good call!
Melbourne cbd growth
- Thread starter wll6568
- Start date
good call!
I know someone who bought in Melb CBD in 1997. The apartment is average standard by Central Equity - melbournians know the typical Central Equity quality, nothing fancy. It's 2 bedrooms, about 65sqm internal, and carpark.
Purchase price $270,000.
Current price $550,000 to $650,000. Loan fully paid off with the help of rental income and some additional funds. In 2004, this person was complaining its only valued at $350,000 approx. But by 2006 and especially after 2007, no more complaints after prices suddenly shot up.
Also know someone who bought in 1995 similar type of apartment for $199,000, and now worth $650,000. Loan also fully paid off.
Those who are able to lose money from CBD apartment investments are those who are trying to sell after only holding them for a while.
Wait 1 or 2 property cycles and then your retirement is secure. CBD investment is good because it is so easy to find tenants, low vacancy rates, and you can charge higher rent. When rental prices increase, it happens in the CBD first. The person in the first example above had 7 rent increase in (not sure) 1 or 2 years period during 2005. Rent went from $350 pw to $520 pw because rental demand was so high.
Purchase price $270,000.
Current price $550,000 to $650,000. Loan fully paid off with the help of rental income and some additional funds. In 2004, this person was complaining its only valued at $350,000 approx. But by 2006 and especially after 2007, no more complaints after prices suddenly shot up.
Also know someone who bought in 1995 similar type of apartment for $199,000, and now worth $650,000. Loan also fully paid off.
Those who are able to lose money from CBD apartment investments are those who are trying to sell after only holding them for a while.
Wait 1 or 2 property cycles and then your retirement is secure. CBD investment is good because it is so easy to find tenants, low vacancy rates, and you can charge higher rent. When rental prices increase, it happens in the CBD first. The person in the first example above had 7 rent increase in (not sure) 1 or 2 years period during 2005. Rent went from $350 pw to $520 pw because rental demand was so high.
Comparing 1997 prices and 2013 is pretty pointless.
But if you must, $270k to $650k over 17 years is a pretty horrible return for anyone who's ever invested in Melbourne real estate (most people here).
Flats in Kew were selling for $80,000 in 1997. Sells for ~$550k now. Shorter period, greater returns, and lower body corporate fees.
By the way I think you're overestimating the selling price of a 2-bedder Central Equity apartment built in 1997 - let me guess, the one opposite Royal Exhibition Building on Latrobe St?
But if you must, $270k to $650k over 17 years is a pretty horrible return for anyone who's ever invested in Melbourne real estate (most people here).
Flats in Kew were selling for $80,000 in 1997. Sells for ~$550k now. Shorter period, greater returns, and lower body corporate fees.
By the way I think you're overestimating the selling price of a 2-bedder Central Equity apartment built in 1997 - let me guess, the one opposite Royal Exhibition Building on Latrobe St?
LOL. Pretty pointless? Shows that you don't have an investor's long term view. As long as there is good growth. I wouldn't call it "horrible returns" as you put it. And investing in the CBD gives higher rent income and less vacancy rates than most other areas. Most of the time one tenant moves out and immediately they find people queuing t get the lease.
Kew is different with the fact that it has good schools there and not many apartment supply there. Either you buy an expensive house in Kew or you are left with an apartment which you can afford. Generally suburbs with good schools such as Kew, Balwyn, Glen Waverley will have better growth because of schools. I know many Asian people in the last 10 years have started buying in suburbs purely because of the school factor, and they don't mind how much they pay as long as their kids get to go to that good school.
If you want to talk purely about fast return, you might as well compare property investing in the CBD with buying shares in Sirius resources(SIR) that went from 5c to $3 in less than a year.
And do you have an actual case analysis of Kew instead of just saying you can get an apartment (how many rooms?) for $88,000 and now it's worth $550,000? Any renovation done? And what type of apartment? With the Melbourne examples I am only using the standard Central Equity type apartment in towers. If you are comparing a boutique apartment with a standard tower apartment with no views, you haven't been really thinking have you?
And do you think Kew apartments will be more expensive than Melbourne CBD in the long term? Well it all depends on the location, the quality.
Property investing is a long term game, you cannot compare your scores in the middle of the game and say you've won and you're smarter than everyone else. It's immature.
Rodimus,
What DB is saying here is true.
If those figures are correct, that's about 5.5%PA.
Then if you allow for running costs (maintenance, body corp, rates....) it starts looking pretty girm on the returns front (i.e. would cash in the bank have been better?)
The Y-man
Haha. Couldn't be bothered answering all your questions as there's too many, although I do have answers to all of them.
But yes for the record I do know Sirius Resources, Mark Creasy and the Nova-Bollinger project very well. Bought at $1.20, couldn't get in at 3c unfortunately.
I must say while I hold a long-term view, I haven't been that much of a long-term investor in in real estate, since in 6-7 years of investing I've made it to the point I can retire well into 6 figures of passive income (self-made despite folks' portfolio of course). If the long-term is as great as you say, maybe I'll help my friends retire too
Immature indeed. Good luck in your investments.
But yes for the record I do know Sirius Resources, Mark Creasy and the Nova-Bollinger project very well. Bought at $1.20, couldn't get in at 3c unfortunately.
I must say while I hold a long-term view, I haven't been that much of a long-term investor in in real estate, since in 6-7 years of investing I've made it to the point I can retire well into 6 figures of passive income (self-made despite folks' portfolio of course). If the long-term is as great as you say, maybe I'll help my friends retire too
Immature indeed. Good luck in your investments.
If you invested $250k in 1997 into the bank, after 17 years it'd be worth around $550k today. So yes, investing in the apartment would be marginally better because you also picked up the rent less agent fees, council rates etc.
The thing is, with an investment class that has shown such terrible returns over 17 years despite one of the biggest real estate booms in this city, where's the future potential in this sub-class of assets in a market that is saturated with an oversupply of high rises?
Someone once said (i think on this forum) that inner city high rises are for lifestyle- not the best for CG.
Haha. Couldn't be bothered answering all your questions as there's too many, although I do have answers to all of them.
But yes for the record I do know Sirius Resources, Mark Creasy and the Nova-Bollinger project very well. Bought at $1.20, couldn't get in at 3c unfortunately.
I must say while I hold a long-term view, I haven't been that much of a long-term investor in in real estate, since in 6-7 years of investing I've made it to the point I can retire well into 6 figures of passive income (self-made despite folks' portfolio of course). If the long-term is as great as you say, maybe I'll help my friends retire too
Immature indeed. Good luck in your investments.
Well I picked up SIR at 10c. So should I be comparing my purchase in SIR with yours now, just like you compared Kew with the CBD?
You can't compare part of people's investment portfolio and how it compared with part of your portfolio and then say you're a way better investor. That's really immature.
There are several WAYS to increase rentals legally in the city to become almost double of market rent. And these are methods that can easily be done in the CBD but not in other suburbs.
That is how the person I know paid off the CBD apartment in just less than 12 years. So now the apartment is free of loan.
You compare property investing with putting money in the bank? Are you serious? That is an unfair comparison because with property investing, you only come up with 10% of the total,($27,000) and the bank loans you 90% to buy a $270,000 property. But fixed deposit money in the bank, you are assuming that the person has $270,000 cash sitting in the bank.
If you had $270,000 in the bank, you would do a lot better by putting it as 10% deposits to buy 10 apartments in the city in 1997. So which will give you a better return for your $270,000? You still believe your fixed deposit will win over 10 CBD properties? For an experienced investor, you neglect to factor in your investment outlay and leverage.
i don't think a 2 bedroom is anywhere near 600K for 65sqm for a CE building build in 1997. it is most likely SPring st towers and the corner of latrobe st.
2 bedrooms are around 550K.
2 bedrooms are around 550K.
OK you got me. CBD apartments are great. Keep up the buying. By the way I think you extrapolate too much. I never said I invested in Kew in 1990s and did better than your friend. You see, in 1997, I'm only around 10 years old, but anyway.
Yes Melburnian - I'm not sure which 1997 Central Equity 2-bedder is selling for $650k.
But to be honest, I really don't know if you're trolling or not. Your friend took 12 years to pay off a $270k apartment despite being on double the market rent...
Not sure. $270k sounds overpriced at the time but I wasn't old enough to remember. I know my folks were selling 2-bedder apartments for around $90k in 1991 in CBD. I didn't think the market had run that hard between 1991 and 1997.
Yeah sounds overpriced then. If there's one thing that remains constant in the investment world...it's the likelihood of an overpriced OTP!
Deltaberry,
So you feel it's cool to use Kew apartment as an example(something you haven't bought), in hindsight, and then compare it with my friend's CBD purchase, and then you judge him to be a bad investor?
I can also find other suburbs in Australia that performed better than Kew. NO matter where anyone bought, you can always find a better performing suburb and then say "It's pointless to even compare the growth from 1997 to 2013!" and "this suburb sucks in comparison to this other one".
That's why I said to you if you are into property investing in the short term, getting in and out, then you wouldn't be considered wealthy as yet.
The person I was telling you who bought in Melbourne CBD has more than 40 investment residential properties worldwide, including Singapore, Hong Kong, and over 8000 acres of land.
And yes, it took him about 12 years to pay back his loan for that apartment (give or take), because he's also been using his rent income to buy others. So it's really pointless for you to analyse what he's doing with his rents just to win an argument.
So you feel it's cool to use Kew apartment as an example(something you haven't bought), in hindsight, and then compare it with my friend's CBD purchase, and then you judge him to be a bad investor?
I can also find other suburbs in Australia that performed better than Kew. NO matter where anyone bought, you can always find a better performing suburb and then say "It's pointless to even compare the growth from 1997 to 2013!" and "this suburb sucks in comparison to this other one".
That's why I said to you if you are into property investing in the short term, getting in and out, then you wouldn't be considered wealthy as yet.
The person I was telling you who bought in Melbourne CBD has more than 40 investment residential properties worldwide, including Singapore, Hong Kong, and over 8000 acres of land.
And yes, it took him about 12 years to pay back his loan for that apartment (give or take), because he's also been using his rent income to buy others. So it's really pointless for you to analyse what he's doing with his rents just to win an argument.
I think it's perfectly okay to compare the performance of one investment property with another. After all, capital is scarce.
Not sure why you're so angry. I suspect you must have a lot of these apartments.
Not sure why you're so angry. I suspect you must have a lot of these apartments.
I didn't read his last comment as racist to be honest, unless I missed something he posted earlier. Or maybe I'm just too tired to be reading between the lines.
I think the right property in the CBD will have great growth, despite the supply. I've seen some Art Deco apartments that have made my jaw drop. No way those will have average growth.
Same applies to any suburb in Melbourne - almost everyone in Melbourne - CBD or not - is going to be affected by this supply side boom. But the right properties will always be resilient. And yes the higher CBD yields are great, don't think anyone is denying that. How about we leave it at that?
I think the right property in the CBD will have great growth, despite the supply. I've seen some Art Deco apartments that have made my jaw drop. No way those will have average growth.
Same applies to any suburb in Melbourne - almost everyone in Melbourne - CBD or not - is going to be affected by this supply side boom. But the right properties will always be resilient. And yes the higher CBD yields are great, don't think anyone is denying that. How about we leave it at that?
A CBD commercial I bought this April has almost appreciated as much as that apartment did over 17 years. Oh boy.
In percentage terms I should say.
He's still talking about art deco apartments. Not house with land in the CBD, and I wonder how many house with land you can find in Melbourne city!
And why are you comparing apples with oranges again? Comparing commercial with residential?
At first you compared keeping money in fixed deposit with buying an apartment in the CBD. You said money in fixed deposit gives better return??? Now you want to compare commercial with residential property???
He's still talking about art deco apartments. Not house with land in the CBD, and I wonder how many house with land you can find in Melbourne city!
And why are you comparing apples with oranges again? Comparing commercial with residential?
I think you've misunderstood him. He's talking about apartments with a higher land ratio...basically small buildings with maybe 20-50 apartments instead of something like the UWS development that consists of literally thousands of apartments.
