VIC Docklands Investment

I was told these place is HIGH DENSITY and HIGH RISK investment, what are your thoughts guys?

 

I don't think it's high risk. If my experience is anything to go by, you can safely reckon that in ten years your Docklands 'investment' will be worth much what you paid for it and no more. Much as I'd like to be able to do so, I can't think of any good reasons to invest here unless you're going to chance your arm on AirBnB.

 

Old Docklands thread

Pretty much sums things up.

 

thanks mate, i am thinking of pulling out and lost my 40k, its a lost and lost situation, i think too many apartments there...

 

So why did you put down a deposit in the first place?

 

There is a lot of negativity about Docklands from Melburnians, and of course the sales evidence over the last ten years or so show that many resellers have encountered a loss (it looks like most of the off-the-plan sales at the time were totally overpriced).

Having said that, I recently moved to Melbourne to start a new job. Initially, people warned us off Docklands, so we looked everywhere else St Kilda Rd, South Yarra, Prahran, Richmond, North Melbourne, Fitzroy, South Melbourne etc and really couldn't find anywhere that hit the spot for us, so we relented and looked in Docklands - what a complete surprise, it was much better than what people said. I guess because we've lived in places like Singapore and KL before, had kind of a view of what feeling we were looking for. So now having been here for 4 months, we really like it. So what have been the positives and negatives.

Positives:
- A wide selection of apartments that are "newish" (i.e. up to 10 years old or so) with facilities.
- Free Tram Zone - one cannot knock the benefit of being in the free tram zone, it is so convenient to getting into the CBD and other places. It is worth it just for that.
- The rents are no better or worse than other places, in fact considering we got a storage cage, 2 parking spots etc, considered the rent to be very reasonable.
- Quite convenient, have a Woolworths nearby, Asian supermarkets, and a small selection of cafes / restaurants.
- Generally, quiet i.e. not a lot of through traffic. In fact I am enjoying the serenity and being able to walk around the harbour foreshore on the weekend mornings.
- Also feels kind of safe (the CBD of Melbourne itself can feel a bit unsafe at night).
- Able to see fire-works close at hand.


Negatives:
- It's very windy here, very very windy. Need to have a good coat!
- Does have party noise that reverberates from the harbour mainly Friday / Saturday nights when the cafes, restaurants, bars and boats are partying.
- Depending on the angle of the apartment, the low afternoon sun really cuts through quite strongly (although might be good for winter).
- Does seem to have a lot of Airbnb people, so if you are living in apartment there could be a lot of people in out out from Airbnb and they maybe using the facilities for residents, so it is kind of a trust thing, if you accidentally leave your glasses behind near the pool with residents, likely to get it back, but for Airbnb, who knows!

Recent observations are that prices in Docklands are currently at a low point, the population is increasing (has increased by 10% last year), it does seem that most people who live in the area are from other places, and the facilities are improving - saw a sign about building a school in the area.

So what's the prognosis for the future. Well, I think it's kind of positive, there are lots of people moving to Melbourne every week, they've come from other places, they don't necessary like the shabbiness (albeit "shabby chic") of some of the other suburbs (I'm a bit shocked of all the graffiti here - way more than Brisbane or Sydney), they like new / clean / modern living, and especially they like the convenience of being close to the CBD in the free tram zone.

I can't vouch whether your specific investment will be good or bad, but would really hate to see you lose your $40K deposit based on comments. If the deal can stack up for you financially in terms of holding costs say over the next 10 years, then possibly it will be OK.

There is still some developments going on but the land availability is getting less and less by the day. From the experience I've had so far in Docklands, actually think it is OK and should be a different place in 10 years time. At the moment, very much enjoy living here, and it's so convenient!

 

We’ve stayed there in weekends when visiting and liked it

I wish there was somewhere that close to the centre of Sydney with the facilities it has at the same price point , but no way . It seems crazy to be able to pick up units that close to the centre of a major city at that price

My perception is it’s a perception thing , but ....

Cliff

 

= yeah that was stupid of me...the consultant said "would you like to invest worth like 400k in the same place like darling harbour, docklands is darling harbour of melbourne, " caught me there,

 

Last 10 years, good rental yields and less or no equity.

But who knows, what is held in future. I would not buy such an asset personally.

Regards

 

well said, lots of apartments, I think its too much for the local residents, makes me wonder probably most of the apartments owned by foreigner (chinese), these affects the value of the property but now is low value and create a negative result on rents, The foreigner does not care about renting their apartment, they prefer no one will rent in their apartment. And in 10 years time you will never know, i think that is the risk of investment.
lost 40k now and lost more money later on, or keep the apartment and hoping for the best later on...still uncertain,,,

 

googled rental value in docklands most of them from 1 bedroom and 1 bathroom works around $400 a week, maybe good rents but no value to invest...

 

If you work in the city and want to live nearby, then docklands would provide a great lifestyle for a younger couple (I am assuming, having been there a handful of times)
As an investment however, the sums do not add up, you are better off almost anywhere else.

As a starting point, do not invest in any apartments in the next 3-4 years around Melbourne, there are many reported issues and perceived problems with the industry that will hold down apartment prices for a while.
Once you become well researched in the Melbourne property markets then you can possibly look at below value apartments but very risky at the moment for those that don't do their own due diligence.

 

Can I ask then as a first time investor: I am looking at a Docklands apartment 2bd 1bth 1cp 1 storage for $510K, the rent is $670pw, are you saying it is not a good investment because the apartment value will not increase much over time even though the rental income is pretty good.

 

Rental seems high...I'd have thought $500 to $550 p/w would be closer to the mark?

 

I have the rental agreement from the estate agent surely they can't doctor that?

 

Lots of info on here.
Old small apartment blocks vs high rise
Docklands has a few threads
Cash flow vs Capital gain

Buying and selling property is expensive, you might also need to pay tax on profit at sale.
Good cash flow lets you hold an investment property but without some capital gain overall profit would be very low.

CF and CG get used often on here so search those terms as well as cash flow and capital gain

 

Think about it this way. If the return is so good then WHY the seller is selling?

 

Be wary. A lot of Docklands apartments are used by Airbnb. I have a friend who purchased in Docklands, from the USA.

He thought he was going to rent out his 3 bedroom apartment to a family of professionals. Property manager ended up finding a tenant who caused him a world of problems. The tenant was actually a young woman from South America who promptly posted his apartment on Airbnb - and it was listed at a price that would make her a tidy profit! My friend had to fly down from the USA to take this lady to VCAT to get her to move out of the property. Property manager turned out to be useless and this tenant tried every tactic to stall leaving the property. It was a real headache for him.

Even if your tenant doesn't put the property on Airbnb, they are likely to be disturbed by neighbours that do this. I understand this isn't an issue for only apartments in the Docklands - you can have this issue in other suburbs.

Also worth mentioning that the storage cages in these buildings often have terrible locks, and are targets for thieves. You might find you need to upgrade the lock so that it is at an acceptable standard. Oh, do make sure your building doesn't have that awful flammable cladding. There are a few buildings in the Docklands that have this issue.