High-profile apartment defect cases have changed the way many NSW buyers approach purchasing, putting greater scrutiny on building quality, strata records and the parties behind a development before a contract is signed.

The industry buyers are assessing today, however, is also different from the one in which cases such as Opal Tower and Mascot Towers emerged.

NSW has introduced a series of regulatory measures aimed at strengthening oversight of apartment construction, including Building Commission NSW, the Residential Apartment Buildings Act 2020 and the Strata Building Bond and Inspections Scheme. Under the latter, developers are required to lodge a bond, with independent inspections forming part of the process for identifying defects in new strata developments.

Those changes provide another layer of protection, but they haven't removed the importance of buyer due diligence.

[smartcode_project:default project_id=5743 project_image_fid=372394]

For purchasers considering an apartment, that means looking beyond the residence itself. Building and strata history, strata reports, the track record of the builder and developer, the condition of common property and any known or planned expenditure by the owners corporation can all form part of assessing a building before purchase.

Whether the development is already complete can also materially change what can be assessed.

An off-the-plan purchaser is necessarily buying before the finished product exists. A completed apartment, by comparison, can be walked through before contracts are signed, allowing the purchaser to see the finishes, common areas and broader building as they have actually been delivered rather than relying solely on plans and renders.

It also removes exposure to some of the uncertainties that exist between an off-the-plan purchase and completion, including construction delays, cost pressures and builder insolvency during the delivery period.

[smartcode_project:default project_id=5743 project_image_fid=927]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a> National Sales Director Ben Hamblett said that greater focus on tangible evidence is increasingly evident among apartment purchasers.

“The biggest shift we're seeing is buyers wanting proof, not promises,” Hamblett said.

“That's exactly why we deal in completed stock - you can inspect the building before you commit - and why we've backed every purchase with a cash bond against special levies.”

At <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> in Parramatta, that emphasis on a completed, inspectable product is already in place.

The 413-apartment, 46-level tower at 12 Phillip Street is being marketed by Projects by Equitifund, allowing prospective purchasers to inspect the residences, common areas and resident facilities before committing.

[smartcode_project:default project_id=5743 project_image_fid=375255]

The Lennox also introduces another layer to the due-diligence conversation through Strata Surety.

The vendor-funded arrangement provides purchasers with a cash-backed bond held in their own solicitor's trust account from settlement. According to Equitifund, the bond covers any special levy raised during the applicable cover period and is provided at no cost to the purchaser.

Special levies can create an unexpected cost for apartment owners where an owners corporation needs funding beyond its existing strata contributions. Under NSW strata law, a special levy requires approval by owners at a general meeting.

Equitifund Executive Chairman Greg Huxley said Strata Surety was designed to provide something more concrete than reassurance about that potential exposure.

“Buyers have every right to ask hard questions about strata risk - the industry has given them plenty of reasons to,” Huxley said.

“Our answer isn't a reassurance, it's a bond. Strata Surety puts real money behind that confidence, held by the buyer's own solicitor, not by us.”

[smartcode_project:default project_id=5743 project_image_fid=375281]

For The Lennox, its completed status also means purchasers can assess not only the apartment itself, but a building that has already been occupied and operating for several years.

Completed in 2021, the $300 million development, designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, comprises one, two, three and four-bedroom apartments, with open-plan living areas extending to private balconies. Interiors incorporate engineered timber flooring, stone benchtops and integrated appliances, while many upper-level residences have views across the river and surrounding district.

Its established amenity can similarly be inspected in operation. Resident facilities include the Watermark precinct with a 20-metre pool, outdoor terrace, barbecue areas, gym, fitness studio and conference room, while ground-floor retail addresses the river walk and surrounding public space.

The Lennox is also home to the Southern Hemisphere's first fully robotic residential car park, which has now operated for several years. Its nine-level basement combines three conventional parking levels with six automated levels, accommodating 327 vehicles using technology from German firm Lödige Industries.

[smartcode_project:default project_id=5743 project_image_fid=925]

The riverfront address puts The Lennox close to much of central <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a>'s existing infrastructure, including Parramatta Station, Westfield Parramatta, Parramatta Park, and the Church Street dining precinct.

The remaining apartments form part of a limited release secured by Equitifund, following the sale of the majority of residences before and shortly after completion.

The regulatory environment around NSW apartment construction has changed considerably since the defect cases that reshaped public discussion around the sector. For purchasers, however, regulation is only one part of the equation. The ability to investigate a building's history, review its strata position and, where possible, inspect what has actually been delivered remains central to making an informed apartment purchase.

At The Lennox, its completed status provides that opportunity before contracts are signed, while Strata Surety adds a financial backstop against special levies beyond the protections already provided under NSW strata law.

[smartcode_project_cta:default project_id=5743]

Joel Robinson

Buying with confidence: What NSW apartment buyers should check beyond the defect headlines

Too often, heritage buildings become the podium for a contemporary tower. At <a href="https://www.apartments.com.au/new-apartments/623-collins-607-623-collins-street-melbourne-vic-3000">623 Collins</a>, <a>Sterling Global</a> challenged its design team to reverse that process.

The brief to <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> was deliberately simple: "Don't design around the heritage. Design from it." It became the philosophy behind a project that draws inspiration not only from two landmark heritage buildings, but from Collins Street itself, a street layered with architectural history and civic significance.

That philosophy has shaped one of <a href="https://www.apartments.com.au/developments/melbourne-vic-3000">Melbourne</a> CBD's most considered residential projects, where the 1924 State Savings Bank and neighbouring Batman's Hill Hotel have become the architectural foundation for 623 Collins rather than remnants preserved beneath a new development.

[smartcode_project:default project_id=145324 project_image_fid=372749]

Rather than approaching the site as a blank canvas, <a href="https://www.apartments.com.au/developers/sterling-global">Sterling Global</a> saw the existing buildings as the beginning of the story.

"Sites like this rarely become available," the developer said.

"623 Collins wasn't simply an opportunity to develop a prominent CBD site. It was an opportunity to restore and reimagine one of Melbourne's important heritage landmarks while contributing to the continued evolution of Collins Street. For us, the existing buildings weren't constraints. They were the beginning of the story."

Instead of mimicking the ornate heritage architecture, Plus Studio studied the proportions, rhythm and craftsmanship of the original buildings before translating those characteristics into a contemporary 42-storey tower.

[smartcode_project:default project_id=145324 project_image_fid=372748]

"The brief challenged us to create a contemporary landmark that respected Melbourne's architectural history without becoming nostalgic," Plus Studio said.

"Rather than mimicking heritage, we sought to understand its proportions, rhythm and material language before translating those qualities into a distinctly contemporary architectural expression."

The practice says the State Savings Bank and Batman's Hill Hotel became the project's primary source of inspiration, allowing the heritage buildings and contemporary architecture to exist "in conversation rather than contrast." Generous planted terraces further soften the transition between old and new, creating elevated green spaces while reinforcing the dialogue between the restored podium and the contemporary tower.

That dialogue continues throughout the interiors, where Melbourne designer Fiona Lynch developed a material palette inspired by the idea of alchemy, balancing contrasting materials that reference both the Neo-Grec detailing of the original bank and contemporary urban living. The result is a series of spaces that feel timeless rather than trend-driven.

[smartcode_project:default project_id=145324 project_image_fid=354343]

The project will deliver 316 residences across four collections, Heirloom, Signature, Reserve and the Penthouse Collection, with each responding differently to its position within the building, from the restored heritage podium through to the upper levels of the tower. The Heirloom Residences retain defining heritage elements including original heritage windows, generous proportions and high ceilings, while the tower introduces contemporary homes with expansive layouts and elevated views.

Amenities have likewise been designed to support long-term city living rather than short-stay convenience. Residents will have access to concierge services, wellness facilities including a pool, cold plunge, sauna, steam room and gym, alongside private lounges, entertaining spaces and dedicated resident clubs.

Sterling Global says that approach is resonating with buyers seeking permanence rather than novelty.

[smartcode_project:default project_id=145324 project_image_fid=354347]

According to the sales team, purchasers are looking for enduring architecture, generous floorplans, heritage character and long-term value, with many commenting that 623 Collins "doesn't feel like another apartment development" because of the way the architecture has been curated around the site's history.

Situated on the prominent corner of Collins and Spencer streets, the project occupies one of Melbourne's most recognisable gateway sites, marking the western entrance to the city's best-known street. For Sterling Global, it also reflects a broader shift in city-making.

"Rather than maximising development yield, the project embraces adaptive reuse as a design philosophy, allowing heritage to inform architecture, interiors and the overall resident experience," the developer said.

"The result is a building that feels uniquely connected to Melbourne."

[smartcode_project_cta:default project_id=145324]

How Sterling Global designed 623 Collins from Melbourne's history

Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

[smartcode_project:default project_id=152069 project_image_fid=374394]

Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

[smartcode_project:default project_id=152069 project_image_fid=374399]

Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

[smartcode_project_cta:default project_id=152069]

Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/graya">Graya</a> has secured a prime Newstead site from fellow developer Fraser, subsequently lodging plans for The Silo, a major mixed-use residential project in Newstead designed around a new public laneway linking the James Street precinct with the wider Gasworks and Newstead neighbourhood.

Proposed for the corner of Chester and Morse streets, the <a href="https://www.apartments.com.au/architects/bureauproberts">Bureau^Proberts</a>-designed project places its strongest emphasis at ground level, where retail, landscaping and a new cobblestone pedestrian connection would open the site to the surrounding neighbourhood. The design team describes The Silo as “more than a residential building”, positioning the development as an extension of Newstead’s public realm rather than a standalone apartment tower.

“A new cobblestone laneway and landscaped connection between James Street and Gasworks unlock a missing pedestrian link, improving walkability and stitching together two of Brisbane’s significant urban destinations,” Bureau Proberts said in its Urban Design Report.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="0ea1b06a-75f5-40a5-b2c5-33c97bc86052" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/silo%20bldg.png?VersionId=KmjsAtNePu57_B31EM_DJ5T6KPJHtcmo" />

The Silo is planned as a mixed-use development incorporating apartments alongside a bar and centre activities including food and drink outlets, indoor sport and recreation, office and retail uses.

Architecturally, Bureau Proberts has conceived the building as a collection of vertically expressed, stepping forms rather than a single uniform tower. The composition rises from an articulated podium before being broken by a triple-height landscaped recreation level, with the upper section becoming more compact before terminating in a landscaped rooftop garden.

The project's name and architectural language draw directly from Newstead's industrial history. Patterned off-form concrete is proposed as the principal façade material, complemented by slender metal rod balustrades and extensive planting. The cylindrical and vertically ribbed elements give the building its silo-like expression, while curved balconies and planted edges introduce a softer subtropical layer.

“The Silo reinterprets its robust forms, scale and materiality through a contemporary subtropical architectural expression, creating a building that acknowledges its industrial legacy, while responding to the way the precinct is occupied today,” Bureau^Proberts said.

The recreation level is one of the defining breaks in the tower. Plans include a lap pool, mature subtropical planting and shared resident facilities within an elevated communal garden. Landscaping continues through the podium and onto the rooftop, where a further garden forms what the architects describe as a “subtropical crown” to the building.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="f8451036-35a4-49a9-8d88-2ef4438eba3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Silo%20Lane.png?VersionId=h8N31_rYmCEqoNrpt4kbYVQhJGZn60LH" />

At street level, the development has been designed to establish a more permeable block. Retail and hospitality tenancies address the public realm, while landscaped pedestrian spaces lead into the new laneway connection. Renders in the design report show the proposed “Silo Lane” as a substantial opening through the podium, framed by cylindrical concrete forms with cascading planting above.

The Silo continues Graya's move into larger apartment developments after building its reputation across high-end residential projects in Brisbane and the Gold Coast.

Graya buys Frasers Newstead site, plans The Silo between James Street and Gasworks precincts

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

[smartcode_project:default project_id=95289 project_image_fid=366769]

A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

[smartcode_project:default project_id=95289 project_image_fid=366762]

The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

Limited-time stamp duty offer at completed Linacre Rise apartments in Hampton

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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The NSW Fair Trading Minister Anthony Roberts says strata schemes work best when owners and residents take an active interest in how the scheme is run. Getting people to volunteer their time to serve on committees or attend meetings is an ongoing challenge for many schemes, particularly where the majority of residents are tenants.
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Just over half of all residential strata lots in New South Wales are investor owned with many of these investor-owners living inter-state or overseas, making it difficult for them to attend meetings or to take an active interest in the concerns of the residents.
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The act currently sets an upper limit of nine for the number of people who can be appointed to the committee. While owners may find that having a small committee helps to ensure the efficient management of the scheme, the government maintains there is no clear reason why an upper limit needs to be provided for in the law. There are many different types of strata scheme and owners corporations should be able to appoint as many committee members as is necessary to effectively administer the scheme and to provide suitable representation.
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Noting in some schemes tenants make up the majority of residents, the government will be seeking to recognise tenants for their role in strata communities as many are willing and able to contribute in a positive way to the running of the scheme.
Despite this, tenants currently have no rights to attend meetings or contribute to decisions that affect them.
It is proposed that the law give tenants the right to attend and participate in meetings of the owners corporation. It is also proposed that tenants be allowed to appoint a non-voting representative to the committee in circumstances where tenants occupy more than half the lots in a strata scheme. Consistent with community feedback on the discussion paper, tenants will not be given new voting rights.
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HE SAYS – NO, NOT YET <img style="float: right;" alt="jc-silhouette-5" height="225" width="150" src="/images/stories/2013/09/06/jc-silhouette-5.jpg">
The voicing of tenants’ opinions by formal representation at body corporate meetings isn't really vital.
Let's face it many body corporates are already dysfunctional – hence, the reason for the NSW governments’ long overdue overhaul of strata title.
Renting an apartment for only six or 12 months is not unusual for tenants who could cause more grief than harmony for their neighbours if they are encouraged to have a say/play in the running of a building.
Imagine these tenants demanding the right for barbecues (even the ultimate portable barbecue, Ziegler &amp; Brown Twin Grill) on miniscule balconies in buildings with hundreds of apartments. Don’t tell me they won't demand to formalise the practice of hanging laundry items on portable racks on balconies in between their smokey barbeques.
Given the transient nature of many tenants, these could be distracting issues raised on a regular basis at strata meetings.
Certainly if we had the ideal European model of lengthy tenancies, often almost life-long, then it would be a different matter.
 
<img style="float: left;" alt="mb-silhouette-4" height="225" width="150" src="/images/stories/2013/09/06/mb-silhouette-4.jpg">SHE SAYS – YES
I’m all for democracy - everyone has the right to be heard. Indeed our reformist Fair Trading minister Anthony Roberts often refers to strata schemes as the fourth tier of government.
A proposed change to strata laws suggests tenants have a voice, but they won’t be allowed to vote on issues of building management. Tenants will be permitted to speak, but owners of strata title property will still hold all the cards due to their voting rights.
Let’s not forget that when Australia’s first parliamentary elections for the Legislative Council were held in 1843, the right to vote included men with freehold property valued at £200 – but also was granted to any householder who paid rent of £20 per year. So since colonial days most tenants have had a right to participate.
If tenants are allowed to air their grievances, or suggest positive ways to solve a problem, it could resolve neighbourly conflicts and encourage more harmonious day-to-day interaction with residents of a strata building.
Call me Pollyanna, always optimistic and trying to look on the bright side, but I am in agreement with Anthony Roberts on this one. 
In his speech on November 2, Roberts said “these reforms aim to build a culture of community and co-operation by encouraging participation and inclusion…and improve the everyday things that people in strata schemes care about."
<a href="mailto:jchancellor@propertyobserver.com.au" target="_blank">jchancellor(AT)propertyobserver(DOT)com.au</a>
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jchancellor-FAypfDUnLy

Should renters have a say in the management of residential strata buildings?

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Watch the video below, and tell us: could you have lived in this?
According to <a href="https://www.just-think.com.au/" target="_blank">Just Think Real Estate</a>’s Edwin Almeida, who told us that on his inspection of the property he couldn’t be in there for more than six minutes, the tenants did so – for two years! They even paid $410 per week for the pleasure. The rental is in Sydney's Homebush area.
What you see on the ceiling there, is copious amounts of mould. Around the fuse box? Asbestos. Also note that there is no smoke detector.
{qtube vid:=v1dYcpRNkec}
The tenants were asthmatic and their fuses kept blowing out.
The investor had been self-managing and had allowed the property to get into this state, later asking a property manager to take over when he found himself dealing with tenants in arrears and some property damage.
Luckily, the landlord has now renovated, spending up to $15,000, and bringing the rent up to $480 per week. The renovation included fixing the broken fence, fixing the mould and electrical problems, fixing the concrete balcony, a kitchen upgrade and other more cosmetic fixes. The property could now achieve somewhere around $750,000 if it was put on the market, says Almeida, compared to around $600,000 beforehand.
See the gallery below for the fixed up property. These photos were provided as part of the most recent routine inspection report.
{yoogallery src=[images/stories/2013/11/14/sq]}
However, it could have created far more problems; including possible liability for the landlord should a tenant have gotten sick. Unfortunately, not all stories are happy stories.
With <a href="https://www.propertyobserver.com.au/victoria/landlord-sued-%24300000-over-balcony-collapse/2013111466359?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news" target="_blank">Property Observer reporting about a landlord being sued $300,000</a> for a balcony collapse due to poor maintenance in a Melbourne rental, it’s now more critical than ever that investors, particularly self-managing ones, and property managers are aware of what is required from them.
Almeida has been providing Property Observer information for the <a href="/news">‘Is your tenant living in squalor?’ series</a>. He says the property above is not the worst he has seen, and that these problems are rife across Sydney.
He details the following:
The misnomer when we discuss the topic of “tenants and landlords” in relation to self-managed properties, that the landlord is somehow exempt from legislative obligations around duty of care, is far from the truth. This is not the case, and burying your head in the sand and thinking you have some sort of exception will only create more issues.
Some, no doubt, have come face to face with the “tenants from hell” as noted in this article but is it always the tenants that are at fault? This is a question that has to be asked and dealt with on a case by case basis.
What of the landlord’s responsibilities in relation to providing a safe living environment under the residential tenancies Act 2010? Regardless of whether the property is self-managed or managed by an agent, there is an obligation. We can blame the tenants all we like, and even jump up and down as much as we want, but the question remains: Why are the issues allowed to become so big in the first place? The law works both ways, it doesn’t just protect tenants as many would like you to believe.
Now back to the issue of safe living standards. Outside of damage caused by tenants, there is a clear obligation for the landlord to provide a safe living environment. Don’t be fooled in thinking that not many cases are recorded or heard around landlords being sued for damages in the area of health. Most of the cases around this are settled outside of the courts before they become too costly. These are costs that overshadow arrears and any other form of malicious damage done to property by the tenant.
The video attached to this article is a short glimpse of a self-managed property. Yes, there was an arrears, some damage to some of the rooms. But frankly, these problems are overshadowed by the fact that the property was riddled with hazards that may cost the landlord tens of thousands of dollars due to possible health and safety issues, if they are sued. Some of these issues included mould, being the most obvious, as well as electrical hazards, sharp objects and falling fences.
Again this is a third call for the governing bodies to be more proactive when it comes to dealing with living standards. We are not living in a third world country and surely we have more than a legislative obligation to providing a safe living environment. We have a strong moral obligation just the same if not more prudent.
I note the financial temperature of the property market is 'hot' and equity levels of properties are increasing on an almost daily basis. So why not put back and re-invest into these properties? Look at the upside: higher rental returns, greater values in terms of equity, and the obvious one: you won’t get sued!
If you don’t want to lose it all because you didn’t fix the issue early enough before someone was injured or suffered a health loss, then ask yourself the question one more time: Is your tenant living in squalor?
 
<a href="mailto:jduke@propertyobserver.com.au" target="_blank">jduke@propertyobserver.com.au</a> 
 
 
 
<div id="_mcePaste" class="mcePaste" style="position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow: hidden;">managing partner and licensee-in-charge of <a href="https://www.just-think.com.au/" target="_blank" rel="nofollow">Just Think Real Estate</a></div>
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jduke-EHk3XBmHkn

Is your tenant living in squalor? This video is hard to watch

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A fairly soft <a target="_blank" href="https://www.propertyobserver.com.au/economy/wage-growth-slows-to-lowest-rate-in-decade-why-interest-rates-could-stay-low/2013111266295">wage price index release this week</a>, while the share markets got a bit of nudge cropping by 1.4%. Not much to get excited about with the wage prices, in truth. Wages in Australia increased by 0.5% quarter on quarter leading to year on year wages growth of 2.7%, with the usual volatility across industries.
<a href="https://3.bp.blogspot.com/-DAG9pEYHP84/UoMPmEXokpI/AAAAAAAAKwk/2RCzLsbDDmE/s1600/Wages.jpg" imageanchor="1" target="_blank"><img border="0" height="175" src="https://3.bp.blogspot.com/-DAG9pEYHP84/UoMPmEXokpI/AAAAAAAAKwk/2RCzLsbDDmE/s400/Wages.jpg" width="400"></a>
Source: ABS
Wages growth at that kind of level appears unlikely to fuel much in the way of consumer price inflation, yet go some of the way towards explaining how hard it is to time property markets. In Sydney, for example, we have had three property downturns in the last ten years (2004, 2008, 2011), yet as each cycle passes wages and household incomes have trended higher over time.
<img alt="Dwelling Prices graph" src="https://www.rba.gov.au/chart-pack/images/5-6-household-sector/6bl-dwelpri-small.gif?accessed=2013-11-13-16-51-47">
This soft wages print adds something to the argument that interest rates could be staying right where they are with an official cash rate (OCR) of 2.50%, potentially for the next six months, until such time as there is clear evidence that the unemployment rate has peaked.
The inflation picture is a little mixed at present. The key inflation readings - the trimmed mean and weighted mean - are comfortably within the target range, yet note the gulf between tradables inflation and non-tradables (apologies, I have to go with the RBA's spelling, though I don't like it).
<img alt="Underlying Inflation graph" src="https://www.rba.gov.au/chart-pack/images/4-au-gdp-growth/4bl-underinf-small.gif?accessed=2013-11-13-16-58-37">
<img alt="Non-tradables and Tradables Inflation graph" src="https://www.rba.gov.au/chart-pack/images/4-au-gdp-growth/4br-tradeinf-small.gif?accessed=2013-11-13-16-58-37">
Note that: "Tradable items are things whose prices are largely determined on the world market like oil, motor vehicles and clothing. As such, the prices of tradable items are heavily influenced by exchange rate movements. By comparison, non-tradables refers to things that are not readily exported or imported, like medical services, housing and haircuts. As such, their prices are largely determined domestically."
Following on from its worse-than-expected business survey, National Australia Bank (NAB) still believes that the next move in interest rates will be down, although it has pushed out its cut estimate until the middle of 2014. Others remain more positive on the economic outlook and see the next move as being up.
The respective trends for public and private sector wages are detailed below. The downtrend over the last three years is fairly clear, although perhaps there are signs of hope in private sector wages. The trend for public sector wages doesn't look inspiring. On a related point, the outlook for Canberra's property markets also does not appear great with jobs likely to be cut in the ACT.
<img alt="wargent-wages-source-abs-nov-15" height="373" width="470" src="/images/stories/2013/11/15/wargent-wages-source-abs-nov-15.jpg">
Source: ABS
Elsewhere, however, Westpac reported that consumer confidence picked up (no doubt in part due to stronger dwelling prices) and perhaps unemployment expectations may have topped out...for now.
Overall, the data on Wednesday seems to fit with the Reserve Bank of Australia's base case, which is for below-trend GDP growth through 2014 before the economy starting to pick up momentum again in 2015. The impact of slowing mining capital investment will be key, and certainly one of the most significant issues to watch with interest.
<a href="https://3.bp.blogspot.com/-f44cEH3xLM4/UoMRG8YSMtI/AAAAAAAAKxA/TYLG380kdTE/s1600/RBA+GDP+forecast.jpg" imageanchor="1"><img border="0" height="365" src="https://3.bp.blogspot.com/-f44cEH3xLM4/UoMRG8YSMtI/AAAAAAAAKxA/TYLG380kdTE/s400/RBA+GDP+forecast.jpg" width="400"></a>
 
<hr>
Pete Wargent is the co-founder of <a rel="nofollow" target="_blank" href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a rel="nofollow" target="_blank" href="https://petewargent.blogspot.com/">blogger</a>.
His new book '<a rel="nofollow" target="_blank" href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>' is out now.
 
 
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pwargent-M4siyDbqQY

How wages are affecting the property market

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While iron ore, coal, gold and natural gas have been Australia’s biggest commodities for the past decade, industry experts say the exporting landscape is evolving, with new industries coming to the fore.
Food manufacturing, oil and gas extraction, beer manufacturing, education services and legal services have been ranked by IBISWorld analysts as Australia’s best chances to support the nation’s economy in the next few years.
In 2013-14, Australia is expected to generate $317.6 billion in export revenue and IBISWorld industry analyst Sebastian Chia told SmartCompany in a statement macroeconomic factors will favour exporters in the next five years.
“It’s mainly been driven by the growth of the Asia Pacific region and the demand for our food products and our education services which are viewed as higher quality goods in the region,” he says.
As the value of the dollar softens, Australian exports are expected to become increasingly price competitive against the currencies of Australia’s major trading partners.
Businesses in the food manufacturing sector are positioned well for the next five years, as Australia’s high food standards are attractive to foreign markets.
IBISWorld figures show revenue for Australia’s baby food manufacturing industry is forecast to grow by 2.9% per year over the next five years to reach $206.7 million. The dairy industry is also expected to grow, with revenue anticipated to grow by 2.1% to reach $12.8 billion.
The demand from south-east Asian markets is likely to be behind the dairy sector’s growth, with this a likely motivating factor in the current <a href="https://www.smartcompany.com.au/growth/economy/34058-bidding-war-emerges-between-saputo-and-bega-over-warrnambool-cheese-and-butter">bidding war for the Warrnambool Cheese and Butter Factory</a>.
Chia says overseas companies have twigged that Australia is in a favourable geographic position to Asia.
“They’ve realised we have an advantage in this sector because we’re so close to these countries where the middle class is booming and there is a great demand for our food services.”
Dairy Australia industry analyst John Droppert previously told SmartCompany dairy processors with exporting links are leading the market.
“At the moment there is tremendous growth in south-east Asia and this year the export story is very strong. There have been a few tough years for many of the key exporters, but there have been supply shortages in China this year and there have been exits among the smaller producers there, which is driving up commodity prices to levels we haven’t seen very often.”
The Australian education services sector, like the food sector, is considered to be of high quality in the Asian markets, and the sector is predicted by IBISWorld to grow at 3.7% over the coming years.
“International students are a major market for this sector, accounting for 24.9% of total enrolments this year,” IBISWorld general manager Karen Dobie said in a statement.
“Following annual growth of 7% prior to 2009, industry growth has cooled off somewhat because of the high Australian dollar, but the anticipated decline of the dollar in the next five years will boost enrolments from foreign students once again.”
While the education and food industries are already attracting demand from overseas, whether or not Australian beer companies are successful overseas is yet to be told.
Chia says beer manufacturers are expected to place an increased focus on exports, as sales in the local market have declined over the past five years.
“Faced with that stagnant or falling demand, particularly for the traditional brands, they’re looking to export markets for growth,” he says.
“They see there being more growth by going overseas. It’s too early to tell whether or not they’ll be successful, but brands like VB are seen as quintessentially Australian and people will pay a premium.”
Chia says one way businesses can succeed in <a href="https://www.smartcompany.com.au/leadership/strategy/31265-exporting-made-easy-a-guide-for-small-business-exporting-to-asia">expanding overseas</a> is to consider merging with a brand in that market.
“Looking at the legal services sector, this is a good case and point, there have been a lot of mergers recently which have seen business start to align themselves to different regions like the UK, US and Asia,” he says.
“A lot of that has been to take advantage of the push into the Asia Pacific region.”
This article first appeared on <a target="_blank" href="https://SmartCompany.com.au">SmartCompany</a>.
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mrobin-TVRYiru7si

Australia’s top five exporting opportunities revealed

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Investing in property can be costly and time consuming - such as having to buy how-to books, attend seminars and pay consultants - so competent operators will welcome advice on which fees and charges they can claim through their tax.
Property taxation specialist Shukri Barbara said he was often asked which of these self-education programs are tax deductible.
They include:
<ul>
<li>wealth creation using property as a class of asset</li>
<li>learning about new trends in property values</li>
<li>mentoring on property – both short and long-term programs</li>
<li>consulting fees relating to management ‘assistance’ with property investments 
</li>
</ul>
To assist, Barbara has accessed ATO correspondence regarding an audit of a claim by a client. It helps explain which expenses are deductible and includes some of the ATO’s responses.
Basic principles of claiming deductions
An expense is generally allowed as a tax deduction if it is incurred in generating income - in this case rental income.
So, first, there has to be:
-          Ownership
<ol style="list-style-type: lower-roman;">
<li>A property has be owned before it can generate rental income, then there has to be</li>
</ol>
-          Income
<ol style="list-style-type: lower-roman;">
<li>Revenue from rent before a claim for a deduction is considered to have been incurred in generating that income.  Finally, </li>
</ol>
-          Nexus
<ol style="list-style-type: lower-roman;">
<li>The expense has to have a nexus to earning the income i.e. incurred directly in generating the income e.g. agent fees, rates etc.</li>
</ol>
Timing is important if the expense is to be deductible. The expense has to be incurred after you own the property – usually after settlement.
Claiming deductions for education/mentoring/consulting fees
As regards coaching, some of the questions include:
-          If the program relates to increasing wealth  – no deduction
-          If the program relates to acquiring/sourcing property  – no deduction
-          If the program relates to improving the value of a property  – no deduction
-          If the program relates to improving rental revenue – yes deductible
-          If the program relates to reducing rental expenses  – yes deductible
-          If the program relates to getting better tenants  – yes deductible
-          If the program relates to better managing the agent  – yes deductible
What if the coaching is for all of the above?  – a proportion of the fees may be deductible
-          What’s the ATO’s attitude? – If it sees expenses as capital related to increasing wealth the expenses are usually not deductible.
Unfortunately, as suppliers continue to change the descriptions on their invoices, and descriptions of their services, to enable the client’s fees to be deductible, some things still remain unclear as they have not yet been tested in the court.
The above approach is equally applicable to seminars and mentoring. A proportion of the fees will be allowed as a deduction where they relate to the revenue and expenditure side of rental properties. Otherwise they are not deductible. This is assuming the property is owned and earns rental income.
Sourcing fees
Sourcing fees – such as hiring a buyer’s agent - are considered a capital expense and part of the cost base of a property, along with property inspections and pest inspections. When calculating capital gains on resale, the CGT will be less as a result of this cost.
If the deal falls through and the property is not purchased, while the ATO will acknowledge that an expense has been incurred, it is not accounted for anywhere for tax purposes and cannot be claimed.
In which year is the claim deductible?
Where deductible, the expense should be claimed in the financial year in which it is incurred - usually the date on the invoice of the agreement with the provider. The contract/invoice date is the relevant one where payment is made by instalments.
What is the ATO’s view?
In an audit situation the ATO will review each person’s circumstances based on the facts. They will:
-          look at the description of the services on the invoices from the providers
-          test each claim and see if, in reality, that’s what is being charged
-          look at whether the amounts are reasonable
-          look up the provider’s website and see what they are promising and then compare it to the invoices
So, if the website only talks about wealth creation, while the descriptions on the invoices are very brief, the fees are likely to be not deductible. Otherwise, they may form part of the cost base for sourcing the property.
Barbara said investors could legitimately claim for the cost of ‘’lifetime membership programs’’ offered by spruikers even if they charge by instalment. The claim should be for the full amount at the time of the first instalment.
He said those generating income through real estate – such as real estate reporters – can claim for tickets for events such as home buyer ‘expos’.
<a href="mailto:staylor@propertyobserver.com.au">staylor@propertyobserver.com.au</a>
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staylor-63KgDrKwoY

How much of your “property education” is actually tax deductible? 

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Owners corporation managers are becoming involved in residential developments earlier and earlier on, according to Andy Dawson, managing director of Engine Property Group.
Dawson spoke to Property Observer as part of our Day in the Life series.
{qtube vid:=SFsbTEceQbI}
As soon as planning permits are approved for large residential development, owners corporation managers can become involved providing feedback on how the building will work.
The role has extended far beyond that of being just a strata manager and now involves consultation on laws, lay-out, and structure of residential buildings from day one.
"If you break down from our perspective what we actually do, right from the moment that the actual town planning permit is issued and there are architectural drawings we’re asked to have a look at the drawings, to look at the machinations of the building, look at how many buildings there are, what type of amenities there are, how we actually structure the owners corporation," Dawson told Property Observer.
Photos: ILK South Yarra
New developments, prestigious and otherwise, have more and more common spaces. <a href="https://www.propertyobserver.com.au/victoria/vue-de-monde-communal-kitchen-for-melbourne-development/2013092365193">Banquet kitchens</a> are the norm these days, buildings aren’t complete without their <a href="/news">own cinema</a>, and <a href="/news">shared rooftops</a> are now almost as important as what is in the newly completed apartment.
But with that rise of shared spaces comes the added burden on the owners corporation for managing and funding them.
<blockquote class="twitter-tweet">
Pool at South Yarra, Ilk <a href="https://twitter.com/search?q=%23propertyobserving&amp;src=hash" target="_blank">#propertyobserving</a> <a href="https://twitter.com/search?q=%23ilksouthyarra&amp;src=hash" target="_blank">#ilksouthyarra</a> <a href="https://t.co/UEovBOF8Jd" target="_blank">pic.twitter.com/UEovBOF8Jd</a>
— Jennifer Duke (@JennieDuke) <a href="https://www.propertyobserver.com.au/https://twitter.com/JennieDuke/statuses/380251428985380864" target="_blank">September 18, 2013</a>
</blockquote>
The organisational and technical infrastructure required far surpasses what was required in previous styles and require a far larger owners corporation.
Working out the operational costs of these spaces is integral to maintaining body corporate fees at their advertised rate, and working this out takes months.
Dawson says larger firms are generally able to keep body corporate fees within 10% of the advertised rate even after several years.
"We have to set quite reasonably budget allocations so incoming purchasers know what the level of the owners corporation fees are."
The increasing complexity of developments also means there is an increasing number of owners corporations for each development. It’s common for them to have eight different bodies for one development.
"They’re a function of cost centres they don’t want to be paying for the costs of a person living in another tower."
Day in the life
8.30am: Get to work and check emails
9:30am: Meeting with managers to organise staff for upcoming hand-over of development
11:30am: Site visitation to Tip Top development in Brunswick. Discussions with developers on how to approach owners corporation structures.
12:30 Lunch meeting with an architect on the design of a communal kitchen
14:30 Meeting the building manager of 27 Little Collins Street on how to move 170 people into the development, using just one goods lift, without disrupting the operations of the Sheraton Hotel.
16:00 Meeting with Engine’s Lawyers to develop presentation on the legal obligations of a developer in an upcoming site
Video Transcript
Alistair: Prestigious new developments these days seem to offer more and more shared spaces, from rooftop cinemas, massive gyms, beautiful gardens and banquet kitchens but this drive towards shared facilities requires a sleeker much more engaged owners corporation structure to manage these spaces. We spent the day with Andy Dawson, head of Engine Property Group to talk about how they manage this emerging breed of new developments.
Andy: Engine Property Group is a property asset management company. We look after every aspect of property save and except sales and rentals. So when common property is created an owners corporation is deemed to exist and the owners corporation is the owners and they can own a multi-level residential tower or they can own an estate or a planned-community and we assist them with their functions under the act to fulfil the repair maintenance of common property and enforcing the rules and regulations in that environment.
Alistair: So which sort of developments do you cover?
Andy: We’ve got some beautiful sites, we have some beautiful established sites. We have representation at New Quay, the Nolan Tower, Royal Domain Tower, we have properties in Port Melbourne, Bay Apartments and out to the east we have Mitcham Village. We have wonderful estates Solomon and Allamanda. Out in the east we have Marriot Waters and we’ll be taking a trip today to a beautiful development, probably the most prestigious development in South Yarra which was delivered by Little Property which is Ilk.
Alistair: What’s changed in the industry?
Andy: You could purchase an apartment back in the early 80s and upon settlement you receive your owner’s manual and your keys and you would arrive at the apartment complex and possibly be met by a retired bank manager. Your movement would be organised. Now the delivery of service is at such an acute level that we have worked so hard and can see the high level development companies that attract purchasers. Their service proposition with regards to delivery has increased because apartments are now seen as homes, buildings are now seen as communities. The level of owner occupier is significantly higher. If you break down from our perspective what we actually do, right from the moment that the actual town planning permit is issued and there are architectural drawings we’re asked to have a look at the drawings, to look at the machinations of the building, look at how many buildings there are, what type of amenities there are, how we actually structure the owners corporation. It’s not unusual in these larger developments to have anywhere from six to eight owners corporations and they’re a function of cost centres they don’t want to be paying for the costs of a person living in another tower. So we have to have a look at the structure of the owners corporations, the cost allocations. We have to set quite reasonably budget allocations so incoming purchasers know what the level of the owners corporation fees are.
Andy: So if you can imagine, you’ve purchased your apartment, you move in, and then you arrive at the apartment complex and you’re met by one of our team who’s the building manager. There’s been a lot of lead-up work for two to three months to that particular point in time. So someone comes in and straight away they feel the building is clean, safe, it’s secure, it’s compliant, and they can go to their website. They can have a look at how to book into the movie theatre, the barbeque area, how do I go about this, what are the rules, what can I can’t do, who do I contact? It all augurs well for maintaining that higher standard. And we’re lucky enough to be working with groups that are continually evolving up and we’re continuingly evolving up. So that’s our significant point of difference and that’s where I see our industry as going.
Alistair: So where are we heading?
Andy: Toorak Road, the new very prestigious Ilk development that’s been recently handed over by Little Property.
Alistair: So you’ve been working with Little Property for a while?
Andy: Yeah we’ve got a great relationship with Little. We’re very fortunate to have tremendous relationships with a lot of high end developments. We try and work really hard. We have our scabby knees but we try and work really hard to maintain the respect and deliver in accord with their expectations and purchasers’ expectations.
Andy: It was delivered in stages. The first stage was end of June early July; the second stage was end of August. And that’s getting nearly 400 people into a building over that period of time.
Andy: We’re standing on the ninth level of Ilk Tower. Which is Little, in South Yarra’s development. So there are six owners corporations at Ilk. We’re standing on one owners corporation here which the residential towers share. Which is the common amenities here, it’s a beautiful entertaining area where people can have their own private parties, catering, bring in a chef, over there we have cinemas, barbeques, it really is well done. But the point I’m making is it’s a common property and an owners corporation. Above us is the North Tower, that’s an owners corporation. Below this slab is the South Tower, that’s an owner’s corporation. The point I’m making is the people in the South Tower don’t contribute to the costs of the people in the North Tower but they share the costs of these cost. We have a retail component and we have a car park component. But again the whole process of bringing a $100 million plus building on stream, in anticipation of 400 residents where you know that people have just experienced that journey I’ve spoken about with regards to customer relations. It’s so critical for us to hit it right.
Andy: Behind the scenes, behind that area there is plant and equipment. And that plant and equipment is being loaded up on building management system so we know who the core supplier is, who the manufacturer is, what types of warranties are involved, both from a manufacturing perspective and from a service perspective. And that is so important. People don’t think of this, they think it might just be heating and cooling equipment. But the reality is, if something goes wrong and you just have a strata manager who gets the call they might just ring a contractor to come and fix it. But from our office we know who to go directly to. We know who the service providers are and all that is a function of not breaching warranties. And again that’s a function of cost saving. So it’s a situation of managing a building parcel in its entirety rather than just having one particular discipline which is strata management.
<a href="mailto:awalsh@propertyobserver.com.au">awalsh@propertyobserver.com.au</a>
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awalsh-7Ub9EypybQ

What does your owners corporation actually do? A day in the life of an owners corporation manager

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Vacancy rates across Sydney’s popular inner and middle suburbs have tightened as first home buyers, struggling to afford properties, look to rental accommodation.
The October 2013 Real Estate Institute of New South Wales Vacancy Rate Survey shows availability across the Sydney metropolitan area is steady at 1.7%.
REINSW president Christian Payne said the rate was the lowest the middle suburbs had experienced in 18 months. "It is yet another indicator of how the abolition of incentives on existing properties for first home buyers is causing issues across the marketplace."
Other figures are:
• Inner suburbs (0-10 kilometres from the CBD) are down 0.1% to 1.7%
• Middle suburbs (10-25 kilometres from the CBD) fell 0.2% to 1.6%
• Outer suburbs (more than 25 kilometres from the CBD) are up 0.2% to 1.7%
"First home buyers who can’t afford to buy their dream homes are putting substantial pressure on the
rental market," Payne said.
"Middle suburbs, including Auburn, Burwood, Hunters Hill, Parramatta and Ryde are some of the hardest places to find accommodation in Sydney."
Outside Sydney, the Hunter fell 0.1% to 2.9% despite Newcastle’s increase of 0.7% to 2.4%. The Illawarra remained steady at 2.0% even though Wollongong’s vacancy rate rose 0.4% to 2.3%.
In regional areas, Albury is the hardest place to find rental accommodation after a decline 0.2% to 1.8%. Orana, which had previously held the title, jumped 0.6% to 1.9%.
Northern Rivers’ availability rose 0.2% to 3.1% and New England was up 0.5% to 2.9%.
Meanwhile, the easiest place to find rental accommodation in the state is the Central West after a rise of 0.3% to 4.1%. South Eastern NSW added 0.5% to 4.0%. Coffs Harbour’s availability leapt 0.8% to 3.8%.
<a target="_blank" href="mailto:staylor@propertyobserver.com.au">staylor@propertyobserver.com.au</a>
 
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Struggling first home buyers pushing down Sydney's inner and middle suburb vacancy rates

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A recent article in the Australian Financial Review reassured investors that the anticipated short-term surge in sublease space (within Australia's CBD Office markets) has simply not eventuated:
"Sublease space spikes at times when the economy is weak and business confidence is low because companies are restructuring and downsizing."
<img alt="CBRE_sublease_space_by_industry" height="315" width="470" src="/images/stories/2013/11/12/CBRE_sublease_space_by_industry.png">
Source: CBRE
Furthermore, the article suggested that the overall amount of sublease space is expected to fall sharply over the next few months — following the post-election improvement in business confidence.
And of all the capital cities, the CBRE research shows Melbourne has provided the greatest improvement over the past year.
What else does the chart reveal? For a number of years now, this blog is pointed to Melbourne having far greater stability — when you compare it to other capital cities. And my reasoning has been that Melbourne enjoys a far more diverse tenancy mix.
However, there has never really been any definitive analysis, to clearly confirm this particular assertion.
That is until now!
As you can see from the chart above, every CBD (other than Melbourne) has a major exposure to one specific market sector:
<ul>
<li>
Sydney: Finance &amp; insurance;
</li>
<li>
Brisbane: Mining, manufacturing &amp; construction;
</li>
<li>
Perth: Mining, manufacturing &amp; construction; and
</li>
<li>
Canberra: Information technology.
</li>
</ul>
As you would appreciate, when any of these business sectors begin to surge those capital city office markets respond rapidly — with escalating rentals and prices.
However, during an economic downturn (like the GFC ) those same markets tend to suffer the most.
Bottom line is with a more-balanced spread within its tenancy mix, Melbourne's office market is better placed to withstand such economic gyrations.
While it may not reach the same heady peaks, nor does Melbourne plumb the depths experienced by the other capital cities.
Perhaps it lacks some of the excitement. Yet instead, Melbourne has historically been able to offer investors solid and predictable returns.

<hr>
Chris Lang is an advisor to commercial property investors, sell-out author and regular speaker on how to invest in commercial property. You can visit his website <a target="_blank" rel="nofollow" href="https://property-edge.com.au/">Property Edge Australia</a> to help you get the most out of your commercial property investing.
 
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Balance is best: Why Melbourne's office market is well placed to withstand economic gyrations

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For most investors who focus on units and apartments, buying on the ground floor long time been a property industry taboo. Experts and successful investors historically have insisted on avoided the ground floor for a plethora of reasons. This sentiment was then reflected and evidenced in the market via property values. Take your stock-standard, older style, three-floor walk-up unit block without a lift.

For the past fifty years or more, you could almost guarantee that that the top floor units would achieve the higher values, followed by middle floor and then the ground floor with the weaker property values in those complexes.

There are a number of reasons why professional investors have avoided ground-floor units and apartments in the past, each of these being perfectly valid within the context of historical demographic and cultural trends/preferences:  

1) Safety and security

[smartcode_project:default project_id=26730]

Historically, unit dwellers have been mostly a younger demographic cohort, with singles, couples, or perhaps couples expecting their first baby, occupying units due to the cheaper cost of living whilst saving for a home of their own. Ground floor was always seen as less secure and therefore at greater risk of theft and damage.

2) Top floor units having better views and more private balconies

[smartcode_project:default project_id=22584]

With most investors targeting more of a young single/couple/family investor persona, views and privacy is a crucial feature for investors to ensure tenants have peace of mind. A better outlook and maximum privacy helps to keep tenants happy and thus keep them renting your investment unit longer. This reduces vacancy periods and thus maintains solid return on your investment, so top floor eclipsed ground floor units in terms of demand by investors.

3) Noise

[smartcode_project:default project_id=29915]

Top floor units have also been favoured by investors because of noise issues. With many light sleepers who are also rental property seekers, being on a ground or middle floor of a building can be a real turn-off, with footstep noise from the units above being the deal breaker between renting an apartment and not renting one. Top floor units do not have this problem and thus grow in capital value faster, as well as attract higher rental cost.  

However this preference could be changing, and for NSW investors with a keen entrepreneurial streak, there could be genuine opportunities emerging with ground floor units. With some due diligence and forecasting, investors could be well placed to purchase ground floor units at lower rates, and reap the rewards later on in the holding period.

The reason for this is a combination of two dynamic factors:

1)      The very recent – and well covered – news of the NSW state government’s upcoming changes to strata by-laws; and

2)      Changing demographic factors in the NSW population coupled with the an increasingly urbanised and unit-preferential population  

There are a number of strata by-law changes that the Department of Fair Trading is looking to push through, and these are expected to take effect by mid-2014. Of all the changes established, the most significant changes for ground floor investors are:

-          That smoking will be prohibited on balconies and courtyards within individual units

-          It will now be much easier to have a pet in a strata property than ever before  

So how do these changes positively affect ground floor units? The answer in my mind is all to do with Australia’s aging population. NSW is Australia’s most populous state and also has one of the highest baby-boomer proportional populations in the country. As this generation moves into retirement age, demand for easy-access, level ground floor dwellings will no doubt increase in this state.

For me, the smoking and pets by-law changes is about reading between the lines. Most complaints to strata committees (which, when unresolved at a strata committee level, escalate to the NSW Fair Trading department, the team responsible for the strata by-laws restructure) stem from refusal of pets, and also complaints from elderly and family dwellers about neighbour’s balcony smoke blowing into their unit.

In my mind, the new by-laws have been developed in part to benefit and assist our increasing aging population who are downsizing to apartment living, as well as benefit young families. Smoke is a genuine turn-off for these dwellers, and as for pets it is well documented that having a pet helps boost the mental health of retirement age and elderly people, especially those who may have lost their life partner and are living on their own. Pet ownership can curb depression and also assist therapy for illnesses such as dementia too.

Where it used to be a trend for retirees and elderly to move out of capital cities, seeking ‘sea-change and tree-change’ lifestyles, to live in a bigger dwelling (i.e. a house on a larger lot), in a quieter, more remote, and peaceful town, new trend data now that suggests the opposite is occurring.

Retiree-aged Australians are increasingly wanting to remain urbanised, with the main reason being to be close to their families and grandchildren; not having to travel so far to see them regularly. Affordable houses with yards in metropolitan areas then becomes a challenge for retirees to source.

The other cultural shift occurring is one geared towards low-maintenance, well-located properties. So, units and apartments that do not have yards are much easier to maintain.  

The pros of holding a retiree-age occupied, ground-floor investment property, far outweigh the cons these days, and here’s why:

-          A growing retiree demand for ground floor housing – providing stairs are minimised and access is easy – this creates a growing tenant pool, which in turn increases demand.

-          Sure, some mature tenants may simply prefer to live on the top floor of a building with a lift, however as an investor the increased strata costs to maintain a lift (along with any other amenities such as pools, tennis courts, water features etc.) may make this property type not as profitable as a modest non-lift building

-          Elderly folks make great tenants! It will be very unlikely that your tenant will trash the place, create noise issues etc. In fact, in my experience my elderly tenants have maintained the properties very well, and even created a sense of community within their buildings, as well as reporting suspicious activity to local police

-          Rental repayment security is also a positive. With most mature tenants being downsizers; cash-flow is quite positive and the commitment of an apartment is usually far less than the house they may have occupied previously

-          Occupancy tenure is usually also excellent, with many retiree-aged tenants establishing themselves in a property with more of a long-term view than say a young family or couple, who are looking to move out as soon as their home deposit is saved  

So perhaps it is time for investors to reconsider their stance on ground floor units and apartments. I do not doubt that middle and top floor properties will continue to grow also, however the opportunity for ground floor success is substantial.

 

<hr>
Cameron McEvoy is a NSW-based property investor and maintains a blog, <a href="https://propertyspectator.blogspot.com.au/" rel="nofollow" target="_blank">Property Correspondent.</a>

 

 

 
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Down low can be the way to go: Ground floor apartments and units could be a good investment

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Australia's real estate market remained a tale of two stories in the third quarter of this year.
In its latest Global Market Perspective fourth quarter report, Jones Lang LaSalle found that during the September quarter, the theme of robust investment activity and subdued leasing activity not only continued globally but was more pronounce in the Australian market.
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Unlike the US and London which are experiencing both strong leasing and investment markets, it highlighted that in Paris and the Australian cities, the very strong demand from domestic and cross-border investors were in stark contrast to weak market fundamentals.
But JLL also noted that with the outlook improving in the majority of major leasing markets, it expects "in general, that disconnects will narrow during 2014".
The domestic findings were part of broader global real estate market report which overall pointed to more encouraging signs in 2014.
"Virtually all major markets are recording sales volume growth - and the weight of money, combined with an improving lending environment and heightened risk appetite, point to further uplift over the coming year," the report said.
"Liquidity is improving across a broad spectrum of markets and sectors and, barring external shocks, we are looking at a scenario where 2014 global sales volumes are potentially only 20-25% lower than the boom years of 2006 / 2007.”
However, it cautioned that the global leasing markets are less exuberant, with corporates remaining vigilant.
It also pointed out that following such a period of weak corporate activity, demand would typically be expected to bounce back by 20-30% - but that this cycle was likely to be different. "Commercial real estate is now being utilised more efficiently, leading us to the view that the upswing in occupier demand is likely to be less pronounced than in previous cycles, JLL said. “Even so, the majority of major leasing markets should be on a more solid footing in 2014".
Commenting on the local results, JLL head of international investments for Australia, Simon Storry said that strong institutional demand, both domestic and offshore, continued to support core valuations and noted that yield spreads, both within and between markets, widened again in the third quarter.
"These very wide spreads are now attracting yield-hungry investors - frequently active asset managers, smaller funds and syndicates - with more flexible mandates," he said.
In office markets, the average CBD vacancy rose from 10.9% (Q2) to 11.3% (Q3). He attributed that spike in vacancy rates to an increase in stock, however, he also pointed out that net absorption across CBD markets posted the first positive reading since 2012.
"Sub-lease availability (a sensitive indicator of underlying demand for office space) also fell slightly in Sydney and Melbourne although Brisbane and Perth both reported increases," said Mr Storry.
On the basis of information on future transactions, as well as long term indicators such as residential construction, Mr Storry said "we see the September quarter as marking the stabilisation of office space demand". But he expected vacancy rates to remain elevated through 2014.
"The medium term outlook for office markets, as for retail and industrial sectors, is for a measured recovery, with rental growth strengthening,” he concluded.
<a href="mailto:%20news@propertyobserver.com.au" target="_blank">news@propertyobserver.com.au</a>
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