Does an apartment make a good investment?

The pipeline of new apartments is thin

Lots of new houses are popping up everywhere, but it’s a different story for apartments. Since 2015, there have been about 26,040 apartments built every year in Australia’s big cities, but in the next three years, it looks like that number is going to drop by 39%. That means fewer apartments will be built compared to before. This drop is happening mostly in the biggest cities like Sydney, Melbourne, and Brisbane.

However, there’s some good news! In Perth and the Gold Coast, they’re actually going against this trend and still building more apartments.

Are apartments a good investment?

Some investors remain sceptical about the value of investing in apartments as a long-term option, seeing apartments as a “riskier” choice compared to houses.

However, what this viewpoint fails to consider is that apartments can offer a higher rental yield compared to houses.

Additionally, with population growth and housing demand continuing to increase in major cities, apartment values are expected to continue rising as well.

Some investors also highlight the fact that with apartments, strata fees and other associated costs can significantly cut into the rental income, a cost that is generally not associated with standalone houses.

However, these costs can often be offset by the higher rental income and potential tax deductions available for apartment investors.

What are the advantages of investing in an apartment?

In the past, investing in apartments wasn’t the norm. Many believed that real money in real estate came from owning land. The fast expansion of Australia’s capital cities has changed this perception, as land near city centres becomes more scarce and expensive.  Apartments have now become a more attractive and profitable investment option.

Affordability

Apartments are typically more affordable to purchase compared to houses, making them a popular choice for tenants looking for more affordable housing options. This high demand often leads to lower vacancy rates and higher rental yields.

Longevity

With more people opting for apartment living, you’re likely to have a pool of potential tenants. This means reliable rental income and a steady return on your investment.

Property Management

With apartment investing you will likely benefit from shared building repair costs, insurance and the potential to have less of a hands-on investment.

Broad buyer potential

When it comes to selling your apartment investment property, you will likely find you have a wide range of interested buyers. From first time buyers to downsizers as well as other investors. Having higher interest and competition in your property will likely result in a higher selling price.

Performance

Typically, higher rental yields, and capital growth strengthening with increasing demand.

Growth Drivers

Proximity to CBD, employment, transport, retail, restaurants. Quality of views and residents’ facilities.

Location

Within 10km of a highly built-up area, CBD or major employment hub.

Tenants

Professionals, students, young couples, downsizers and families.

How can you be confident you’re investing in the right apartment?

Not all apartments are created equal.

Many would-be investors are put off by the perceived risk of buying an apartment, but with the right knowledge and guidance, it can be a highly lucrative investment. At Ironfish, we understand that finding the right apartment requires a strategic approach. Factors such as location, growth drivers, and potential tenants all play a significant role in determining the success of your investment.

That’s why meticulously assess every property we recommend and work exclusively with top-tier developers.

How do we select an outstanding apartment?

Our brand reputation means we can be as selective as we want when it comes to choosing which developers we partner with and what apartments we recommend to our investors. In reviewing a development, we consider many factors including location, convenience, comparable pricing, size, view lines, floorplans, and contract terms. And of course, the developer: what’s their track record, which builder are they using, and what’s their strategy to ensure the development gets off the ground successfully?

Typically, we reject the majority of apartment developments on the market. That’s how you can be confident that when we recommend an apartment for your portfolio, it’s of a high standard. Our rigorous selection process ensures that we only choose apartments that are likely to deliver strong capital growth and rental returns.