Bankstown blocks comprising 42 units slated for October auction
Four blocks totalling 42 units in Bankstown have been listed for October 19 auction.
Set in Sydney’s south west, the offering will be in one line through CB Richard Ellis agents Harry Bui, Frank Oliveri and Peter Vines.
The blocks have already been strata titled.
Their current gross income is $665,000 and their anticipated market rent is $762,000.
The complex has $66,000 operating expenses plus $111,000 in statutory charges, making its annual net operating income $486,000.
Its statutory charges include $33,000 council rates, $45,000 water rates and $32,000 land tax.
Three of the blocks were built in 1984, and one constructed in 2006, with none having undergone any significant upgrades or modernisation.
With rental demand rising in the Bankstown market and rent growth projected by Residex at 5% to 6% a year for the next few years, Bui says the 42 multi-housing collection is “a prime real estate investment opportunity”.
According to Residex, the residential house market in Bankstown experienced capital growth of 11% over the year to June 2011.
The median value for Bankstown units during the June 2011 quarter was $306,000.
The Bankstown residential sales of individual strata-titled apartments have totalled 661 apartments in the past 12 months, with a $239 million total transaction volume at an average of $270,000 to $310,000 for one-bedroom apartments, $300,000 to $360,000 for two-bedroom apartments and $330,000 to $465,000 for three-bedroom apartments.
According to Residex, apartments within the 2160 to 2249 postal code range are forecast to have about 2% to 3%-plus growth a year over the next five years.
“As a broader outlook for the local residential apartment market, we expect apartments in Bankstown to continue to be popular amongst private investors and owner-occupiers,” Bui says.
“There could be further yield compressions for a quality asset in a prime location as there are more first-home buyers and investors coming to the market.”
The median weekly Bankstown rent for a two-bedroom unit is $385 per week.
Its vacancy rate remains tight and rental yield for apartments has outperformed, Bui says.
According to SQM Research, the suburb of Bankstown had a vacancy rate of 0.6% at June 2011.
Its rental yield was 6.45% reflecting a 1% increase over the last decade.
“This offering is a unique opportunity to secure a low-risk investment with very strong foundation for future growth,” Bui says.
“There’s a value creation opportunity and a safe exit strategy. There’s significant scope to enhance capital immediately through various cosmetic enhancements with select interior upgrades,” he notes.
He suggests smaller strata-titled apartments for under $400,000 were highly sought after by smaller investors and owner-occupiers in the local market.
The apartment sizes range from 68 square metres for one-bedroom units to 131 square metres for two-bedroom units. They average 100 square metres.
The current rents range from $275 a week to $340 a week.
Whole-block sales have been rare in Bankstown in the past 12 months. The most notable transaction was the sale of the whole 21 two-bedroom apartment block leased to Housing NSW at 2-6 Bungalow Crescent in Bankstown, which fetched $6.04 million in April.
The next highest sale was a block of 12 units sold for $3.35 million in mid-2010. Its sale price reflected $279,000 per unit. It’s leased to NSW Housing returning $191,000 a year.
