The Melbourne CBD apartment market is gradually being saturated with new buildings in and surrounding. It creates choice for buyers and lessens the price across the board of similar properties. The worst part is, the properties, for the most part, are a joke, developers are cramming as many attributes (bedrooms, bathrooms, etc) into such small spaces and using the attributes to market small spaces which haven’t been logically thought through affecting the resale price and rental price as most people can’t logically live in the small space.
So, what should you put your money into? The CBD has a bright future ahead for potential growth. Over this past cycle, plenty of apartments have picked up a lot of growth, though it’s lagged a little to some of the competing suburbs. With the way the city is expanding and slowly becoming a city that doesn’t sleep, I believe the next cycle should see some solid growth in good quality apartments.
When you’re investing in the city, just use common sense. Look at the space and think about if you were to live in it. This means, if a sixty square metre apartment has two bedrooms and two bathrooms, then realistically, what is the living space or how small are the bedrooms. This size is perfect for a good size one bedroom or entry point for a two-bedroom one bathroom. You will have a greater chance of renting out a logical space and most likely capture a better return.
I personally, would only invest into buildings that have been standing for more than six years. This way I can do solid research into the trends of the building and have some idea how it will react to market rises and falls. The best place to park your money though would be in Melbourne’s Heritage scene. The old heritage listed apartment blocks that have been converted years ago, mostly provide great space and plenty of character. These apartments have outplayed all others throughout the city on price gain. They have shown that over the years, they remain to be a solid investment and capture the strongest growth.
It’s a tricky city and you can make some great investments, just as much as you can lose plenty of money. Think about each apartment being its own suburb, if you can’t do or be provided research on something that incapsulates both sides of the market, then I would suggest holding onto your money. The only new build that may prove to be a good investment are landmark buildings, but the with the price you pay to buy in, you definitely want to move in and enjoy it.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.