by the beach or in the outer suburbs??? I have lived in Adelaide all my life and the Northern suburbs always had and always will have a bad rep, just drive thru there. I think many are in denial about the effect GMH will have out there and trying to justify what they have. A couple of mid priced props near a beach with great CG potential and reasonable yields V a few ex housing trust boxes out North making a couple of grand a year at best and no CG it ain't a hard decision. I know I have done it many times.

 

[strongy1986]

Because aesthetically pleasing and good investment aren't necessarily the same thing. Distance for people down South is much more detrimental than North, as a large number have to commute to the CBD. I think you'll find a lot in the Outer North don't have much need to go to the CBD so this is not as much of an issue.

Jobs, ok:

Australian Head Quarters of BAE Systems Australia
DHL
Inghams
MTU Detroit Diesel
Coles Distribution Centre
Cape
Rocla
Kimberley-Clark
Lockheed Martin
DSTO
RAAF Edinburgh inc. 7th RAR Mech Battalion
Lyell McEwin Hospital
SCT Logistics Freight Terminal
CPC

These are just some of the big boys who are in the immediate area. There are a bucket load of SME's and other Nationals/multinationals moving into the area. I didn't even include any Holdens related jobs in this list.

I have many clients who work in these facilities, and I can tell you that the majority of the pay brackets for floor staff that I provides services to are in the 60-80k range.

I had a tenant look at a property I own yesterday, she's a lawyer.

But once again, I've told you that my strategy has no interest in rapid CG appreciation. But all the Federal, State, Local gov and private interests are making the CG more and more likely.

For what it's worth I dont think Elizabeth is a bad place to invest.
However, facts are that unless you have a very aggressive strategy (Nathan birch style) then I don't see the point.
You have to remember that low price properties have higher proportionate expenses as well

Dandenong has lots of jobs. A lot of them pay well too. But they don't live in dandenong.

People with money (choice) will live in the lifestyle location. Even if it's 30 minutes from their work.

 

[Brady]

Well said Strongy1986, this is something they seem to be forgetting. Not only in Australia but around the world beachside/water locations the CG outperforms other locations hands down. Where do wealthy people live, by the beach or in the outer suburbs??? I have lived in Adelaide all my life and the Northern suburbs always had and always will have a bad rep, just drive thru there. I think many are in denial about the effect GMH will have out there and trying to justify what they have. A couple of mid priced props near a beach with great CG potential and reasonable yields V a few ex housing trust boxes out North making a couple of grand a year at best and no CG it ain't a hard decision. I know I have done it many times.

Do you honestly have any idea of what an investment is?

Define out perform...

You have the wrong idea of what performance is... Yes it's nice to live bear beach or close top CBD but that doesn't mean that it is a good investment.

Just because something is close to a beach or CBD doesn't mean it's going to out perform something else.

 

[Adelaideian]

Brady, No it doesn't but the likelihood is that it will compared to CG in outer metro suburbs in the middle of no where. But hey that's ok keep buying those up, good luck!

 

[Brady]

Brady, No it doesn't but the likelihood is that it will compared to CG in outer metro suburbs in the middle of no where. But hey that's ok keep buying those up, good luck!

A property can be in dingo woop woop and still out perform a beach front property.

Maybe go look at some water front properties in Gold Coast, they will meet your investing criteria good performers...


For the record I like both Elizabeth area and Christies... Actually find myself driving down to Christies alot of weekends if I lived in town I could live at Christies especially once the duplication on the express way is completed... Im sure alot of other people have the exact same opinion as well.