You may be cautioned against buying apartments in the heart of the CBD due to overcrowding and values that don’t necessarily climb over time.
But if you know what to look for, an inner city investment can deliver strong
returns over time, especially as space becomes ever more premium in our capital cities.
So how can you sort the standouts from the pack?
Floorplan with a twist
What is surprising with so many new CBD apartments is how many have strikingly similar floor plans. Your goal is to find a unit that is a little different from the pack, with a well-thought-out floor plan and ample living area separated from the kitchen by a bench – and with a car space on title. There’s a reason car spaces are hot property on their own!
One of the downfalls of living right in the city is feeling like you’re you’re in a cookie cutter environment. Find those floor plans that have a little extra something, and are laid out for easy living and maximum lifestyle appeal.
Don’t forget the car space if you’re considering your CBD apartment as an investment.
Judge the book by its cover
If you’re buying as an investment, apartments built into heritage buildings or with architect designed exteriors tend to perform better than towers built with glass-dominant exteriors and cheap adornments. Both have fans, but it’s usually a question of supply and demand. The former tend to be rarer and can command higher prices and rents.
Room with a view
One of the greatest attractions of living high above the CBD is the view. So make sure you have one.
Above all, make sure the view brings plenty of natural light into your property. Just as it does in properties closer to earth, plenty of light and capacity for airflow are highly sought after.
Size matters
What’s always in great demand is liveable space, so look for a unit with at least 60 square metres of internal space, particularly two and three bedroom apartments.
Sound ratings = peaceful living
One of the biggest drawbacks of living in the CBD can be the noise rising up from the street or from within the building.
You can avoid this by looking out for an apartment with AAAC 5 or 6 star sound rating instead of the BCA minimum, and double glazed windows to help reduce noise.
Learn where the noise would come from; you don’t want to back onto an alleyway full of bar bins.
You should also get to know where the noise will come from in your location, paying particular attention to nightclubs and restaurants bins. The last thing you or your tenants want is to be woken at 4am by doof-doof or the sound of thousands of bottles crashing into the recycling truck.
Four years or older
One of the great temptations is to buy a unit off the plan to save stamp duty. Yet the experience of many owners is that the values of new apartments fall for the first few years after completion.
There are many reasons for this, but in a reasonable market, this post-construction drop in values tends to stop around year three to four. That means you can often beat the stamp duty saving by purchasing an established apartment in a building that is four years old or more.
Hidden costs
Pools, gyms, concierge, high tech connectivity – even shared guest apartments. Some residential towers have amazing facilities and services.
But while these look great to new tenants they can cost additional funds, which you as an owner will subsidise through owners’ corporation fees. Roller doors, lifts, and roof gardens with BBQs are often part and parcel of new apartment blocks, but make sure you understand and keep the glitz to a minimum and to keep your annual costs down.
Many of these new buildings come with swimming pools and gyms, luxury living indeed, but both are heavy cost drivers for owners corp fees as the building begins to age. USA style concierge services may be a nice extra, but these services tend to be dropped after a few years as they are very expensive.
Predict thy neighbour
There’s nothing quite so deflating as moving into a new city pad only to discover someone is building another tower in just the right spot to block your fabulous view.
Before you buy, search the local council’s website and take a walk around the neighbourhood to see if you can find development sites nearby. Heritage listed buildings and commercial buildings completed in the last 10 years are the least likely to be developed.
If your building neighbours old warehouses and offices, which seem disused or in need of repair be cautious; these areas could be next on developers’ target lists and you may find your 180 degree view becomes cut off with a new high rise building. If your investment is designed as long term, make sure you investigate any plans for the area, but remember most will be outside your control.
Original article published at www.realestate.com.au/blog by Paul Thornhill, September 2014
