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Which developers tend to overvalue OTP apartments in Melbourne inner city?

Discussion in 'Property Experts' started by Chloe Danza, 4th Dec, 2016.

  1. The Y-man

    The Y-man Moderator Staff Member

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    Location:
    Melbourne
    I am not against OTP if the primary reason for buying is personal - i.e. it's for a ppor.

    @Chloe Danza as per above posts - be aware OC costs can be big
    Also, an HO can be a double edged sword, as it can add to maintenance costs (where facades etc have to be maintained in certain colours, etc)

    I prefer units built (not necessarily developed) by big names. For example, Multiplex were particularly good at fixing up various faults and issues we found with the apartment after we got the keys in the month after completion.

    For a developer to make any money, they really need to be charging 30% above the land + building price as a general rule (there are many other costs for marketing, agencies, etc).

    The Y-man
     
  2. Big Will

    Big Will Well-Known Member

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    Melbourne, Australia
    Things that hold their value the best is things that are the rarest or limited supply.

    Land > House & Land > Townhouse > Unit

    Simply because the % of land in the property price which is the increasing part of property could be;

    100% (Land)
    10-90% (H&L)
    10-50% (Townhouse)
    1-20% (Unit)

    The numbers are vice versa for building which is the depreciating part.

    e.g.
    Land 0%
    H&L - 90-10%
    Townhouse - 50-90%
    Unit - 80-99%

    You cant build more land (you have to move further away to get more land) but you can always build more units (as you can build up).

    Since Clifton Hills there is very little vacant land anywhere nearby this is the appreciating part and since there is little supply but a lot of demand it will increase quite quickly. However land in Doreen doesn't appreciate as much as there isn't as much demand but also there is a lot of supply (including undeveloped land).
     
  3. MTR

    MTR Well-Known Member Premium Member

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    Location:
    Perth, Melbourne, USA

    not necessarily so when it comes to smaller blocks of units/townhouses vs houses

    I would not compare these 2 products It's dependent on demand at the time.

    If people can not afford houses you may get higher growth for units. This is what happened in boom cycle in Melb 2008/9, inner city units, (not apartments) soared and outperformed houses in same areas. I put down down to affordability and demand in desirable pockets.

    It's common belief that houses and land will always outperform units/townhouses, not so
     
  4. Big Will

    Big Will Well-Known Member

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    Location:
    Melbourne, Australia
    The rarer something is the more valuable it is