NSW Sydney prices still falling...

I went heavy into unlisted property trusts starting 3.5 years ago now. Kept accumulating up till about 12 months ago. Averaged from a worst case being 7% p.a return to a few returning over 20% each year over the last 3 years. As an average I get 7.5% p.a distributions plus capital growth. And approximately 50% of all distributions have been tax deferred.
After the last few years experience with property trusts I personally would never touch a residential investment property again.

 

wow

 

Nice work... 20% returns with no pesky calls from RE Agent nor increase in land taxes too

Are you still holding or divesting?

 

Yes commercial is a different cup of tea. Someone I know mentioned that during GFC his $50M commercial portfolio would be untouched until GFC hit so hard that he was asked by the top bank managers to pay down debt of around $12M, but guess what happended to his residential portfolio.....no margin call there...he was not asked to pay any debt!
So no one has a crystal ball into the future but in itself the finance industry perceives commercial much riskier than residential, even if you look at their lending criteria which is much more favourable and differs to residential!
I always think people need to live somewhere, have a roof over their head, so if 65% OO and 35% Investors so even if ALL investors sold out the whole market would not crash forever...?

 

Thank you Sir. I’m a buy and hold guy. In saying that with unlisted property the decision is made for you. While some unlisted property trusts have some liquidity options, most must be held for a minimum 5-7 years before the option of exiting is available.

20% returns are going to be hard to achieve from this point on I think. Commercial has had a strong run the last few years. Office property has been hot and now everyone is talking about industrial being the next strong performer.

 

There will always be a place for commercial property but I do agree with your post to a large extent. It will be interesting to see how major companies like Westfield fare with deteriorating retail conditions. It's hard for small businesses to pay CPI + 3% rents when their businesses are stagnant. A lot of the fast food outlets have already deserted shopping centres.

 

Indeed. Retail sales are struggling, the long term challenge will come from technology and globalisation... Australia has always been a laggard in terms of online sales to the US and UK, but is still growing 20% YoY.

This won’t be good for the traditional retail shop

 

Most new commercial centres are becoming services focused, hairdressers etc as people are buying less things... I can’t remember the last time I used a shopping trolley

 

Westfield has done very successfully in dozen of centre they owned, they called them living centre, add in service, entertainment and dining, they replicating this model across their portfolio where they can.

Their latest one was Woden Canberra add in restaurants, pubs, coffee shop surrounding their mall and draw in massive crowd well after the mall close.

 

54% preliminary clearance rate in Sydney today.

~43% with full results.... hmm that post election bump really didn’t last long...

 

Most of the places in my area (inner West) are selling for huge amounts!

 

This sold today for $2.39m
21 Wilson Street, Newtown NSW 2042 - House For Sale | Domain

This sold days before the election for $1.65m.....which will prove to be an absolute bargain in years to come (provided the Westconnex doesn't traverse within 50/100m of it)
130 Darley Street, Newtown, NSW 2042

@Shane Oliver You see what you want to see

 

The Wilson Street agent told me a few weeks back that feedback was around the $1.65m - 1.7m mark with the vendor's expectations (NSW trustee) at around 1.9m.

For Darley Street: nice land but narrow street making it almost impossible to get into the driveway. The side driveway also wasted a lot of space compared to Wilson Street with the rear lane access

Whilst the Wilson Street location is superior being closer to the action/transport and a nice pocket of Newtown, where it was located on Wilson street isn't ideal and is a thorough fare.. that being said I think a few hundred K premium over Darley was fair so up to around the 1.9 would have been what I was expecting!

 

They could widen the entry to the driveway perhaps by a metre or two STCA. Still see my point though.

Wilson St would have (def) sold for < $2m - $2m if we were talking merely a month ago.

And horses for courses but I hate RLA..now those things are narrow.

 

Yeah potentially. I wonder whether the council would consider that, given it effectively removes a parking spot from the road.

I am also not sure if the westconnex off (or on?) ramp would potentially impact Darley Street since it's close to the top of the street where Edgeware road meets unwind bridge road.

 

But there's been some big sale prices over the last week or two which have certainly surprised me!

 

Yeah that's what people were probably thinking. Should I roll the dice with the Westconnex map as it stands?

I know those two spots are perceived differently but a $750K gap between the two....that's waaay too large.

I own a crappy (and I mean crappy) semi detached house in Newtown on a double fronted block (with front side park). Wonder what it's worth. A few months ago, I reckon $1.1 - $1.2m max was a reality. Now, may be more. Location is Ersko/Newtown border behind NHSPA.

 

I definitely agree, like I said I think a could of hundred K but 750k is huge! lol

What's your land size of your don't mind me asking?

 

I also own a place in a similar spot by the sounds of it... single fronted semi RLA parking, but also bought something a bit larger (not 300-400sqm large though unfortunately) on the Camperdown park side

 

Data don’t lie... 750K discounts are good.. emotional purchasers who have faith in Scomo, hmmm