Your thoughts on buying OTP in Erskineville, Sydney.

[Mondie]

l am looking at an OTP purchase in Erskineville, Sydney at the moment that l would really like to discuss with anyone who has some insight into the Sydney Inner West property market and thoughts on OTP in general.

Details of the deal;

- Two bedroom, two bathroom apartment set on two levels with small study/media area, 3 balconies, main living and balcony facing due North. Possible views. Underground security car park space on title. Apartment 86sqm + balconies 18sqm. Price $498k
- Over 2500sqm of private gardens, BBQ area, swimming pool etc.
- Good potential for future CG as Erskineville is undergoing an 'urban renewal' program
- Architecturally designed by Allen Jack + Cottier
- 150 apartments, predominately one bedders in two buildings
- high quality development by ASX listed company.
- Built on 5 levels with undeground residents carpark and ground level vistors parking.
- project not to commence until 3rd quarter this year, with an expected completion date of 3rd Quarter 2005. Not publicly marketed yet, still waiting on council approval.
- Close proximity to King Street, Sydney park, Train station, Sydney airport, 5km to CBD etc

l am still in two minds on this deal. The price is good l believe as it is comparable or better than what's for sale presently in the area and significantly cheaper (by over $100k) to the only other comparable development in the area which is near completion. Rent on today's market is around $420pw, a gross return of 4.2% which is right on the average for the area. BC fees and rates are inline for the development and area in general. With depreciation and a 6.4% interest rate my calcs show a holding cost of less than $100pm and would balance out nicely with some CF+ properties we hold and others we are looking to buy. It would be a long term buy and hold proposition.

We have done several OTP's in the past that have proved excellent deals with great CG, l like this one but l keep reading about oversupply etc which puts some doubt in my mind. Sydney's population is growing at 50000+ per year so there is a constant demand for new accommodation. l don't think this is a real concern in areas such as Erskineville but l would like to hear fellow forumites opinions and thoughts on this.

l am thick skinned so please let me hear it!!!

Cheers Mondie

 

[MarkB]

Mondie

Firstly I should say that I personally know little about the Sydney property market.

What has led me to reply to your post is that the train I catch to work each day goes through Erskenville on its way to the CBD.

Plus I noticed that no-one else had yet replied to you and I figured that something is better than nothing.

I've some friends who are active in the Syd property market and I will pose the question to them (of your Ersk. IP) - one of these friends is a R/E agent.

Are you committed yet?

(the reason I ask is that I am trying to get a feel for the urgency of information).

MB.

 

[XBenX]

crunch the numbers, forget the emotion and if they work go for it... inner west cg has been reasonably solid (and I believe this will continue) but I would also note that this would need to be a long term play IMO.

check comparables etc - it seems like you've done all that ive said anyhow - no need for the forum to sign off on your deal

different properties suit different people, Im not buying inner west OTP - but who am I ? the person next to me is - who is right ? trust the numbers, your due diligence and your gut feelings

 

[WillG]

Hi Mondie,

Can you give more information on the statement :

Good potential for future CG as Erskineville is undergoing an 'urban renewal' program

What prompts you to say this ?

I don't know anything about Sydney property except it is good to have if you can afford it.

Cheers

 

[Mondie]

MB, l would be very interested in hearing your firends thoughts on the area. We arent commited yet and probably wont be for at least another week, still waiting on contracts.

You're right xbenx, l dont need the forum to sign of on our deals but l have heard so much negative press on oversupply on inner city apartments that l wanted to hear others views. l like this devlopment and the price (because its early days of the develoment) is good, but with what l am reading from the banks, in 2 years at settlement l could get stuck with a 50% LVR. That would really stuff up our other plans on future acquisitions.

Easiest thing would be to walk, but l am not at that point yet!

 

[Mondie]

Hi Will,

Erskineville is an inner western area of Sydney that used to be industrial. It has a lot of appealing arcitecture, predominatley semi's/terrace housing but also many run down undesirable industrial/factory buildings that are slowly being demolished and the land re-claimed.

l believe as the area transforms from an industrial look/feel to more of a desirable inner city suburb its appeal will increase. A bit like Williamstown in Melbourne, and even Altona, which is now undergoing a similar type of 'renewal'.

 

[layer181]

Mondie
Dont know if this is relevant but know of subbies founding it hard to collect payments on some big sites in that area.Signs of the times? Who knows
layer181

 

[XBenX]

ahhhh thats the stuff my dreams are made of

got to love the fact most of the market is short sighted

 

[MarkB]

Mondie

I got some feedback re: Erskinville from that R/E agent friend of mine.

Here exact words were:

* * *

Erskenville is an industrial factory area. Lots of sweat shops. Close to Redfern.

It is inner city. Not sure if it is in a good part or not. Like Redfern, part of it is trendy and expensive, the other part is full of less desirables and is dangerous.

You would have to have a look at the exact location of the property to know.

* * *

For what it is worth, my current boss lived in Redfern until recently and she made similiar comments. Going through an urban renewal, but parts of it aren't as nice as others.

MB

 

[addicted]

well i cant beleive the prices in good old erko
i grew up there ,,,,,,,and it used to be the worst place ,
but in the last 15 years or so ,,many city slickers have moved in and done up the old houses at a remarkable price ,
i checked one terrace house out about 10 years ago across from where i used to live and they were asking 300k+
i dont know the prices now .
newtown up the road is full of cafes and little shops and so close to the city
nowdays when ever i drive past ,the streets are packed with people ,the areas there now are more up market
there has been heaps of units going up in the last 5 years or so
thats my 2 cents worth see ya

 

[Mondie]

Thanks for the info MB364, l appreciate you taking the time to ask.

l guess the answer doesnt suprise me, its all part of the transformation of suburbs such as these. Some pockets are a lot better than others as the revitalisation/redevelopment continues.

l remember being in Redfern in 1992 and it did feel dangerous, the sort of feeling l have only ever felt previosusly when l was in Port Moresby the year before.

Cheers