Inner Melb period style apartments - showing good value?

Whilst the Melbourne market 'as a whole' is coming off the boil, two different property investment companies believe that the Inner Melbourne period style apartment market is showing value.

I'm talking the 50's - 60's - 70's house sized apartments in your prime inner areas - Armadale, Prahran, Toorak, Malvern, etc. Small number of units in the block, high land % value, quiet leafy streets, parking on title, good floor plan & natural light, etc etc. 'Investment grade' some might say - you'd pay around $800 - 850k for a good 2 bedder example (with parking).

I did some maths on about 5 good examples and found that whilst they had a 30-40+ year history of around 7.5% capital growth, the last 10 years has been woeful. I happened to own one myself, and it only grew around 3.5% pa for the last 10 years. @The Y-man 's one in Prahran has been flat for 5 years or so as well as an example.

Houses during this last 10 years have rocketed ahead, above historical 'house:unit ratio' no doubt (per my guestimation at this stage!.

Do we think this apartment market is showing value?

Or, was it over-cooked to start with and it'll remain flat just like the rest of the Inner Melb for the short-medium term?

The yields on these things still suck at around 3% but some say these have been surpressed by the towers in South Yarra near the station - even though it's a different product from a OO's view it's somewhat comparable competition on the rental market.

 

A recent article in Domain states that new apartments are going to have difficulties in selling.

Melbourne apartments face resale issues as experts report saturation of stock

 

It's an interesting question - how do these tower apartments compare and effect prices of the prices of the much more livable period style ones?

I for one think the period style ones are far better, but when you're talking $800-$850 for one and you can get one of the nicer tower 2 bedder for $600k it's hard to know.

 

It seems that the unsold Abbotsford apartment mentioned in the article linked above, sold for $568,000 in the end. Quoted price was $550,000 - $580,000.

The plan shows two bathrooms in a tiny flat, with no room for a proper table and a tiny living room. The second ‘bedroom’ had no external windows just an obscured glass wall facing into the kitchen area.

Sold 302/88 Trenerry Crescent, Abbotsford VIC 3067 on 18 May 2018 - 2014243040 | Domain

 

Vested interests.. poor stats

 

Possibly.

One is a BA (Performance Property Australia) who buys all over Australia. On one hand if you were to walk in the door and ask them to buy you the property with the most potential in this price range I'm sure they'd guide you towards QLD or SA, maybe even WA, but on the other a sale is a sale.

The other is a mortgage broker / financial planner (ProSolution) who has a close relationship with the Wakelins (BA specialising in buying these types of properties).

 

I used Performance in Oct last year they purchased in Hamlyn Heights Geelong for me and it has had really great growth already,, a friend of mine used them to Purchase in Adelaide and Brisbane and he has done well there also. I found them to be trustworthy. It also mirrors the view from Empower Whealth who seem to be happy to buy established large sized apartments in Melbourne.