Alexandria ranks as top investment suburb: Survey

The inner-city suburb of Alexandria, just five kilometres west of the Sydney CBD, is Australia’s number one investment suburb, according to Your Investment Property’s Top 100 survey for 2011. 

Alexandria ranked top due to a combination of affordable prices, a history of strong rental growth, rising house and unit prices and expectations of a major boost from the nearby Green Square urban redevelopment project. 

Other inner-Sydney suburbs to make it in the Top 10 include Newtown (ranked fifth) and Potts Point (ranked sixth), both within four kilometres of the CBD. 

Regional towns are also well represented in the Top 10. 

With several massive infrastructure projects planned or underway, the Queensland harbour town of Gladstone, 550 kilometres north of Brisbane, ranked second on the list. 

Gladstone has enjoyed capital growth of 5% over the last 12 months and rental yields of between 5% and 6%. 

WA’s remote South Headland, 1,600 kilometres from Perth, ranks third, with Queensland regional towns of Toowoomba and Chinchilla (just 6,200 residents) ranking seventh and ninth respectively. 

Houses have gone up 15% over the last year in Chinchilla, and rental yields are at a very healthy 7.25%. 

Property analysts say prices of houses and units in Alexandria are an “aberration”.

Recent sales include a 56-square-metre, one-bedroom unit at 63 Euston Road sold by Richard Movsessian from Century 21 for $410,000.

Current Alexandria listings include Christian Ziade from Cobden & Hayson selling a 154-square-metre, two-bedroom apartment at 147-161 McEvoy Street with prices over $480,000 and Marnie Seinor from NG Farah selling a two-bedroom unit at 12/4 Gillespie Avenue and considering offers above $600,000. 

The suburb is poised to benefit from the massive urban redevelopment in nearby Green Square. 

“The Green Square area is set to become a major employment hub comparable to Chatswood but situated in a far superior location,” says Andrew Donnelly, CEO of property investment advisors Whiterock Capital.

“Green Square is seen as the most important urban redevelopment project in Sydney at present and is considered to be one of the largest urban renewal projects in Australia comprising 278 hectares of land in Sydney’s oldest industrial area. 

“Once completed in 2021, Green Square will be home to more than 33,000 people, and more than 28,000 people are expected to work in the area by 2021,” Donnelly says.

Alexandria’s media unit price is $449,000, $30,000 lower than Sydney’s median unit price of $479,000. 

Median rents for units rose 11% or $50 per week to $500 during the past year, according to RP Data. 

This healthy increase in rent, combined with the affordable median price has pushed average gross rental yields to 5.8%. 

While, the median unit price dropped by 18% over the three months ending March 2011 as buyers sought out lower priced offerings, the year-on-year figures show a 12% rise, indicating the growth momentum is still in place.

Alexandria’s long-term average annual growth of 4% also suggests there is still room for strong growth over the medium term as it moves to catch up. 

According to realestate.com.au, there are 38 people viewing every available Alexandria property. 

The current auction clearance rate is 73%, which is significantly above Sydney’s overall auction clearance of about 55%. 

A unit in Alexandria takes just 30 days to sell a unit, among the shortest on the market. 

Alexandria, like other inner Sydney suburbs benefits from low vacancy rates across the city pushing up demand for rental properties. 

The latest data from the Real Estate Institute of NSW showed vacancy rates falling 0.2% to just 0.9% during April – the lowest in 12 months. 

Units in Alexandria are $141,000 cheaper by than the neighbouring suburb of Zetland, $96,000 cheaper than nearby Kensington and $76,000 lower than Erskineville to its immediate west. 

“Alexandria has been undergoing gentrification over the past 10 years,” says Rich Harvey, managing director of buyers’ agent, www.propertybuyer.com.au. 

“It’s slowly being transformed from a medium industrial area to residential, which makes it an attractive choice for city workers due to its proximity to the Sydney CBD.” 

The suburb is also located close to three universities: Sydney University, University of NSW and the University of Technology, Sydney, which means it’s benefiting from student and staff demand for housing. 

Another key factor in its top ranking is its excellent transport links to the Sydney CBD. Residents can access the Green Square train station, and it’s within easy walking distance to Erskineville, St Peters and Bankstown railway stations. 

The Top 100 was made up of 25 suburbs in Sydney, 12 from Melbourne, seven from Perth, eight from Adelaide, five from Canberra, three from Hobart, two from Darwin and 26 from regional areas. 

Analysts who helped compiled the list included Charles Tarbey, chairman, Century 21, Tim Lawless, research director, RP Data, valuers WBP and Herron Todd White and Terry Ryder, director of www.hotspotting.com.au. 

Rankings were compiled based on affordability, accessibility, amenities, demographics and population growth, employment opportunities and rental yield and rental growth potential.