I have never been a fan of apartments as a successful investment vehicle to recommend to my clients. They generally lack scarcity features to make them a sound investment.
They are a bit like a large bunch of bananas where one looks no different to another.
However, times are changing and more and more Australians now call medium and high density living home.
Apartment size has been manipulated over time to be more focused on providing a suitable “investment option” than a home.
85% of the apartments in the city of Melbourne have been sold to investors, and may of these are pre-sold in Asia. The appealing price point of $450,000 to sub $500,000 has been maintained despite increases in construction costs by reducing the size of the apartments. Recent APRA (Australian Prudential Regulatory Authority) changes have significantly altered this trend.
It is pleasing to see a movement to imposing required minimum sizes of proposed apartments.
NSW introduced minimum apartment sizes in 2002 as part of SEPP 65 (State Environmental Planning Policy No. 65) design rules, and these have long been the envy of planners and designers in Victoria.
The new minimum, increases the required size from 50 to 58 sq m for dual-aspect apartments and up to 73.4 sq m for the more common single-aspect apartments.
The judgement made it easier for councils to reject development applications according to a spokesperson from consultancy Urbis.
Even if it’s a good design and a good urban design, if it has internal areas that are below that in the table, they can refuse the application on that ground alone.
In Singapore 82% of Singaporeans live in Housing Development Board (HDB) flats. The HDB has the following minimum space requirements-
- 1 bed apartment 45 sq m
- 2 bed apartment 60-65 sq m
- 3 bed apartment 90 sq m
New York has a minimum apartment size of 37 sq m. However there is also a large amount of family sized accommodation available in the city.
It is easy to see how Asian investors may view a 50 sq m one bed apartment as a good size however Australia cities do not have the same overcrowding issues as many Asian cities and it is questionable if living in “shoe boxes” is sustainable in this country.
I recommend if you are looking to purchase an apartment as an investment you consider those that offer a point of difference. It is often preferable to be in a smaller, low rise boutique development with minimal body corporate fees.
If the development is larger, having ample lifts to service the complex and suitable storage are desirable features. To maximise your investment outcome, you want your apartment to appeal particularly to owner occupiers. Be aware of the features that will provide for a comfortable long term home. Consider storage, ventilation, light, the aspect and street noise.
Medium and high density living are becoming more the Australian norm as we move away from the quarter acre block lifestyle. Apartment living is clearly the way of the future for many. Pay attention to the inclusions that take an apartment from where you “stay” to where you enjoy “living”. This will ensure a better investment return.