Why Melbourne apartment development West Side Place is attracting investors
Investors are scrambling to get a piece of the recently completed $1 billion, four-tower Melbourne development, West Side Place.
The majority of investors are seeing double-digit rental yields in the Spencer Street project on short-stay accomodation platforms, given the prime location opposite Southern Cross Station, Spencer Outlet Centre, and Marvel Stadium.
Investors likely won't have any trouble leasing long-term either in the sought-after development, and will be securing yields they haven't seen in a number of years. Melbourne rents have jumped 12.9 per cent over the year to July 2023, the second best performing capital only behind Perth (13.9 per cent). The REIV have Metro Melbourne's vacancy rates at just 2.2 per cent.
Nest Projects Director Nick Marinakis, who is marketing West Side Place on behalf of developer Far East Consortium, says the rental yields being achieved at West Side Place are being driven both by what the building offers just as much as the current rental crisis.
"There are two reasons why investors are securing such a good return at West Side Place. First is the current rental crisis which is driving prices, and the second is the location of West Side Place, which is second to none in the city."
The amenity, both in and out of the building, has been a major driver at West Side Place. Within the development there's a swimming pool with steam room and sauna, a gymnasium with an open terrace, function and meeting rooms, open terraces with seating and BBQ facilities, a private cinema, and even karaoke and virtual golf facilities.
"The amenity on offer at West Side Place means investors can reasonably have considerably higher returns than they would in other CBD buildings," Marinakis says.
Prices start at $550,600 for the one-bedroom, 60 sqm plus apartments, which have a study space and secure parking for one car.
Two-bedroom apartments, which start from over 70 sqm, are priced from $708,000.
It was a decade ago that Far East Consortium signalled their intentions for the $2 billion plus West Side Place development, securing a prime Spencer Street site in 2013. They spent the next three years in the development an design phase with Cottee Parker before launching in 2016. It still stands as one of the largest developments in Melbourne's history.
Completed apartments in the Melbourne CBD have proven popular on Urban.com.au over July and August, with investors keen on taking advantage straight away of the high rental demand and forecasted population boom in the Victorian capital.
First home buyers have also looked to completed, inner-city apartments to try and get out of the rental market. They offer great value, and despite interest rates being higher than we've seen in the last few years, first home buyers are still able to pay down a mortgage for less than what they're paying renting a similar apartment.
