Home' API Magazine : December 2014 Contents 76 n APIMAGAZINE.COM.AU n DECEMBER 2014
RW: This property could suit someone who regularly comes to
Perth and needs a beach pad that’s fully furnished and doubles
as an investment on the short-term rental market. It could also
suit a ‘lock up and leave’ buyer or someone who is looking
to downsize. The main growth driver will be the beachfront
location. There’s limited and small parcels of land available for
development on the beachfront and this apartment overlooks
one of Perth’s best surfing beaches. Restaurants, coffee shops,
hotels and retail surround the apartment too.
nWHAT ARE ITS CONS AS AN INVESTMENT PROPERTY?
LS: Due to the apartment’s proximity to the ocean,
maintenance costs may be high as a result of wind and
salt damage. There is little to no land value in such a large
complex, placing more importance on achieving a strong
rental yield over capital growth. Without a strong land
component, capital growth of the apartment relies on scarcity
value and attraction of the location and amenities. There may
also be some risk of attracting only short-term tenants on a
RW: For an investor attracted to high yields, this has the
potential for short-term accommodation, but such rentals
attract higher management/service fees and strata fees. Short-
term rental income isn’t consistent each month, which can be
concerning for investors that need consistency in rental return
to meet mortgage repayments, etc. Investors should ask local
short-term holiday agencies about likely vacancy rates and
servicing costs to assist with their decision on rental options.
Short-term accommodation offered within the complex can be
a negative to owner-occupiers. As a result, the property is only
going to appeal to certain sections of the market and finding
the right buyer can take time when reselling.
nHOW HAS THE MARKET BEEN PERFORMING IN THIS
SUBURB AND FOR THIS PROPERTY TYPE?
LS: Scarborough has historically achieved slightly higher
growth in apartment and unit sales than the combined Perth
metropolitan area. This growth appears to have accelerated
beyond the rate of Perth’s growth considerably in the last
financial year, with a reported 18.7 per cent growth to Perth’s
4.5 per cent, according to the REIWA. This may be in part due
to the Metropolitan Redevelopment Authority’s Scarborough
Redevelopment Area, which is revitalising the beachfront area
as the state government invests in improvements to the public
facilities and encourages new growth in the community.
RW: The flat/unit/apartment segment makes up a third of the
properties in Scarborough. The 12 months to June 2014 shows
a big spike in unit prices of 19 per cent, with the median now
sitting at $529,500. Although there’s more supply coming and
this complex is becoming dated, it’s all about the location. This
one is in a prime location and offers good value in comparison
to the ‘new kids on the block’.
nWHAT IS THE MARKET OUTLOOK IN THIS SUBURB
AND FOR THIS PROPERTY TYPE?
LS: The suburb has great potential for growth, however high
growth in an apartment isn’t always guaranteed, so this needs
to be taken into consideration.
RW: Scarborough offers some of the most affordable coastal
property investments in the metro coast between Hillarys and
Fremantle. The local council and state government have made
a financial pledge to the urban renewal of the Scarborough
beachfront, too. In recent times, some key franchises have
moved into the prime commercial spaces. There are several
new apartment complexes in various stages of construction,
which are attractive to buyers like downsizers wanting a ‘lock
and leave’ but wishing to remain in the suburb. This all bodes
well for the local market.
nWHAT SORT OF INVESTOR WOULD THIS PROPERTY
LS: An investor looking for a good location with a reasonable
rental return, or who would like to increase their rental
return by leasing it furnished and is prepared for the
RW: I believe this is more likely to suit a buyer looking for
lifestyle as opposed to investment.
nAT ITS PRICE POINT/RANGE, WOULD YOU LOOK TO
TALK TO THE AGENT OR WALK AWAY?
LS: We’d recommend talking to the agent. The asking price
is just four per cent higher than the last similar sale in the
complex a year ago. However, according to RP Data, the
property has been on the market for approximately five times
the average number of selling days for units in Scarborough
(REIWA statistic). Is this a result of the seller asking for too
high a price, or is there something else about the property
holding buyers back? And as the property has been advertised
for an extended period of time, is there room to negotiate a
RW: Yes I’d talk to the agent. I’d see value in this property
in the low $600,000s. New apartments in close proximity
are selling significantly higher and there are only limited
beachfront opportunities in Scarborough. API
“Due to the apartment’s proximity to the ocean,
maintenance costs may be high as a result of wind
and salt damage.”
Here’s an update of properties previously analysed in Open for Inspection
Walk Under contract Unconfirmed
Dulwich Hill NSW Talk
OPEN FOR INSPECTION n Stuart Park, NT and Scarborough, WA
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