Home' API Magazine : September 2014 Contents 58
API SEPTEMBER 2014
SEPTEMBER 2014 API
¿ SUBIACO, WESTERN AUSTRALIA
$530,000 TO $560,000
Subiaco is positioned three
kilometres west of the Perth city
centre. The suburb is well catered for
with schools, a hospital and transport
options. Its location makes for a
convenient, well-established locality.
The chosen listing provides a two-bedroom, one-bathroom
apartment in a three-storey walk-up complex circa 1980. It
offers good size accommodation with basic fit out. The property
is listed for sale between $530,000 and $560,000, but no rental
estimate has been supplied.
¿ WHAT WOULD BE THE APPROXIMATE RENTAL RETURN
BL: In the current market the property is likely to achieve
between $420 per week and $450 per week. The rental market
in Perth has softened in recent months, with similar two-
bedroom units in Subiaco, which were asking around $500 per
week earlier this year, now advertised in the low to mid $400s
RC: An 80-square-metre, two-bedroom, one-bathroom unit
in the same complex is rented at $550 per week. Another
80-square-metre unit in the complex is currently for rent and
although the initial asking price was $510 per week six weeks
ago, it’s now dropped to $425 per week. In a softer Perth rental
market, the approx. rent per week for this unit is $430 to $470.
¿ WHAT ARE ITS PROS AS AN INVESTMENT PROPERTY?
BL: Overall, Subiaco has good rental appeal – close to half of all
dwellings in Subiaco are currently rented, well above the Perth
metro area average of 28 per cent. The property is located within
close proximity to Perth city, offers easy access to transport links
and amenities and is only a short walk to cafes, restaurants,
shopping and entertainment. It’s also low maintenance in a
medium density group of only 15 units.
RC: Location is the best aspect of this property. Subiaco is a
well established and highly sought after location. Considered
one of Perth’s trendiest suburbs, it has many high-value
houses. This property offers an affordable entry point into the
‘Subi’ lifestyle. The seller purchased this property over two
decades ago, which means they’ve made their money, and may
be more negotiable than a seller who paid close to the asking
price a few years ago.
¿ WHAT ARE ITS CONS AS AN INVESTMENT PROPERTY?
BL: While the property appears to be neat and tidy inside, the
fixtures and fittings are a little dated and likely to require some
renovations within the next few years in order to compete with
an increasing supply of newer, more modern rental apartments
in Subiaco and surrounding suburbs. It’s also located on a busy
road relatively close to the commercial part of Subiaco, which
coupled with the age of the building, is likely to limit its capital
RC: This complex has 15 units in the group sharing a total land
area of almost 1500 square metres, giving each unit a small-
imputed land component. If land is what goes up in value,
this investment has a lower land value compared to other
investments you could buy for the same amount of money.
Furthermore, it has quarterly strata fees of over $600, which
erodes the rent return on this investment. Too many investors
also forget to check who the neighbours are, and I can see
that this block is opposite a group of flats owned by a charity
organisation which takes on tenants who may not be able to
afford regular rents. It may pose no problems whatsoever, but
one bad apple can impact a neighbourhood, so door knocking
would be recommended to get feedback from the locals about
any potential trouble.
¿ WHAT ADDITIONAL QUESTIONS WOULD YOU ASK
BL: Whenever considering a strata complex it’s important to
have a good understanding of the financial position of the body
corporate. Given the age of the building (built in the 1970s),
I’d be asking what the strata fees are comprised of, whether
there’s a sinking fund for replacement of common items, a copy
of the last minutes of the strata company and whether there are
any outstanding issues or monies to be paid. I ’d also be asking
whether the courtyard forms part of the strata plan and is for the
exclusive use of this unit.
RC: I’d try to find out more about the seller’s motivation for
selling – if they ‘need’ to sell, they may be more negotiable on
price. A subtle way to ask this may be, ‘This looks like a good
little investment, why don’t they keep it?’
¿ HOW HAS THE MARKET BEEN PERFORMING IN THIS
SUBURB AND FOR THIS PROPERTY TYPE?
BL: Overall, the property market in Subiaco has delivered steady
long-term growth for investors. For the past 10 years, however,
growth rates in the multi-residential/unit market in Subiaco have
been weaker than the average for the overall Perth metro area.
RC: The Subiaco apartment market has been relatively flat. The
Real Estate Institute of WA quotes a one-year growth rate of 0.8
per cent and a five-year average growth rate of three per cent
per annum for multi-residential sales in Subiaco.
¿ WHAT IS THE MARKET OUTLOOK IN THIS SUBURB AND
FOR THIS PROPERTY TYPE?
BL: Given Subiaco’s proximity to the city, transport and
amenities, the suburb should continue to deliver steady long-
term growth. Above average growth rates are unlikely without
any significant upgrades to infrastructure and amenities in the
area. An expected oversupply of modern, new apartments within
close proximity to Perth city in the next couple of years is likely
to impact on rental yields and capital growth for this older style
apartment complex. Other factors which are likely to impact on
the suburb’s growth potential are the relocation of the AFL from
Patersons Stadium (Subiaco) to Perth Stadium (Burswood) in
2018 and a retail strip which has struggled in recent years, faced
with increased competition from places like Claremont Quarter.
RC: Subiaco will continue to grow, being so central, convenient
and trendy. However, it’s a suburb that’s already gentrified
and has ‘had a good run’. You’re not getting much bang for
your buck compared to other suburbs in Perth. Apartments in
Subiaco offer an affordable entry point into the suburb for owner-
occupiers, but as an investment, Subiaco apartments don’t offer
outstanding growth. There are quite a few apartments available
OPEN FOR INSPECTION //
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