Off the Plan in South Yarra

Considering to buy off the plan apartment in South Yarra Melbourne for a development that is to be complete in 2013-2014.

6 star fit out with all the amenities. Looking at 2Bed, 1 Bath, 1 carspace, 72sqm. 600K.

Is there any Capital Gain to be made? or will this most likely sell at same price in 2+ years?

Thoughts appreciated....
 
G'Day Booby

Welcome to the Forum

The person who can predict Capital Growth is the person with a functioning Crystal Ball!

I am currently doing a loan for a very smart apartment in an almost finished block in Williams Road, South Yarra. It should be out to valuation in the next week or so - I'll let you know if (a) The Contract price confirmed, or (b) Valuation comes back at a higher valuation than the price, or (c) Valuation comes back at a lower valuation than the price.

This apartment was purchased 31/01/2010 so it will be an interesting snapshot of the apartment market in established areas

Provided that you are not relying on the value of your purchase improving between Contract and Settlement, buying 'Off The Plan' can be a great idea. Just make sure that between now and completion that you save the mortgage payment each month, have plenty of reserves and make no sudden movements to be in the best position possible in the approach to settlement.

Regards
Kristine
 
No I don't believe there will be any gain in two years. You could be the person buying it in 2 years at a slight discount. I might be wrong ;)
 
Just be aware there will generally be a negative bias against OTP apartment purchases on SS. Not saying its wrong, but you won't get over-whelming endorsement at all on your prospective purchase.

But 72sqm is imo small for a 2br apartment, however pretty standard for new OTP apartment sizes admittedly. Approximately 10 years ago, I purchased an apartment as a PPOR in Sth Melbourne, it was 90sqm 2 br apartment, and that was the smallest available. They varied from 90 to 130sqm for memory.

What are owners corporation fees?
 
The owner fees haven't been established awaiting on these before making any progress.

I would be very interested to know if valuation has increases since the Jan 2010 purchase.

72sqm + balc is small, there are 109sqm+balc apartments which are 2 bed, 2bath but are 1mil for north facing.

Hence I'm looking at the smaller ones.

Seems like in the next 18months there will a few apartment towers going up, this can't be good for cg. The fact that I will have a 2-3year buffer period is attractive as am hoping it will even out or gain.
 
The owner fees haven't been established awaiting on these before making any progress.

They'll only be estimates until the things complete..... allow a leeway of about 20% on the upward side.

Check who the builder is going to be - even with a great design, crap build can mean low CG.

As Kristine said - be prepared for when financing doesn't quite make it thru - have at least 20% deposit standing by (if not more).

By the way - 6 star - on whose star rating?


The Y-man
 
Considering to buy off the plan apartment in South Yarra Melbourne for a development that is to be complete in 2013-2014.

6 star fit out with all the amenities. Looking at 2Bed, 1 Bath, 1 carspace, 72sqm. 600K.

Is there any Capital Gain to be made? or will this most likely sell at same price in 2+ years?

Thoughts appreciated....

You better off buying older apartments. there are some which are like 100sqm for 609K or less.

500K 2 bedrooms for 72sqm, or even 550K for 91sqm.

You would be losing money if buying off the plan.
 
6 star is the developer rating, so by no means definitive. The architect is the same that designed The Melborniun, with similar amenities and fittings.

I agree the price is high compared to older apartments, but I would be paying interest on an immediate 600k+ purchase even though the property is bigger as oppose to off the plan in 2+ years. 600k now is about 45k per year interest x2 years, so I would be paying 690 for older vs 620 for smaller but newer...
 
G’day Booby,

Is this the ILK apartments you are talking about? Or the other one on corner of Alexandra and chapel / church st where the car dealership is?
 
The architect is the same that designed The Melborniun, with similar amenities and fittings.
...

What the made the Melburnian good in the eyes of many (if I am thinking of the right one) was that it was a Mirvac project. Is this one a Mirvac project, as I didn't think they were doing anything in SY right now?

The Y-man
 
People here are wary of OTP apartments for good reason. But I wouldn't be so quick to dismiss it - depends on what you want to do with it. If you get a decent place with nice views and can get a good yield, why not?
 
6 star is the developer rating, so by no means definitive. The architect is the same that designed The Melborniun, with similar amenities and fittings.

I agree the price is high compared to older apartments, but I would be paying interest on an immediate 600k+ purchase even though the property is bigger as oppose to off the plan in 2+ years. 600k now is about 45k per year interest x2 years, so I would be paying 690 for older vs 620 for smaller but newer...

I feel building costs are attributed to high fees demanded by the designers and architects - i had like a 15K design fee for an apartment which was basically measure up design couple of inspections, ideas and then complete set of drawings. and it was only a 100sqm.

Again depends on your - i normally have a margin of 60%-80% loan to at least give some breathing space. Again depends on your budget and as well as your intentions to either live in it or not.
 
What the made the Melburnian good in the eyes of many (if I am thinking of the right one) was that it was a Mirvac project. Is this one a Mirvac project, as I didn't think they were doing anything in SY right now?

The Y-man

You are correct, the Melburnian was a Mirvac project. Had a look back in 2001 for memory at some of the lower level 2 br apartments. They were in excess of $600k then. :eek:

However it has been very well managed in terms of its sales and rentals. Its definitely maintained its exclusiveness.
 
People here are wary of OTP apartments for good reason. But I wouldn't be so quick to dismiss it - depends on what you want to do with it. If you get a decent place with nice views and can get a good yield, why not?

Hi Wunderbar

I'm a people here and I'm not wary of 'Off The Plan' apartments, houses or any other type of property

Our family has bought Off The Plan twice and both times the properties have exceeded expectations

However, the main problem is buyers too confident that the market or their lives will not change to their disadvantage in any way. I have seem a small number of people who, even after two years or more for subdivisions, building or whatever, have made no preparation whatsoever for the Day of Judgement which will surely come!

Provided that the buyer takes the Contract seriously, buying Off The Plan can be a great start for a home owner and a great method for an investor.

I have a young customer just bought a 'House & Land Package', and wow! is she organised!

My No#2 Son bought Off The Plan in May, 2009 which settled in October, 2010. He saved the mortgage payment every month from January, 2009 and as a result sailed smoothly towards settlement. He is delighted with his penthouse and has turned his two bedroom plus balcony 70m2 into a comfortable home. The car stackers under the apartments are a source of endless conversations and fledgling friendships with other occupants and being able to walk to good coffee and pastries is a treat he has not previously been able to do out in the dormitory suburbs.

Quality of life is something which is often overlooked. Modern apartment living in areas of high density - population, train stations, shops, eateries -offers a lifestyle simply not found in the outer growth corridors

For a boy who grew up in the foothills, moving to a really cosmopolitan suburb has been quite an eye opener!

Nothing in life is about the money, but having said that, buy Off The Plan on an extended Contract and the buyer had better make sure that they have their money ready!

Cheers
Kristine
 
Buying off the plan for apartments historically has led to losses in return for many. Well for lifestyle - yes but if you're in to make a gain then most likely no.

http://www.theage.com.au/news/in-depth/high-rise-low-return/2007/12/29/1198778759211.html

i highly doubt that you can make a gain on the OTP apartments especially since 2009. i go to a lot of the OTP opens in melbourne so i am really curious as to where your sons apartments is. 70sqm is kinda small too.

as for home land package - that is a different investment type altogther and i think the person was talking abt an apartment in south yarra.
 
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