Canberra’s skyline is gradually changing. Luxury apartment blocks appear to be popping up everywhere. Whilst Canberra’s CBD will receive a number of new developments over the next couple of years, other areas in Canberra such as Kingston, Belconnen, Gungahlin, Molonglo Valley and Tuggeranong are also experiencing their fair share of apartment action.
Housing Industry Association economist Diwa Hopkins recently explained to the Canberra Times that in the last 12 months, non-detached housing (including apartments, as well as townhouses and duplexes) accounted for the lion’s share of newly commenced building projects, with detached houses making up just 23 per cent of the pie. “In terms of the actual numbers, we had 3828 multi-units - low and medium non-detached housing products - that were commenced, while for houses, there were 1166 commenced,” she says.
Owning an apartment has many advantages. For owner-occupiers, an apartment can be an affordable way to get on the property ladder, whilst securing accommodation in an area that is close to work or convenient to public transport. An apartment can also be a low-maintenance option for downsizers that want to be close to local amenities. For investors, the right apartment with the right tenant and property management team can be a solid investment. But not every development is a sure-fire investment. So how do you determine what to buy, and where?
In a recent article for Domain.com.au, Paul O’Donnell, managing director for Pod Projects Group explains that two key factors: the location and the quality of the home determine an apartment’s long-term appeal. The key is pinpointing the areas with forecast population growth, where government and private sectors are investing. O’Donnell “points to Gungahlin, Molonglo Valley and Kingston as examples of regions where apartments will see growth”.
As with any investment or property purchase, research is essential. If you research the below four areas thoroughly, you will significantly minimise your investment risk by purchasing an apartment that holds its value for the long-term.
1. Research the area
When you find a suburb or new development you are interested in purchasing an apartment in, look at what else is being planned in the area. What shops and amenities are close by? Are there plans to build more facilities, or upgrade existing ones? What other new developments are being planned, and how close are they being built? An apartment might have a great view now, but when a new apartment block is built nearby, your views (and light) can swiftly be compromised. A new development next door may mean you acquire neighbours who are closer than you’d like!
2. Research the developer
Are you familiar with the developer of the building you are considering investing in? Some questions to ask could include:
What else have they built?
What is the quality and finish of their other buildings like?
Do you know anyone who has lived in one of their apartments who you can ask about the wear-and-tear of the finishes?
Durable finishes are particularly important when you are leasing out a property, as you don’t want the added cost and hassle of replacing flimsy fixtures.
3. Research the building
Will your building have a gym, pool, lift, or gardens? How much body corporate will you be paying? New development, Founders Lane (centrally located between Civic and Braddon) boasts an onsite childcare centre and community greenspaces, in addition to “quiet cafes and quirky Canberra pop-ups”. These options would appeal to young professional families who enjoy café culture, but need the practicality of convenient childcare. Whilst these facilities can be a draw-card for residents, they require a lot of maintenance, which can result in a hefty body corporate fee. You will need to factor this cost into your rental rate.
4. Identify and research your target market
Who is your ideal tenant, and why would they want to live in this building? Where would they work and would this building be within walking distance or conveniently located near public transport? For example, apartments closely located to Canberra’s nearly completed light rail could be a worthy investment.
ABC News’ recent property analysis article highlighted the strong position of the Canberra property market: “The prospects for Canberra look good. Unemployment is low, migration is trending higher and public sector wages have been growing more strongly than the private sector”. Provided you do your research, there are some excellent apartment investment opportunities to be gleaned in Canberra at the moment.