Off the Plan in South Yarra

[Tony3008]

overseas investor - only could buy new - what to do?

You can buy new, completed but never occupied. I bought my current home when I was still a UK citizen just after completion (probably an OTP sale that had fallen through) and the developer rebated half the stamp duty. It meant that I saw exactly what I was getting for my money.

I've bought two OTP units in Melbourne CBD in the past, sold each one after seven years and barely got back what I paid.

 

[Melbournian]

You can buy new, completed but never occupied. I bought my current home when I was still a UK citizen just after completion (probably an OTP sale that had fallen through) and the developer rebated half the stamp duty. It meant that I saw exactly what I was getting for my money.

I've bought two OTP units in Melbourne CBD in the past, sold each one after seven years and barely got back what I paid.

whereabouts are these units? and by which developer?

 

[Wunderbar]

It depends on what CBD apartment you buy. Buying your typical, run-of-the-mill apartment with no views and in a random part of the CBD will never go up as much as a well located, good quality/size apartment. It's just simple common sense!

 

[Melbournian]

agreed - you need to be in a reasonably good area and have decent size anything below 60sqm is not worth buying.

 

[Tony3008]

whereabouts are these units? and by which developer?

Central Equity [you may have guessed], Melbourne CBD. I was in living in the UK at the time and fell for the hype at their London presentations, e.g. "Here's a graph of Melbourne property prices over the last ten years", "Here's the projected population", "If you buy an apartment now for $400K, then assuming 7% growth, in ten years it will be worth $787K", "The guaranteed rent is $20K p.a. Assuming 5% p.a. growth, in five years you'll be getting $28K" and so on. Nothing said that was untrue, but the reality proved otherwise - rent dropped at the end of the guarantee period and didn't increase significantly while costs did. Of course three plus years down the line CE were anxious to rent out spanking new apartments in their latest development.

But I'm now older and wiser, and now being an Australian resident am not hampered by FIRB rules.

For the record, here are a few examples of what CE were asking for units in their City Point, 668 Bourke Street tower London presentation, OTP Jan 2001

303: $230K - 1 bed
405: $329K - 1 bed
1306: $365K - 1 bed
1707: $285K - 1 bed
1903: $285K - 1 bed
2407: $335K - 1 bed
2503: $330K - 1 bed
2506: $409K - 1 bed
1102: $459K - 3 bed
2102: $512K - 3 bed
2611: $449K - 2 bed
2703: $468K - 2 bed

After ten years, buyers are probably looking at 25% gain, having got a net yield of about 3% in the interim. Money in a deposit account would have done better, a good IP very much better.

 

[Melbournian]

best to buy older apartments. Many OTP ones in other suburbs like in malvern, prahan are so small with inflaed prices.

There was one in the outer suburb of mitcham not sure how that went.

 

[RobW]

OTP in South Yarra

Hi, I have never purchased off the plan before - does anyone have any experinace or thought on the ILK apartment complex in South Yarra ?

 

[RobW]

Has anyone had a look at the ILK development ? it is next door to Capital

 

[eeew]

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....

whats your investment horizon timeframe?. If its otp and less than 5 yrs, then forget it. 72sqm is a bit small. Id try some older apartments that are larger. The new ones are quite small thesedays.
600k for 2+1+1 72sqm is not worth it OTP- if CG is your goal. There are older ( built 2000 to 2005) buildings that are established that may be larger in SY/SB...try those.

 

[Kristine..]

Hello Rob

Welcome to the Forum

In the top menu bar, there is a Search function.

There is currently a thread running on buying Off The Plan in South Yarra

You will find it here

http://www.somersoft.com/forums/showthread.php?t=69085

The 'Off The Plan' topic has been discussed to death over the years, so apart from this recent thread you may enjoy searching and reading some of the other contributions.

I personally think that buying Off The Plan is a great idea provided that you have done the research, and are a disciplined person who will make sure that you are prepared to settle when the time comes, and will not be relying on the property being worth any more than you paid for it, even if the build takes two or three years

Hope this helps
Kristine

 

[Melbournian]

majority of people who buy off the plan are unable to achieve capital growth on the purchase price within the medium term period.

And in the event that your circumstances changes, it will no doubt result in losses if you need to sell your OTP asset in the 2-3 years you purchased it.

Do a google search on OTP in melbourne and you'll come up with many reports on people who lost money on it.

Most OTP purchases of apartments are overseas investors where they purchase due to restriction imposed on foreigners. Secondly in Asia, normally all OTP apartments seem to increase as opposed to OTP in Australia.

 

[Melbournian]

i haven't actually heard of any success stories of people buying OTP. Maybe 10 years yes but mostly negative stories are the norm

I pity those who bought in mitcham. it's like buying in a freefall market.

 

[RobW]

Thanks for these details, I will check more OTP feedback, I have bought under a SMSF which plans to hold for 5yr plus. Very interested in opion of the Foreest Hill area in South yarra and in particular the ILK building ? is this development looking positive ?. I am not sure how Society went - there allways seems to be quite a few on the market

 

[RobW]

Does anyone have any opinions or advice on the development of the Forest Hill area in South Yarra - eg ILK past Toorak Road ? I understand there are planning approvals for this area (eg with high rise construcion)

 

[The Y-man]

...in particular the ILK building ? is this development looking positive ?. I am not sure how Society went - there allways seems to be quite a few on the market

One of the exciting things with OTP is that you can't tell how it's doing until it is nearly completed... There always seems to be quite a few on the market because that's how developers and all the marketing infrastructure behind it make their profit on the sale of each unit....

Are you intending to live in it or rent it out?


The Y-man

 

[The Y-man]

Just a note to all: I merged Rob W separate thread re OTP in SY as it went over the same ground....

The Y-man

 

[Melbournian]

I don't believe in OTP

whoever buys OTP apartments - cannot get the capital growth

Check this out apartment out (this isn't mine) - 1.5 years ago bought for the mid 500K mark

http://www.realestate.com.au/property-apartment-vic-southbank-107087342

Sold range 795-820K - 2 bedroom 1 bath - basically floorboards, custom cabinetry, new kitchen, put a spa outside on the large balcony. No rocket science - capital growth or around 200k+ or more. Show any OTP that can do that.

 

[zed_kid]

I am not sure how Society went - there allways seems to be quite a few on the market

I went to Society launch thing... man that thing was crap. 1br apartments were roughly 400k I think in 2008-09 (can’t remember the exact date) anyway the 1br apartments were pretty much studios. The bed was a fold out wardrobe thing and there was a curtain that you pull around the bed to create your ‘bedroom’... it was pretty awful, the body corp fees were off the chart as well as they have a roof top garden and a cinema on top off all the other standard high-rise building stuff. Just looked like a bad investment at the time, not sure how they are doing now.

Regarding OTP I’ve said this here somewhere before, buy into small boutique developments, infill developments in highly sought after suburbs, put down as little of your money as you can (sometimes 5% will do it), get as much SQM as you can, cross your fingers and toes and hope that it gets built without too many headaches.

There was another development in SY/Prahran around the same time as Society. Looked like it was an old mechanic garage / warehouse, they split into 4 loft style apartments, garage on bottom, living area on 1st floor and bedrooms on 2nd floor (not sure if there was rooftop access). The location was a bit B grade as it was across the road from the high-rise commission housing there, but it looked like a really good development.

 

[Melbournian]

LOL - that was my feeling too.

 

[Property Meister]

I don't believe in OTP

whoever buys OTP apartments - cannot get the capital growth

Check this out apartment out (this isn't mine) - 1.5 years ago bought for the mid 500K mark

http://www.realestate.com.au/property-apartment-vic-southbank-107087342

Sold range 795-820K - 2 bedroom 1 bath - basically floorboards, custom cabinetry, new kitchen, put a spa outside on the large balcony. No rocket science - capital growth or around 200k+ or more. Show any OTP that can do that.

Melbourian, you seem to be an expert on the inner city market and rennovations of this type

I only keep an eye on houses so have no idead

however, is this sort of deal hard to find? and this this owner just get a bit lucky? and to me since your are only doing cosmetic rennovations, it seems easier then say dual occ for a house!