Off the plan Boutique Apartment in Prahran Vic

Hi All:

I've just booked a unit at "The Clifton" 25 clifton street, Prahran for investment. NW facing on 2th level (equivalent to 4th story high), promising some city view. for $545K, return is $524p/w. I have up to friday for cooling period. I just like some input from you all.

At this point I'm a bit concerned if the immediate building on West and North has a big possibility to be redeveloped in the next few years, which will block me out all the views and sunlight.

It's very near the Chapel Street, public transport, market. It has also a housing commission on the a few blocks away North. I've drove around the area at night and had not see anything disturbing. Check out the crime rate in the area and it is only slightly higher than Victoria average. Vacancy rate is at in 3.2 (Aug 2012).
 
Is a that a two bedroom apartment?

If so, pretty reasonable price... Does it have outdoor space and a car park?

The location is fantastic, do you have views of the park from there?

Your concerns about other developments are valid. What kind of buildings are next door? Are they in good condition?

It's impossible to know the future but the condition of the buildings next door will help you guestimate if they're going to be imploded.
 
Hi: Jake,

yes it is 2 bed, 1 bath, 1 secure car park. 1 balcony. 56 sqm internal build up 6sqm external. (2.7 meter ceiling height)

The building next door looks new, double story office. google map street view will give you a good idea.

Further away are heritage building and "council loan" multilevel car park.
 
return is $524p/w

That sounds like a very specific amount for the weekly rent. Is that the developers estimate, or your own research (involving local property managers). Or a rental guarantee % of purchase price (generally lenders frown on these & the rent often decreases at the end of the guarantee period).
 
Hi: Jake,

yes it is 2 bed, 1 bath, 1 secure car park. 1 balcony. 56 sqm internal build up 6sqm external. (2.7 meter ceiling height)

The building next door looks new, double story office. google map street view will give you a good idea.

Further away are heritage building and "council loan" multilevel car park.

That is very small for a 2 bedder. The 1 bedroom apartment I'm living in atm is bigger. You should aim for 75-80sqm for two bedrooms.
 
Waldo: The $524 figure is 5% of the property as suggested by the agent. It does match my research (size of apartment not taken into consideration). cash flow will be negative if rental < $490. So I'm happen if it is I only get $500.



Cimbo: I do realize it is on the small side. At 70-80sqm will cost at least another 100k. I did shop around, it looks like a fare price for me.
 
To me that is a poor investment. Your chance of making any CG is slim and reselling will be very difficult. At least if it's a bit bigger you have a slight point of difference compared to the hundreds of 30-50sqm apartments that are flooding the market. There is little demand for such properties and a very big supply.
 
To me that is a poor investment. Your chance of making any CG is slim and reselling will be very difficult. At least if it's a bit bigger you have a slight point of difference compared to the hundreds of 30-50sqm apartments that are flooding the market. There is little demand for such properties and a very big supply.

While I agree that bigger is better in Prahran that size is considered quite acceptable. It's not a bad price for an OTP investment from what I can gather, especially since he has a car park.
 
Well it's more acceptable than a 30sqm studio but it's not like small apartments are rare over there? I personally wouldn't pay half a million for an apartment with a ~10sqm living room (assuming two bedrooms of 10sqm each) anywhere in Australia.
 
Hi All:

I've just booked a unit at "The Clifton" 25 clifton street, Prahran for investment. NW facing on 2th level (equivalent to 4th story high), promising some city view. for $545K, return is $524p/w. I have up to friday for cooling period. I just like some input from you all.

At this point I'm a bit concerned if the immediate building on West and North has a big possibility to be redeveloped in the next few years, which will block me out all the views and sunlight.

It's very near the Chapel Street, public transport, market. It has also a housing commission on the a few blocks away North. I've drove around the area at night and had not see anything disturbing. Check out the crime rate in the area and it is only slightly higher than Victoria average. Vacancy rate is at in 3.2 (Aug 2012).

When is it due to complete? the rent return is possible once it is finished. I have a 3-bed in the area currently returning $550pwk no vacancy and annually the rent is reviewed.

There are a lot of new developments in the area so unsure if they will all come onto the market at the same time and what that might do for the 1-2 bed range. I'm sure however that someone will rent it, its a desirable area and lots of new businesses opening up along chapel and some of the pubs expanding and refurbishing.

Crime wise, I don't think you will have any problems. It's a safe area. Most people renting are professionals or uni students. Young families (i.e. with a young child) tend to rent in the small pockets of terrace houses.

Don't base your decision on city views. These may be built out and these usually get approved at VCAT despite council & resident objections.
 
Thank MelbGal:

It will be ready by Sept 2014.

I'm aware that I'll be in same risk of new development next door where every I buy in area like this. Not really paying a premium for the view. I think location wise is perfect.
 
Well it's more acceptable than a 30sqm studio but it's not like small apartments are rare over there? I personally wouldn't pay half a million for an apartment with a ~10sqm living room (assuming two bedrooms of 10sqm each) anywhere in Australia.

im not quite sure where youre getting a 10sqm living room from
 
Im not one to post here much, however i read these forums on a daily basis. I think you cant go too wrong with Prahran/Windsor/South Yarra area. No matter how good the property you have found your always going to get the worst reasons why not to buy the property on this site, not everyone invests the same, i guess its why investing in property is so interesting??....In this case your also good getting some fairly positve feedback which is probably more important,
Personally I always think worst case scenario......In this case Worst case you will only get 450-500 per week rent and you will be cash flow negative $50-$75 per week going off your brief sums (Again Worst case!) If Property market goes down just means you will have to keep it longer than you probably wished if you have a plans to only keep if for a specific amount of years. If the above scenario happened would it be too much of a concern?? If it is, maybe its not the right investment....
Sounds like you have done your homework though, Just make sure of the body corporates and other fees! Good Luck.
 
im not quite sure where youre getting a 10sqm living room from

I said "around" 10sqm. Bedrooms are generally ~10sqm each which comes to say 20sqm. This leaves you with 36sqm in which to fit a bathroom (and possible seperate toilet), kitchen, the entrance and small piece of hallway in between rooms and the living/dining area. Unless the other parts mentioned are tiny, the living dining area would be an absolute max of 15sqm.

My current apartment has a living/dining area of ~23sqm and I wouldn't want anything smaller than that. To me, buying these kinds of apartments just encourages developers to continue building these scam-like developments (and the authorities to approve them) when they are totally inappropriate for Australian cities. We do not have the population density or such a high scarcity of land to justify these sizes. I can't support it at all. Even on the tiny island of Manhattan (on the east side), you can buy 80-90sqm 2 bedders for around 450-500k.
 
There is OTP boutique apartment in Sth Melb, close to Albert Park, 6% rental guarantee for 2 years, starts from $325k. Only 2 units left. PM me if anyone interested :D
 
54sqm is small for a two bedroom unit. It'd be better if it was a 1 bedroom unit. But then it wouldn't have the price tag it does now. Other than that the area and aspect seems good, the features seem good... It'll probably perform over the long term so I'd say keep it, there are worse investments.
 
Scam like developments? Totally inappropriate? I think you need to have a cuppa and a lie down.

Firstly your calcs are totally and utterly wrong. These small apartments often have no space wasting hallways and big entrances etc. Kitchens are also up against a wall. I have seen living/dining up to 24sqm and bedrooms of over 11 sqm each in a 62 sqm 2x1.

Lastly you seem to be advocating some kind of intervention here, what exactly are you proposing? You do realise affordability is the main reason apartments are getting smaller don't you?

The extra 20sqm you are advocating might cost the devoper 60k in construction costs which he has to make at least 20% on so 72k at the very least.
 
Sanj, I have seen plenty of small apartments that have hallways, small corridor near entrance, etc. The OP didn't provide a floor plan so I made a guess. Just because we may be property investors, it doesn't mean we need to get jingoistic and support any and all types of developments.

Those "galley" style kitchens against one wall that you mention are generally small/unpractical if you do any sort of regular cooking. They are more suitable for people who eat out for every meal and want a kitchen just for making breakfast or a coffee etc. For 500k, I would expect a useable kitchen.

Also, it is nothing to do with affordability, it is just excessive profiteering. How is a small, half a million dollar apartment "affordable" exactly? They could make the same apartments far more affordable by making smaller buildings etc. I am guessing the profit margin is not small given the number of these buildings that are popping up everywhere.

These developments annoy me because I was looking to buy a 2 bedder as a PPOR but the area I am interested in has now been overdeveloped with totally unsuitable big apartment towers which would make buying anything like that a pointless investment. And yes, it is proven to be unsuitable because said tower is still largely unoccupied and apartments in the development remain listed online for many months. How is this even responsible? How will this building be maintained over the long term? I feel sorry for people who fell for the hype and bought into these. The developers have no accountability whatsoever. They don't seem to be required to do any research about the requirements of local areas and seem to poorly (or not at all) justify why they are building something at the parameters they are.

There is consistent research to suggest that people in cities here want well-sized, mixed-use, medium density developments yet such builds are pretty rare or overpriced. Are you suggesting that land in the inner suburbs of Melbourne is so limited and valueable that it is surpasses even the Upper East Side/Lower East Side of Manhattan (with areas of about 2km2 and 1km2 respectively and a combined population of ~400k)? I really hope not.
 
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Thanks all for you input.

Do I have better option with 550k budget? I don't think I can get anything bigger at this price for low density apartment anywhere else in reasonably good suburb. Would OTP town house further away from city be a better option?
 
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