MELBOURNE PROPERTY: CBD VS FRINGE
Among all the states in Australia, statistics show that Victoria will have the largest population in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053.
It’s easy to understand why – spurred by a highly diversified economy and world-class education and tourism, Melbourne has been named Most Liveable City five times consecutively since 2011.
Smart investors looking to net significant rental income from the growing population have been investing their money in various suburbs across this beautiful city.
The key question is, where is the best place to invest in Melbourne?
MELBOURNE CBD: SMART INVESTORS STAY AWAY
Melbourne CBD is an amazing place – organized, pretty, artistic and with amazing walkability scores – and we love it! From an investment point of view, however, property in the CBD is an absolute NO.
1. Valuation for property in the CBD has been 20%++ BELOW purchase price
In the CBD, housing projects are confined to high-rise development only, which usually takes about four to five years to complete. The team at CSI Properties (Cornerstone International) has heard from many of those who had previously invested in CBD property, complaints that the banks had undervalued their property by 20% lower (or more) than purchase price. Statistics have shown that the average property price in Melbourne increases by 9.53% each year (source: Australia Property Monitors). This essentially means that the abovementioned properties in the CBD had not only been valuated BELOW its original purchase price, it had also depreciated! Speak to a licensed independent mortgage broker or lawyer for Australian property if you want verification.
2. The last three years have seen NEGATIVE capital appreciation in CBD property (source: Australian Property Monitors).
3. The CBD is approaching an oversupply of apartments. There is increasingly higher vacancies as more properties come to completion.
Melbourne CBD approvals for six months of 2015 was 12,516. Melbourne’s high-rise boom currently encompasses 33 towers under construction and a further 39 to be built, according to Skyscraper, Activity Monitor and UrbanMelbourne. Researcher BIS Shrapnel said, “The city is already heading for a glut of apartments. By June 2016, there will be a surplus of 15,000.”
4. No Exit for the next 10 Years++
Last September, Australian website Domain.com published that investors should “get out as soon as possible (otherwise) it will take 10 to 15 years before you get your money back.” This is due to (i) the oversupply of apartments in the CBD and (ii) Australians generally dislike living in the CBD. In case you didn’t already know, foreigners are not allowed to purchase property in the secondary market. Which simply means that foreign investors looking to exit the market are only allowed to sell to Australians. But Australians don’t like living in the CBD…
CBD FRINGE PROPERTY – HIGH RETURNS, GREATER CAPITAL APPRECIATION
Research has shown that investing in property located at the CBD fringe is the most rewarding. We at CSI Properties (Cornerstone International) are supporters of properties located in these locations, based on our own research which is backed by industry experts.
Property located in the CBD fringe are a top choice because:
- They are extremely accessible to the city by all kinds of transport including walking, yet removed enough from its hustle and bustle.
- Many are located close to areas with lots of green, F&B outlets, entertainment and the arts.
- Good appreciation value. If you invest in the right location, you should be able to own seven properties in 10 years, with an initial capital of only RM100,000. Ask us how.
We leave you with a chart of the top CBD-fringe suburbs to invest in:
CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence.
Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.
Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260