Apartment investment on the rise

Author: Enzo Raimondo, CEO
Date: 11 Jun 15

Last month the Victorian Government released a discussion paper on apartment design. It aims to involve the community in a discussion about what is appropriate and what is not. This is particularly important as Victoria’s population grows and medium density is no longer confined to the inner city.

Increasingly, apartments are being built in outer suburbs and regional centres as investment opportunities and affordable buying options. More people, including families and the elderly, are choosing to live in them, while many of us invest for the future in an apartment to rent out, commonly through self-managed superannuation funds.

Many factors unrelated to design need to be considered when choosing an apartment. Location is the obvious one – not just the town, suburb and street, but where in the town, where in the street. For example, is it close to transport, is it close to a noisy main road, is it walking distance to the shops?

The neighbourhood is also important – are the buildings well maintained, creating a good impression for future buyers and would-be tenants?

If the apartment is in a block, its location in the block is also important. If you buy a property with a view of the bins or the carpark because it is affordable and many others in the building have attractive treetop or town views, yours will compare unfavourably if it is on the sale or rental market at the same time in future.

Owners corporation issues must also be considered. The Section 32 vendor statement provides information about this, but it is worth seeking more, such as the minutes of past meetings to determine whether any big expenses are looming. Also, check the building rules and try to find out whether it’s well run by an active committee of management and well maintained.

The government discussion paper recognises a balancing act: Victorians are entitled to quality of life and there has been controversy about the size of some inner city apartments. But it must be financially viable for developers to undertake such projects or they will be unwilling to do so.

Some of the design points raised are important for potential buyers to consider. For example, how much light and sunlight does the apartment receive? Are any of the rooms reliant on borrowed light? What is next door to the building – or likely to be there in future?

How big and functional is the apartment. For example, if it is a one-bedroom apartment could two people live comfortably together there? How high are the ceilings? Is there adequate ventilation? Does it have any storage? How convenient is the layout – for example, is the balcony filled by an air-conditioning unit?

When buying an apartment try to ensure it will appeal to as many buyers or renters as possible. Even if you plan to live there, one day you may want to sell it and if you settle for second best because it is affordable your potential for capital growth may be compromised.