Upper West Side New Melb Development

hi, i just went to visit the display suite for the new Upper West Side apartment development in Melbourne. Its located on the corner of Spencer st and Lonsdale st. I'm not sure if any of you guys are familiar with it but the development will consist of 4 towers, each around 30-40 storeys high. The development will have its own private gardens for residents as well as its own alleyways consisting of shopping/cafes. The main views for the apartments will be of Etihad stadium and the Docklands.

The apartment i was looking at was $579 for a corner apartment with views out to Spencer and Lonsdale st. It consists of 2 bedrooms, 2 bathrooms and 1 carspace.

The whole development looks pretty nice but are apartments in Melbourne CBD are good investment? Can i expect much capital growth from an apartment like this? what are the vacancy rates for apartments in the CBD at the moment?

I read that Docklands apartments were underperforming a few years ago. Is that still the case now considering the Docklands area seems to have improved with many businesses having their Head offices there now as well as the redevelopment of Spencer st station with its shopping centre etc.

Thanks for all your help.
 
The apartment i was looking at was $579 for a corner apartment with views out to Spencer and Lonsdale st. It consists of 2 bedrooms, 2 bathrooms and 1 carspace.

The whole development looks pretty nice but are apartments in Melbourne CBD are good investment? Can i expect much capital growth from an apartment like this? what are the vacancy rates for apartments in the CBD at the moment?

Are you looking at this as an IP or PPOR? I've bought two Central Equity CBD apartments off plan when I lived in the UK and both were less than stellar performers, with a net yield of about 3.3% - body corp on developments like this knocks a hole in the return. On the plus side, each time there was a vacancy, a new tenant was in place within 7-10 days.
 
hmm thats interesting. i didnt realise that the plans still haven't been approved yet. surely it should be illegal for them to be selling the apartments already?

anyway, i'd be using the apartment as a PPOR for a couple of years before renting it out. how much rent per week would this apartment be able to attract? the corner apartments were approx $30k more then apartments with just views of Spencer st. is it worth the extra $30k to get a corner apartment? do they have more captial growth potential?
 
hmm thats interesting. i didnt realise that the plans still haven't been approved yet. surely it should be illegal for them to be selling the apartments already?

anyway, i'd be using the apartment as a PPOR for a couple of years before renting it out. how much rent per week would this apartment be able to attract? the corner apartments were approx $30k more then apartments with just views of Spencer st. is it worth the extra $30k to get a corner apartment? do they have more captial growth potential?

does the apartments with just views of Spencer st come with carspace as well?
 
the only apartments that come with car parks are the 2 bedroom, 2 bathrooms apartments and yes there are some of those facing Spencer st only. For a level 42 apartment, the price was $550k. There are 43 levels in the building btw
 
In terms of capital growth it is hard to know how it will turn out.

As with any big highrise build the market will be flooded for a couple of years (2500 apartments is a lot of stock to add to one corner of the CBD). This happened with Docklands. A lot of people spent 5 years in negative territory. I think southbank has had similar troubles at various points.

It takes a while for enough people to get used to the idea of living in that sort of location.
 
I drive past this site on the way to work everyday and it is worth noting that it is situated right next to two of Melbourne's biggest strip clubs. Sometimes I finish work at 1 am on Saturday and Sunday mornings and to say its a colourful part of the CBD is an understatement. Other times I start work at 5:30 in the morning on weekends and its still just as busy!
These places of business won't be moving so they will be your neighbours for the duration but depending on your lifestyle it could be an advantage:cool:
My main concern would be that even if planning goes through (and I think it probably will) you are being asked to pay a premium price that quite possibly is more than what the apartments will be worth by the time completion happens and payment is due. Over time they will make money and if it is convenient for you to live there then it could be brilliant. There have been three or four other high rises go up over the last couple of years on Spencer st so see how they are going now as far as CG goes but bear in mind the recent CG situation.

Good luck
 
Upper Westside

I was pleased to find this thread as I am looking at these same appartments but from ADelaide so I can't look at the display suite. Jasonyong do you have any idea what size the bedrooms are? Is there room for adequate storage and a desk as well? So many of these developers seem to class an area of 3m x 3m as a double bedroom!

The corner 2br appartments are definitely the best, as they have the most natural light - each bedroom has a window and this is not the case with other appartments. I was very interested to read that there is no planning approval yet. From the comments though, it sounds like one could be waiting a long time for capital gain on these units. I also have some big questions about the typical rents that the developers are quoting - i.e up to $630 for a 2 br appartment or $350 for a studio appartment. This would be in late 2012. What comments are there on these rents?

Dorothy
 
Dorothy, I purchased a 2 Bedroom cnr apartment for $567,000. I have been looking at other properties for 6 months. I was amazed I could buy a new aprtment thats settles in 3 years for a lot cheaper than an existing apartment on Spencer St - Check Neo out and it was built over 12 months ago. I think this is good for capital growth. If you buy definetly go a corner one - I havent seen many 2 bedroom apartment in the city both with natural light
 
congrats on your purchase Gumby. did you end up with one of the corners facing Lonsdale or little Bourke st?

Dorothy, i have the plans but i don't think the specific bedrooms sizes are listed. the entire living area is 69sqm though.
 
I bought a one bedder in UWS as well. It's great floorplan, with magnificent views. $359,000, which is still less than many one bedroom apartments selling in Southbank area.

FOr the fact that it is right opposite the Southern Cross station, an iconic building, plus the good views, I think it will be good.
 
We're heading for an oversupply of inner city apartments

I'd be very cautious of buying off the plan at present.

We’re heading for an oversupply of apartments in Melbourne’s CBD with more than 60 apartment buildings now being marketed in the wider City of Melbourne - 27 released this year. This equates to 8100 apartments if all were built.

According to research by Oliver Hume more than 7500 new apartments will settle in three years, with 4829 apartments in 2012 and 2500 expected in 2013.

These apartments will add more than 35 per cent to the existing supply of about 30,000 apartments.

The record year for apartment completions was 2006, with 5000 on the market and we remember the oversupply that caused.

I’ve seen these cycles in the past with massive overbuilding and then a whole group of off the plan investors losing their shirts as they could not settle when the values of the their property on completion was significantly less than the contract price.

Remember these properties are mainly bought by local and overseas investors so this will also mean a glut of vacant rental properties all coming on the market at a time when there will be fewer tenants looking, as there are now fewer overseas students and temporary visa migrants – the typical tenants of these buildings.

Add to this the problems in getting finance for end purchases as banks are restricting their lending to high rise blocks and we are in for a repeat of what happened in previous cycles. A whole lot of very disappointed property investors who will say something like “it seemed like a good idea at the time.”
 
My experience with inner city (Sth Melbourne bordering on Southbank) apartments. I have referenced this previously.

Sold a 2br apartment in Sth Melbourne in Sep 2009 for $545k.
I recently went to see the selling prices for same/similar apartments that I sold. They were asking prices of ~$570k. Given what the market has done, this wasn't a great appreciation in price.

Sure past performance isn't a reflection of future performance and you need to look at forward indicators to establish the future of the property/property type you are looking at, but I now liken OTP apartments to investors as a McDonalds meal to the hungry. Good instant feeling but you'll regret it later.
 
Why developer take half of the interest gained from 10%deposit buyer paid to Uws proj

Hi Gumpy, great to know you purchase a unit in Uws and would like to know the 10% we as buyer paid to developer trust account won't entitle us to get full interest as the interest gained will be split equally between developer and buyer! It is stated in the contract! I am not sure if this is special arrangement as most of the project in AU, the buyer will get back their 100% interest they paid for the deposit to developer trust account. Is it something fishy ? Please advise. I bought a unit in tower 2 cost me 371. One beded.
 
I read that Docklands apartments were underperforming a few years ago. Is that still the case now considering the Docklands area seems to have improved with many businesses having their Head offices there now as well as the redevelopment of Spencer st station with its shopping centre etc.

Thanks for all your help.

You show your age when you call Southern Cross Station Spencer Street Station. I know because I do the same myself :)
 
Uws

Stage One on UWS is set for completion by xmas 2012.Though at this stage I would say we are two months behind ao realistically will be end of Jan-Feb
Cheers
 
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