From: Felicity W.
A share trader I highly respect has recently been researching property as an investment, specifically Melbourne apartments, and I found his following comments VERY interesting, couldn't resist sharing them!
Keep smiling
Felicity
As far as inner city melbourne apartments goes - at the moment, based on figures my secretaries have harvested this last week, there looks to be an oversupply aready. Within a 7 klm radius of Bourke St there are 2360 finished apartments already for sale. This does not include Docklands. Another 4200 approx apartments are planned for construction/completion with 24 months and already 1800 are available off the plan. At the moment about 200 apartments are selling a month(55% 1 bedroom, 23% 2 Bedroom - the remainder 3+ bedroom or uniques) and 65% of those are to Investors.
At Docklands there are plans for another 1600 or so apartments, 600 have already been sold. My interpretation of these figures is that most of the apartment sales are by investors because ordinary people can't afford these apartments. Most of the marketting has been pitched at Investors rather than owner occuppiers. Lisa and Kylie who have both been down there fact finding say that many of these apartments are designed to look good but don't have very much utility in there design for actually living in. This is a trend I've noticed myself in newer apartment buildings.
In one case the girls were shown through a 3 bedroom 700k apartment and did the usual things like take photos and walk around with mobile phones describing the place as they went (to me). They inspected the bathroom/ laundry area and indignantly proclaimed that two woman couldn't live together in this apartment because of the design of the bathroom. Upon finishing their little routine the marketting agent began engaging them in negotiations at a price $55,000 under the advertised price. So was he anxious for a sale? Thats a big knock down!
The marketting agents also refused in nearly every case to let the girls fax the structural plans and working drawings so an independant architect could peruse them and check then for sound transmission, ceiling type, and general design snags. When detailled enquiries were made about underfloor sound proofing and the window tinting, the agent rang a "technical" consultant, who it turned out didn't know the difference between a "glaze bonded" window tint and a integral tint. (Bonded tints are better, stronger and don't give any trouble, also reduce noise by 30%). He also didn't know what if any underfloor sound proofing had been done.
The girls used this line of enquiry at several complexes only to be met with blank expressions and ignorance on the part of the agent as to the specifications of the building they were selling. When the apartment came with parking spaces, agents were very reluctant to show then the spaces - reason - the average width was 1.5 metres and length 4.8 metres (a ford falcon is 1.58 wide and 5.8 long) - hope everyones got a small car!
Another little ploy the dynamic duo uncovered on the part of the developers on many Melbourne complexes is the Reserved Apartments Quota. These are apartments shown on the plans, but are not for sale - yet! All up there may be another 500 apartments "hidden" from available figures. Generally reserved apartments are potentially higher value areas that the developers start marketting once the complex is finished. This strategy has in the past, and in other areas, caused earlier apartment investors grief especially if they decide to on-sell shortly after completion.
All up my general outlook for Melbourne Apartments is a bit glum in terms of capital gains, but at present, rental return is satisfactory - 80% of apartments being leased and occuppied within a month at about 4 - 5% yield.
The type of apartments we are looking at are the uniques - apartments located near, or right next to, universities, film studios, corporate headquarters, or with extra special locations and views. These are easier to rent for higher amounts and hold value better.
So we're still looking but my general impression is that there's something a bit dodgy about melbourne apartments at the moment. The girls reported back that their impression was that most had been made simply to flog them to investors, with only a partial regard to livability.
A share trader I highly respect has recently been researching property as an investment, specifically Melbourne apartments, and I found his following comments VERY interesting, couldn't resist sharing them!
Keep smiling
Felicity
As far as inner city melbourne apartments goes - at the moment, based on figures my secretaries have harvested this last week, there looks to be an oversupply aready. Within a 7 klm radius of Bourke St there are 2360 finished apartments already for sale. This does not include Docklands. Another 4200 approx apartments are planned for construction/completion with 24 months and already 1800 are available off the plan. At the moment about 200 apartments are selling a month(55% 1 bedroom, 23% 2 Bedroom - the remainder 3+ bedroom or uniques) and 65% of those are to Investors.
At Docklands there are plans for another 1600 or so apartments, 600 have already been sold. My interpretation of these figures is that most of the apartment sales are by investors because ordinary people can't afford these apartments. Most of the marketting has been pitched at Investors rather than owner occuppiers. Lisa and Kylie who have both been down there fact finding say that many of these apartments are designed to look good but don't have very much utility in there design for actually living in. This is a trend I've noticed myself in newer apartment buildings.
In one case the girls were shown through a 3 bedroom 700k apartment and did the usual things like take photos and walk around with mobile phones describing the place as they went (to me). They inspected the bathroom/ laundry area and indignantly proclaimed that two woman couldn't live together in this apartment because of the design of the bathroom. Upon finishing their little routine the marketting agent began engaging them in negotiations at a price $55,000 under the advertised price. So was he anxious for a sale? Thats a big knock down!
The marketting agents also refused in nearly every case to let the girls fax the structural plans and working drawings so an independant architect could peruse them and check then for sound transmission, ceiling type, and general design snags. When detailled enquiries were made about underfloor sound proofing and the window tinting, the agent rang a "technical" consultant, who it turned out didn't know the difference between a "glaze bonded" window tint and a integral tint. (Bonded tints are better, stronger and don't give any trouble, also reduce noise by 30%). He also didn't know what if any underfloor sound proofing had been done.
The girls used this line of enquiry at several complexes only to be met with blank expressions and ignorance on the part of the agent as to the specifications of the building they were selling. When the apartment came with parking spaces, agents were very reluctant to show then the spaces - reason - the average width was 1.5 metres and length 4.8 metres (a ford falcon is 1.58 wide and 5.8 long) - hope everyones got a small car!
Another little ploy the dynamic duo uncovered on the part of the developers on many Melbourne complexes is the Reserved Apartments Quota. These are apartments shown on the plans, but are not for sale - yet! All up there may be another 500 apartments "hidden" from available figures. Generally reserved apartments are potentially higher value areas that the developers start marketting once the complex is finished. This strategy has in the past, and in other areas, caused earlier apartment investors grief especially if they decide to on-sell shortly after completion.
All up my general outlook for Melbourne Apartments is a bit glum in terms of capital gains, but at present, rental return is satisfactory - 80% of apartments being leased and occuppied within a month at about 4 - 5% yield.
The type of apartments we are looking at are the uniques - apartments located near, or right next to, universities, film studios, corporate headquarters, or with extra special locations and views. These are easier to rent for higher amounts and hold value better.
So we're still looking but my general impression is that there's something a bit dodgy about melbourne apartments at the moment. The girls reported back that their impression was that most had been made simply to flog them to investors, with only a partial regard to livability.
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