Why buy an apartment Property investment?

Why buy an apartment Property investment? Isn’t it the case that house and land makes a better investment with greater capital growth potential?

There are many reasons why a good apartment will make a better investment than a house and land. The first has to do with the old real estate adage, location, location, location. Most investors have a limited figure in dollars as to what they are willing to spend on an investment property and most are sensible enough to realise that demand on property, and therefore potential capital growth, tends to be much higher closer to the CBD’s of our major cities. In Sydney, you are now unlikely to [purchase a knock-down in the inner west for much less than $1.5 million, this is still plenty to buy a well-positioned two bedroom unit in a desirable inner fringe suburb.

Owner-occupier apartments are proving popular with empty nesters

Cost is of course, only one aspect. We must also be sure of our exit strategy on our ‘new’ property investment so we must be confident that there is a demand for the type of property we are purchasing, particularly in the future, when the time comes to sell.

The huge demand for rental of city apartments is two-fold and increasing. The current highest demand is coming from our younger Gen X and Gen Y demographic. If they can afford to buy, the first choice is a near-to-city apartment, close to all amenities and the largest employment hub in the state. If they can’t afford to buy, sharing with a friend in a rental property can not only be so much more convenient, but be substantially ‘subsidised’ by the huge savings in transport (now deemed to be around $22,000 per year) for an average family living in our west. (See: http://www.smh.com.au/nsw/-4jlfx.html)

Equally important is the large numbers of empty nesters moving out of large family homes to buy luxury apartments in boutique-sized blocks who are now making up a sizeable swathe of the prestige market. The empty nesters are looking for spacious open-plan living, with good views and close to water or park side in suburbs where they can walk to cafes, restaurants and shops; they’re also demanding excellence in design, security and comfort.

They are looking for quality apartments with a ‘sense of community’ which usually means gardens, pools and good shared areas where they can get to know and mix with their neighbours. The preference is usually for the smaller boutique buildings of less than 50 units although inner-city prestige units in the larger developments that are now a standard in our most expensive areas, can also be popular because of the location and community services provided.

This trend is happening around the country from Melbourne to Brisbane, not just in Sydney.

Often, the more affordable new house and land can take many years to see the growth of a good city apartment. As first home buyers move to an area of new land release, it is usually a lot less expensive for them to purchase a house and land package than purchase a second hand property due to the grants and stamp duty savings only available to brand new housing. A new home also allows the first home buyer to make some decisions in the build to give them a more bespoke home of their choosing. This can ultimately lower the capital gains potential of a new release area. So, why buy an apartment property investment? Better location leading to better possible capital growth; better tenancy demand, and an increasing demand for the right type of owner-occupier unit at the time of resale are just a few reasons.

What the experts say: “Empty nesters are looking for apartments in good locations and of a good size in those smaller blocks.” Andrew Scriven, Colliers International

What’s on trend: “They like smaller buildings with a sense of community, they like communal terraces or landscaping or pools and gyms.” James Coombe, Architects EAT

What to look for: “They certainly prefer small and intimate … that tends to be more personal so everyone knows each other.” William Smart, Smart Design Studio

Read more: http://www.domain.com.au/news/the-boutique-appeal-of-apartment-living-20160809-gqohic/