Domestic Investors

Will 2022 be the year of apartments, the year of investors, or both?

Now that international borders are open, the forecasts of immigration are strong, and rolling lockdowns keeping workers out of offices are a thing of the past, industry commentators and experts believe&nbsp;apartments will be back in fashion, given the affordability constraints due to runaway house prices.

Investors, who have been quiet in the property market for the best part of two years due to the&nbsp;COVID-induced downturn on migration and rental returns, are now starting to creep back in to the market.

Now more than ever, the highest priorities for investors are to buy in an area which has planned local infrastructure, solid&nbsp;population growth forecasts, and strong transport links.

One of Sydney&#39;s fastest growing suburbs is Castle Hill&nbsp;in Sydney&#39;s Hills District,&nbsp;north-west of the city. The area&nbsp;is undergoing a huge transformation, with the redevelopment of the Castle Towers Shopping Centre, and the new&nbsp;Metro Station connecting residents to the CBD in just&nbsp;40 minutes by train.

[smartcode_project:default project_id=94147 project_image_fid=152850]

Population forecasts are also solid, with experts forecasting a 20 per cent rise in population in the next 15 years.

McGrath Projects Associate Director&nbsp;Adam Sparkes says he&#39;s seeing investors start to get back in to the market, with a number of investors interested in the potential returns&nbsp;at&nbsp;Grand Reve, the Castle Hill apartment development from builder developer Kassis Homes.

&quot;Many are seeing long-term growth in the area, with the Castle Towers redevelopment the obvious drawcard,&quot; Sparkes says, also suggesting that there are more shrewd&nbsp;buyers in the market than ever before.&nbsp;

[smartcode_project:default project_id=94147 project_image_fid=152854]

&quot;First home buyers are getting savvier, and are intending to live in the new apartment on completion, with a view of making it an investment in the years after when they&#39;ve moved on,&quot; Sparkes notes.

&quot;Local downsizers are also buying with a view that, upon completion in Q4 2023, they will likely lease the apartment while they put the wheels in motion to sell their family home, and downsize in to the apartment eventually.&quot;

One of the biggest drawcards of Grand Reve is its location, in the heart of Castle Hill. Sparkes says there&#39;s considerable interest given the location, close enough to benefit&nbsp;from the infrastructure of the $1 billion redevelopment of the Showground Precinct, but far enough away from where dozens of apartment projects are under construction and in the pipeline.

[smartcode_project:default project_id=94147 project_image_fid=152852]

Sparkes advises some of the larger, more owner-occupier friendly apartments in Grand Reve will likely yield around 3.5 per cent on completion,&nbsp;but the more investor friendly one and two-bedroom product should reach a yield of around 4.5 per cent, well above The Hills District average of 3.4 per cent that SQM Research calculate.

The savviest of investors have been buying through their self-managed super funds, with one purchaser, a local couple, spending over $850,000 on a two-bedroom apartment in their SMSF.

There&#39;s also the depreciation benefit&nbsp;of a brand new asset&nbsp;for investors, who can claim yearly depreciation of the investment, an option not available to those investors seeking an already built apartment.

[smartcode_project:default project_id=94147 project_image_fid=152848]

Castle Hill&nbsp;has a median apartment price of $969,000, up 7.4&nbsp;per cent in the last 12 months, according to CoreLogic data.&nbsp;The gap between the median house and median&nbsp;apartment price in Castle Hill is&nbsp;$1.32 million, with the&nbsp;Castle Hill median house value at $2.292 million in February.

In August last year, McGrath Founder John McGrath noted the growing shift of those seeking out apartments over houses due to affordability, and that gap has only grown since then.

&quot;We&rsquo;re now meeting young people at opens who tell us they&rsquo;ve given up on a house and have switched their search to townhouses and apartments,&quot; McGrath said.

[smartcode_project_cta: project_id=94147]

Now more than ever, the highest priorities for investors are to buy in an area which has planned local infrastructure, solid population growth forecasts, and strong transport links.

Joel Robinson

Will investors and outpriced prospective house buyers drive the apartment market in 2022?

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Miles Residences is one of the Gold Coast’s most sought-after residential beachfront projects in the pipeline.

The development of 118 apartments is part of the redevelopment of the Kirra Beach Hotel. The brains behind the operation is the family-ran KTQ Group, led by Peggy Flannery, who are behind the award-winning Elements of Byron Bay.

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They've already seen unprecedented levels of success in the $180 million Development with over 80 per cent of apartments sold in just under 3 months since launching.

There has been a strong uptake from local investors, with around 52 per cent coming from Queensland and 37 of those are lifestyle investors.

<a href="https://www.urban.com.au/new-apartments/miles-residences-kirra-point-corner-miles-street-and-marine-paradise-kirra"><img alt="" height="1628" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/kirra_beach_hotel_new_1.jpg" width="1800"></a>

KTQ Group Development Director Jeremy Holmes says the high level of Queensland buyers is mainly due to the local market acting quickly to choose their ideal apartment.

"They have been waiting 10 years for this project and didn’t want to miss out on the uninterrupted view lines.” 

<h2>What investors need to know</h2>

Infrastructure

Despite the market booming from COVID-19, there are hopes the Gold Coast apartment market will continue to grow due to the strong infrastructure pipeline.

Some $2.3 billion has been allocated to upgrade the G-Link Light Rail which currently runs as far south to Broadbeach.

The next stage will see the south terminus become Burleigh Heads, then, as part of the Gold Coast City Transport Strategy 2031, it will head as far as the airport at Coolangatta, less than a few kilometres from Miles Residences.

<a href="https://www.urban.com.au/new-apartments/miles-residences-kirra-point-corner-miles-street-and-marine-paradise-kirra"><img alt="" height="800" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/kirra_miles_residences_living_area__0.jpg" width="1200"></a>

The airport is undergoing a $370 million redevelopment, and work has begun on the $673 million upgrade of the nearby Tweed Hospital.

North of Miles Residences toward Broadbeach there's The Star Gold Coast's $2 billion master plan which allows up to seven towers to be built, one of which, a $63 million tower, is reported to be homing a Marriott Brand W Hotel.

Apartments are in high demand

The two most popular destinations for interstate migration are the Sunshine Coast and the Gold Coast, the REIQ note. Some 7000 migrants moved to Queensland in the December quarter.

Surfers Paradise, which recorded more than 2,100 vacant rentals at the peak of the pandemic nine months ago, currently has 0.7% stock availability.

<a href="https://www.urban.com.au/new-apartments/miles-residences-kirra-point-corner-miles-street-and-marine-paradise-kirra"><img alt="" height="896" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/miles_kirra_views_0.jpg" width="1200"></a>

Record low vacancies have been reported across the entire Gold Coast, particularly in the south where there's a 0.3 per cent median vacancy.

“What we’re seeing is an unprecedented level of diminishing rental availability that’s placing significant pressure on our State’s housing sector – so much so that it’s unsustainable and why urgent action is required to better support both increased and ongoing property investor activity in the Queensland property market and the contributions they make to the state economy,” REIQ president Antonia Mercorella said.

For the last details and to check availability connect with the team at Keenan &amp; Co via <a href="https://www.urban.com.au/new-apartments/miles-residences-kirra-point-corner-miles-street-and-marine-paradise-kirra">Miles Residences</a>.

 
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There has been a strong uptake from local investors, with around 52 per cent coming from Queensland and 37 of those are lifestyle investors.

Miles Residences investors safe and sound with local infrastructure boom and sea-changer trend

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The low-growth environment will likely make investors focus on placemaking and present them with the potential to invest in new sectors and locations, according to CBRE’s outlook on the trends shaping the Australian property market.
This was the over-arching theme of the commercial real estate firm’s annual Melbourne Market Outlook presentation recently, which also highlighted the strong performance of Australia’s south-east property markets – in particular, Melbourne and Sydney.
Both cities have stood out from an APAC perspective given their outlook for low office vacancy rates and office rental growth averaging 7 percent over the next three years, said CBRE’s head of Research, Australia, Stephen McNabb.
However, in an environment of relatively limited overall growth, McNabb said investors needed to seek out opportunities to optimise their portfolios, taking into account factors such as the current focus on space efficiency and workplace flexibility.
CBRE’s Asia Pacific head of Research, Dr Henry Chin, said this was driving a heightened interest in trends such as placemaking, as owners sought to unlock property value through asset repositioning.
“Landlords should be striving to create a community of tenants instead of simply providing office space,” Dr Chin said.
“You have to create communities to keep tenants in your building and that’s why we talk about placemaking.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/03/14/CBREinside.jpg" alt=""> 
McNabb referenced CBRE’s recent Millennials survey, which highlighted the heightened focus of millennials on areas such as greenspace and wellness in the workplace.
“Decision makers need to start looking more at employee data to drive their decisions as customer expectations are changing,” McNabb said.
The presentation also highlighted a growing trend for investors to seek out opportunities in newer sectors and markets.
“From a cyclical perspective, Australia’s south east markets are the stand out in terms of forecast income growth,” McNabb said.
“However, we expect to see more domestic investors looking offshore and at opportunities to alternative assets such as health &amp; aged care, infrastructure and even institutional investment in residential,” McNabb said.
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