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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You may recall several <a href="https://his-best.biz/?s=baby+boomers" target="_blank">blogs in the past about baby boomers</a>, explaining the effect they will have upon the property market — both residential and commercial.
In 2005, I warned investors that: If you hadn't sold your traditional inner-city family home by 2010-11, you had better be prepared to hold it until 2025.
My reasoning for this was not that there would be any fewer buyers. Rather, they would be five times as many of these homes on the market — as baby boomers sought to downsize en masse.
Based on the recent buying frenzy (and the regular 70%+ clearance rates) for houses each weekend this year you may feel I had been somewhat mistaken.
However, you need to keep in mind that the GFC had effectively put everything (and everyone) "on hold" for about five years. And the residential market is merely playing catch-up, on both price and activity.
Anyway, an article appeared on page five in the weekend Australian Financial Review entitled: "Baby boomers set to flood the market with family homes", which caught my eye.
So, what will this mean?
For those boomers seeking to downsize, it will mean a growing number of similar competing listings on the market. But with no additional buyers, for these out-moded homes.
Many of them will be in need of major upgrade work. And some will have reached the point, where they only represent land value.
Therefore, you will soon face the likelihood of downward pressure on pricing, in order for you to achieve a sale.
And this new reality will certainly have some unexpected consequences:
<ol>
<li>
What you once looked upon as your de facto superannuation will be eroded;
</li>
<li>
You will have less to spend on your new "smaller" home or apartment; and
</li>
<li>
The inheritance available to your children could effectively be trimmed.
</li>
</ol>
Will this affect commercial property?
On the face of it, you would probably expect not too much impact at all.
However, during the early 2000s, many investors use the untapped equity in their homes, to set up lines of credit.
And then, used them to purchase one or more solid commercial investment properties.
The commercial properties themselves may be performing well. But it is the LVR for the line of credit, which will concern your bank over the next 10 years — as the market falls away, for your traditional family home.
As such, you may find yourself having to sell the commercial property to keep your family home. Or be forced to sell the family home, in what will soon become a soft market.
Bottom line is fortunately, most of my clients will have already taken the necessary steps to avoid this dilemma.
However, with the residential market running hot at the moment, you still have a small window in which to resolve any exposure you may currently have.
 
<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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chrislang-EQKojcgJPV

How baby boomer downgraders may affect commercial property investments 

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This is a question often asked by traditional residential investors when they're considering the transition across to commercial property.
And you'll quickly discover the reasons are rather compelling.
Reason #1: Longer leases
Quite often, you'll find residential tenancies will be on a month-by-month basis, maybe six months, perhaps for a year.
Whereas, commercial properties will tend to lease for between three and five years, and often for longer. That means you have fewer tenancy changes, and a far more predictable income stream.
Reason #2: Greater security
When residential tenants want to exit half-way through a lease, they simply need to find a suitable substitute tenant. And then, transfer the lease across to that person.
From there on, this new tenant becomes responsible for the rental, over the remainder of the lease term.
Commercial tenants are running a business from your property. And whenever they sell their business, they also require your approval to 'assign' the lease.
However, here's the difference: If the new commercial tenant defaults in paying the rental, you also have recourse to the previous tenant as well — because commercial leases are business contracts, enforceable by law.
Reason #3: Commercial tenants pay outgoings
Typically, residential properties will provide you with a 5% gross rental return.
From this, you need to pay the rates and taxes, insurance, maintenance and so on — leaving you with about a 3.5% net return, at the end of the year.
Depending upon what (and where) they are, commercial properties will generate a 5% to 9% rental return.
However, commercial tenants are also required to pay the various building outgoings on top of their rental — making this a net rental return to you.
Reason #4: Commercial tenants operate a business
As you know, if the toilet stops working in an apartment … the tenant asks you to send around a plumber. Whereas, commercial tenants quickly attend to (and pay to fix) the problem themselves — so as not to disrupt their business.
Furthermore, the overall appearance of the property becomes a reflection on them. As such, your property is kept in good condition, at their expense.
Therefore, whether the lease requires it or not, most commercial tenants will regularly repair and repaint the property, in order to maintain a good corporate image.
Reason #5: Payment certainty
Most residential properties are rented by individuals. Therefore, the rent is generally paid in cash or by personal cheque. And this can often vary in its timing.
Because they are running a business, commercial tenants consider rent as simply another regular expense each month. And generally, this gets set up as an automatic bank transfer — and can be specified as such, in the lease.
Bottom Line: As a residential investor, you find yourself having to deal with the vagaries of individual people.
However, as a commercial investor, you tend to enjoy a more predictable long-term relationship with your tenants — based upon a proper business footing.
Doesn't that sound like a far better arrangement?
 
<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 rel="nofollow" target="_blank" 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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The five reasons to choose commercial over residential property

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Australia’s wealthiest suburbs have been revealed.
According to a new Australian Bureau of Statistics publication, residents of Toorak in Melbourne’s inner-east made an average total income of $150,548 each from wages and salaries, investments, businesses, and superannuation.
Toorak was followed by three Sydney suburbs. Mosman residents were on $142,773 a pop, Double Bay/Bellevue Hill’s wage-earners took home $141,544 on average, while residents of Hunters Hill/Woolwich sat on $138,007.
Rounding out the top five wealthiest suburbs was Cottesloe in western Perth, where residents made $125,441 on average.
The report also broke down average incomes by state, finding that residents of the Australian Capital Territory had the highest incomes in Australia, with an average of $61,608 per annum.
This was followed by Western Australia where average incomes stood at $58,291, followed by the Northern Territory, with $54,794, with New South Wales close behind on $54,110 and Victorian residents on $51,398.
Residents of Queensland on average made $49,853, South Australians made $47,853, while Tasmanians made $44,018 on average.
Residents in Australia’s cities tended to record substantially higher incomes than those in regional Australia.
If metropolitan areas are stripped out, the highest-paid regional workers were those in the mining centres of Karratha and Port Hedland in Western Australia, who earned $86,826 and $86,079 on average.
Between 2005-6 and 2010-11, average incomes in Australia grew 4.9%.
Western Australia and the Northern Territory recorded the highest levels of income growth, with 6.7% and 5.3% growth respectively.
Incomes in Queensland and South Australia were just above the national average, both growing 5% per annum over the period.
Residents of the Australian Capital Territory and Tasmania saw their income grow at levels just below the national average – 4.8% per year and 4.7% per year on average.
 
<hr>
 This article first appeared on <a target="_blank" href="https://www.smartcompany.com.au">SmartCompany</a>.
<img style="float: left;" alt="jc-insight" height="210" width="150" src="/images/stories/2013/10/30/jc-insight.jpg">PROPERTY INSIGHTS
<a href="https://www.propertyobserver.com.au/residential/income-correlates-to-prestige-house-price-with-mining-towns-the-major-abs-blow-ins/2013102965985?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=jonathanchancellor'spropertyinsights" title="Income correlates to prestige house price, with mining towns the major ABS blow-ins">Income correlates to prestige house price, with mining towns the major ABS blow-ins</a>
"The enduring global financial crisis fallout means many of these well-heeled residents aren’t actually any the wealthier from house price gains given the top end property market still hasn’t recovered."
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mrobin-TVRYiru7si

Toorak tops list of country's wealthiest suburbs

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Locksmithing is an art shrouded in secrecy for many investors. We spoke to Justin Fankhauser from TopLock to try and unlock the secrets of home security.
Property Observer is starting a weekly Day in the Life series to have a closer look at some of the people who deal with real estate every day and see what lessons there are for property investors.
{qtube vid:=1f3CHUJANaE&amp;feature=youtu.be} 
Most of his jobs are taken up by rekeying jobs – people want to change the key to the property but don’t want to switch the full locks out.
He says this is especially important when moving into a new property, you never know who else might have keys. It’s a quick job but it gives tenants and owners a sense of security.
Justin says a lot of private landlords don’t realise they should be doing this and most of those jobs come from professional property managers.
Even off-the-plan properties should be rekeyed before anyone moves in. In big apartment developments master keys are given to all contractors while they work on the building. That means when you move in any number of people could have a master key to your property so it’s important to rekey.
A lot of renovators are putting internal locks on bedroom and bathroom doors to give their tenants more privacy. It’s a simple thing that tenants really appreciate.
Insurance premiums go down when there are deadlocks installed on all external doors and window locks on all the windows.
They also go down further when alarm systems or camera systems are installed.
 
This is the day (and the night) in the life of a locksmith.
8am: Justin arrives at the <a target="_blank" href="https://www.toplock.net.au/">Toplock </a>factory in Northcote to start the day. He's on night shift as well today so he'll be working through the night. His dispatcher is already at work and has a full list of jobs ready for him and the growing team of locksmiths.
8.10am: Justin leaves for his first job. It’s a house in Coburg. It’s not too far and Justin makes good time.
8.40am: Justin arrives at the house and talks to the owner. The owner’s husband lost his wallet with a spare key hidden inside last week. His address was written on his drivers license and the owner thought she heard someone trying to open the back door last night. It’s a simple rekeying job.
9:00am: Rekeying is a quick job so he’s done in 20 minutes. He invoices the owner and heads back to the car to get his next job. It’s an industrial office out in Keilor East.
9:30am: Justin arrives at the office. He has a quick chat and gets started. The new tenants want to put locks on the three internal office doors. He switches out the old knobs with new keyed knobs. He boxes up the old ones so they can be reused if need be. Some of the doors weren’t quite latching properly but a quick bit of chisel work clears it up.
10:00am: He invoices the client and heads back to his office.
10:30am: Justin has a lot of administration to do. With the recent expansion of his business he spends more and more time running the administrative side of the business while his team of locksmiths run all around Melbourne.
2.30pm: He’s finished his administrative work and it’s time to hit the road again. He has a call out to a renovator in Brunswick who needs some work done.
2.45pm: It’s an old terrace being refurbished and the owners want internal locks put on all the bedroom and bathrooms. Tenants like it especially if they’re sharing a house. It gives them some extra privacy.
4.00pm: The whole house now has locks. It took a while to resit some of the doors and get them latching properly. He heads back to his car to get his next job. A nearby real estate agent wants the locks rekeyed for a new tenant.
4.20pm: He arrives at the Carlton house to rekey the front and back door. It’s a quick job for Justin.
4.40pm: He gives the new keys over to the agent and heads back to the office to prepare for the night shift.
7:00pm: Justin’s rested and eaten and ready to start the night shift. Once a week someone has to take the night shift and be prepared for all sorts of jobs.
9:00pm: The first night job comes early. It’s a call from Richmond where someone has locked themselves out. He heads over to let the tenants back in on a rainy night.
9.20pm: The traffic isn’t so bad at this time of night so Justin gets there quickly. He lets the tenant back in using a pick gun and heads back to the office.
11:00pm: Another call from someone locked out in Collingwood.
11:15pm: They’re drunk but nice. He lets them in with the pick gun again. All documentation is completed and ID is sighted to make sure it’s the right person.
2:00am: No one calls until 2am. He wakes up to take the call. Someone gets a quote, decides they don’t want the job and don’t take the job.
3:00am: He gets another call. The person is calling from a public phone box and needs to be let back in. They have bars on their windows so they couldn’t smash it.
3:00am: He lets them back in with the pick gun again and heads off.
7:30am: The night shift ends with no other call outs and Justin is free to go home and sleep.
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awalsh-7Ub9EypybQ

A day in the life of a locksmith - unlocking security secrets

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Some 20 localities recorded average total incomes of $100,000 plus in 2010-11 across Australia, according to the latest ABS release of ATO data.
But the enduring global financial crisis fallout means many of these well-heeled residents aren’t actually any the wealthier from house price gains given the top end property market still hasn’t recovered.
Of the top 20 income suburbs, 12 were in Sydney, four in Melbourne and four in Perth.
There's no surprise by the strong correlation between the income of the residents and their propensity to pay big money for their city abodes.
The only interesting new trend - or perhaps its retracing steps back to the pioneer days - is the emergence of mining wealth.  Toorak in Melbourne recorded the highest average total income at $150,548 of all the statistical area regions.
Mosman was second at $142,773, then Double Bay-Bellevue Hill at $141,544.
The Hunters Hill-Woolwich peninsula ($138,007) and Cottesloe in western Perth ($125,411) in fifth place. Outside of the capital city regions, incomes were highest in the mining centres of Karratha ($86,828) and Port Hedland ($86,079) in Western Australia. The coal mining centre of Moranbah ($83,257) in north-east Queensland was also prominent. Singleton ranks highly in NSW regions, along with Roxby Downs in South Australia with incomes rising faster than the wealthiest city locations.
Between 2005-6 and 2010-11, average incomes in Australia grew 4.9% with Western Australia recording the highest levels of income growth.
Sydney's top five income suburbs were....
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2005/2006
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2010/11
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Income annual growth %
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Mosman
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$114 971
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$142 773
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4.4
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Double Bay-Bellevue Hill
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$114 507
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$141 544
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4.3
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Hunters Hill-Woolwich
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$110 865
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$138 007
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4.5
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Dover Heights
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$100 951
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$125 350
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4.4
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Rose Bay -Vaucluse-Watsons Bay
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$100 871
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$125 091
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4.4
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The figure is an aggregate of wages and salaries, investment incomes, businesses, and superannuation.
The data also indicated provided insights into other additional income, including investment income - with Mosman recording an average income of $42,998 from this source in 2010-11. The Double Bay-Bellevue Hill incomes were potentially supplemented by $66,258 from investment income. Hunters Hill incomes were supplemented by $54,678 investment income.
So a quick look at the Sydney median house prices are:
<a href="/news">Mosman</a> $2.17 million - down 5.5% over past five years with an average 114 days on market with 9% average discount required to secure a sale.
<a href="/news">Double Bay </a>$2.7 million - up 14.6% over past five years with an average 142 days on market with 12% average discount required to secure a sale.
<a href="/news">Bellevue Hill </a>$2.88 million - down 14% over past five years with an average 148 days on market with 13% average discount required to secure a sale.
<a href="/news">Hunters Hill </a>$1.587 million - up 9% over past five years with an average 94 days on market with 10% average discount required to secure a sale.
<a href="/news">Dover Heights </a>$2.4 million - no change over past five years with an average 116 days on market with 11% average discount required to secure a sale.
The Melbourne median house prices are: 
<a href="/news">Toorak</a> ($150,548) $2.65 million - no change over past five years with an average 160 days on market with 10% average discount required to secure a sale. Toorak was also prominent in investment income terms - recording an average income of $89,841 from this source in 2010-11.
<a href="/news">Brighton</a> on the coast of Port Phillip Bay had the second highest average total income in 2010-11 ($111,966). Its $1.69 million house median up 1.6% over past five years with an average 99 days on market with 10% average discount required to secure a sale.
Then followed Albert Park, ($104,168) East Melbourne ($103,268) and Malvern-Glen Iris ($94,697). 
Perth's top five were
<a href="/news">Cottesloe</a> ($125,411) - $1.725 million down 15% over the past five years 131 days on market with an average 10% discount required to secure a sale. 
then Nedlands-Dalkeith-Crawley, ($116,269); Mosman Park-Peppermint Grove, ($116,253); City Beach ($115,829) and Claremont ($99,777). 
<a href="/news">Port Hedland </a>($86,079) - $1.2 million median house price up 50% over past five years with an average 101 days on market with 11% average discount required to secure a sale.
Recently RP Data research indicated the top end was at the beginning of renewed price growth after premium housing markets recorded a larger correction in values following the GFC. Cheaper price segments have recorded a higher recovery rate to-date than the prestige home market.
<img alt="kusher-oct-18-one" src="/images/stories/2013/10/18/kusher-oct-18-one.gif" width="470" height="238">
The latest quarterly figures suggest the tide may be turning for Australia’s more expensive housing markets.
The premium market, comprising of the most expensive 25% of capital city suburbs, recorded quarterly value growth of 4.1% compared to 3.6% across the middle 50% of suburbs and 2.8% growth across the most affordable suburbs. It's especially noticeable in Melbourne houses, and also Sydney, but not yet in Brisbane and Adelaide.
<img alt="kusher-oct-18-three" src="/images/stories/2013/10/18/kusher-oct-18-three.gif" width="470" height="199">
The annual growth in house values is noticeably stronger than unit values. Over the most recent three months, premium house values are 4.2% higher and unit values are 2.9% higher. 
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jchancellor-FAypfDUnLy

Income correlates to prestige house price, with mining towns the major ABS blow-ins

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This time last month I wrote that we had reached what I called the <a target="_blank" href="https://www.propertyobserver.com.au/landlords/we-ve-reached-the-tipping-point-of-a-balanced-rental-market-ewan-morton/2013091264962">delicate rental market tipping point</a>. I said it would be fleeting and it appears I was right. That moment when rents and mortgage outlay are in line has passed. Figures released over recent weeks highlight house prices in Sydney jumped 2.5% in September with a 10% growth overall so far in 2013. Compare that to figures released by APM yesterday showing average Sydney house price rents haven't moved over the last 12 months and predictions are they will remain stable for much of the year ahead. That's great news if you're renting.  For those in the market to buy it is an interesting revelation. It's certainly another reason not to get caught up in talk of the market going gangbusters, and while it might sound gloomy I think investors should factor in a uniform rental return when doing their numbers on the value of a potential rental property. Better to be happily surprised rather than financially squeezed.   However it is also good to remember that those numbers are the average and there are pockets where rental demand is strong. We manage a large number of properties in and around Pyrmont where demand continues to outstrip supply so rental return is very healthy. If you are a potential investor don't be discouraged but do be discerning.
 
<hr>
 Ewan Morton is managing director of the Sydney based <a target="_blank" href="https://www.mortonandmorton.com.au/" rel="nofollow">Morton &amp; Morton</a>.
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emorton-DecMjPQt5h

Moment when rents and mortgage outlay are in line has passed: Ewan Morton 

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Is now a good time to buy a property or home?
74% of respondents in the RP Data – Nine Rewards survey believe now is a good time to be buying property. While the results show the vast majority of those surveyed think the timing to purchase a home is good, the results are a reduction from our May 2013 results where 80% of respondents thought it was a good time to purchase a home. The result is also slightly lower than a year ago when 76% of respondents thought it was a good time to be purchasing a dwelling.
<img class="aligncenter size-large wp-image-2634" alt="1 time to buy" src="https://blog.rpdata.com/wp-content/uploads/2013/10/1-time-to-buy-580x206.jpg" width="470" height="167" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Across the regions the results for this question showed some diversity. Not a single respondent in the Northern Territory thought now was a good time to be buying a dwelling, perhaps reflecting a reduced level of buyer sentiment in the top end housing market. Similarly, a smaller proportion of Sydney respondents (63%) thought now was a good time to be purchasing a dwelling. The May results were 10 basis points higher for Sydney at 73%. Dwelling values have moved 12.2% higher across the Sydney housing market since values bottomed out in May 2012. Many prospective Sydney buyers have either been priced out of the market or would be viewing the current level of capital gains as unsustainable.
More than 80% of survey respondents thought it was a good time to be buying a home in Adelaide, Regional Western Australia, Regional Queensland and Brisbane.
Is now a good time to sell a property or home?
Despite the strong housing market conditions only slightly more than half of respondents thought now was a good time to be selling their home. The results are dramatically higher than a year ago when only 29% of those surveyed thought it was a good time to be selling.
<img class="aligncenter size-large wp-image-2640" alt="2 time to sell" src="https://blog.rpdata.com/wp-content/uploads/2013/10/2-time-to-sell-580x204.jpg" width="470" height="165" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
The strong housing market conditions in Sydney have prompted the largest proportion of respondents to suggest now is a good time to sell. About 74% of Sydney based respondents thought that now was a good time to be selling their home. Based on RP Data’s most recent weekly statistics, the typical Sydney house is selling, on average, in just 27 days, highlighting the strong selling conditions that are prevalent across this market. 65% of respondents in Melbourne thought now was a good time to be selling and 61% of Perth respondents though it was a good time to sell their home.
Housing markets where capital gains have been softer, such as South Australia, Queensland and Tasmania, have prompted survey respondents to be less bullish on selling conditions. Only 23% of those surveyed in regional South Australia thought now was a good time to be selling and 29% in regional Queensland.
In your opinion is Australia’s housing market vulnerable to a significant correction in values?
This is the first time this question has been included in the RP Data – Nine Rewards survey. The results show 60% of survey respondents believe the Australian housing market may be vulnerable to a significant correction in values. The survey didn’t probe further about what level of value decline would be considered ‘significant’, however, it is clear that there is a level of unease about the future of Australian dwelling values.
<img class="aligncenter size-large wp-image-2639" alt="3 vulnerable" src="https://blog.rpdata.com/wp-content/uploads/2013/10/3-vulnerable-580x258.jpg" width="470" height="209" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Respondents based in the Australian Capital Territory, Perth and Sydney showed the most significant level of pessimism when it came to their belief that dwelling values are vulnerable to a significant correction. 70% of respondents in the ACT thought the local housing values were vulnerable to a significant fall, as did 68% of Perth respondents and 65% of Sydney respondents. Both Sydney and Perth have seen a greater than average run up in dwelling values over the most recent growth cycle which may be contributing to the perceived threat of a downturn in home values.
Conversely, respondents in Tasmania, where the housing market has been the weakest of any state or territory, are much less pessimistic. Only 36% of respondents thought the housing market was vulnerable to a significant correction in dwelling values. The proportion of pessimistic responses was below 60% for respondents based in the Northern Territory, regional NSW, Adelaide, Brisbane and regional Victoria.
What is the most important factor when purchasing a property?
The vast majority of respondents believe the most important factor to consider when purchasing a property is their personal financial situation at 52%. Slightly more than half of the survey participants felt this to be the most important factor when considering a property purchase. Interestingly, the housing market’s prospects for capital growth also rated quite high, with just under 20% of respondents indicating this was their most important consideration. 15% of respondents thought the interest rate setting was the most important factor, while only 10% of respondents felt that job security was their most important consideration.
<img class="aligncenter size-large wp-image-2638" alt="4 most important" src="https://blog.rpdata.com/wp-content/uploads/2013/10/4-most-important-580x211.jpg" width="470" height="171" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Do you believe home values will rise, fall or remain stable over the next six months?
51% of respondents were expecting home values to rise over the next six months compared with just 33% of respondents in October last year. Only 6% of respondents were expecting values to fall over the coming six months.
<img class="aligncenter size-large wp-image-2637" alt="5 6 monhts" src="https://blog.rpdata.com/wp-content/uploads/2013/10/5-6-monhts-580x335.jpg" width="470" height="271" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Of those respondents who are expecting home values to rise over the next six months, their expectations of growth remain relatively measured, with just over half of those respondents that thought values would rise over the next six months indicating that growth would be between 2.5% and 4.9%. The vast majority were expecting growth to be less than 5% over the next half year.
According to the 6% of respondents who think values will fall over the next six months, the largest proportion (41%) are expecting the fall to be less than 2.5% and almost 75% of respondents think values will fall by less than 5% over the coming half year.
Do you believe home values will rise, fall or remain stable over the next 12 months?
A larger proportion of respondents believe Australian home values will rise over the next 12 months, with 57% of respondents expecting values to lift. Compared with the survey responses in October last year, only 42% of respondents were expecting home values to rise over the coming year.
<img class="aligncenter size-large wp-image-2636" alt="7 12 months" src="https://blog.rpdata.com/wp-content/uploads/2013/10/7-12-months-580x225.jpg" width="470" height="182" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Of those respondents who are expecting dwelling values to rise over the coming 12 months, the vast majority (78%) expect the magnitude of growth to be less than 5%.
Do you believe home rental rates will rise, fall or remain stable over the next 12 months?
 Most respondents (55%) to the survey are expecting rental rates to continue rising over the coming year, with only 4% of individuals surveyed expecting a fall in rents.
Of those respondents that are expecting a rise in weekly rents over the coming year, 41% are expecting a rise of between 2.5% to 4.9% while the second largest proportion are expecting rents to rise by under 2.5% over the year.
<img class="aligncenter size-large wp-image-2635" alt="8 rents" src="https://blog.rpdata.com/wp-content/uploads/2013/10/8-rents-580x248.jpg" width="470" height="201" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Respondents based in Northern Territory are the most bullish on rental markets, with three quarters of the respondents expecting higher rents over the next twelve months. Just under 70% of Adelaide respondents were expecting higher rents and more than 60% of respondents were expecting rents to move higher over the year in Regional NSW, Tasmania and Sydney.
Residents of regional South Australia showed the lowest expectation of rental rises over the coming year, with only 38.5% of respondents indicating they were expecting rents to move higher. Fewer than half the respondents in ACT, regional Vic and Perth were expecting higher rents over the coming year.
 
<hr>
 Tim Lawless is national research director of <a rel="nofollow" href="https://www.myrp.com.au/" target="_blank">RP Data.</a>
 
 
 
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tlawless-5VLUrbAk9s

Do people think it's a good time to buy or sell a property? Consumer sentiment survey results

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The increasing interest from offshore Asian buyers, and largely Chinese buyers, has been attracting a lot of attention. Not only are real estate agencies expanding out to these areas, but Chinese-language news outlets and online portals specialising in property are going from strength to strength.
It's interesting then, that many are restricted by certain types of rules and regulations. Property Observer set out to find specifically what stock these buyers can purchase, and what they're looking for.
Australian Property Monitors' Andrew Wilson points out a few major points that are of interest to Chinese buyers.
Firstly, he says, it's a case of replacing the 'location, location, location' mantra with "good schools, good schools and good schools."
Linked to this, they look for highly established quiet to upper-mid price range neighbourhoods, as well as those with "cultural connections". For Sydneysiders, this may mean a suburb such as <a href="/news">Ashfield</a>.
Value is then the final most important consideration.
The categories of buyer
However, we must be wary when categorising all Chinese investors together. Just as resident buyers do not fall into any one strict category, there are a number of buyer-types here also.
Andrew Taylor, co-CEO of <a href="https://Juwai.com" target="_blank">Juwai.com</a>, a listings portal for Chinese buyers to find international property, helped us categorise the buyers into these three segments.
He explains that they classify offshore Chinese buyers into four distinct categories, based on net worth.
1.    Extremely high net worth: Those seeking prime properties, from $5 to $50 million in value. Usually for immigration or as secondary residence. These buyers are fewer in number, but account for a significant dollar amount of total investment.
A typical investment for this type of buyer, may look like a $6.5 million listing they had of a property on Wategos Beach, Byron Bay.
2.    High net worth: Those seeking luxury properties, from $1.5 to $5 million.
3.    Upper middle class: Those seeking properties from $750,000 to $1.5 million. The greatest number are in the $1.2 to $1.5 million range.
4.    Middle class: Those seeking properties from $250,000 to $750,000. The greatest number of these buyers are in the $500,000 to $650,000 range.
He points to the top reasons for buying, across the categories, being for reasons of education, migration and investment diversification. Often, all three are combined.
This may be a buyer purchasing an investment property and renting it out, until a few years later their children live in it to study in Australia, with the entire family staying when they visit.
"Then, perhaps one day, they immigrate to Australia and retire to the home," says Taylor.
In fact, Chinese buyers can <a target="_blank" href="https://www.propertyobserver.com.au/residential/understanding-chinese-property-buyers-and-sellers/2012012653148">also differ in their buying needs and wants due to their ethnicity</a>.
OH Property Group's Oliver Stier pointed to the following points:
- They like full-brick homes (as opposed to brick veneer, weatherboard or fibro – unless they plan to knock it down).
- They like rectangular-shaped land.
- They generally would prefer not to have a swimming pool. Swimming is not a big part of the Chinese upbringing and many Chinese-born children don’t know how to swim. Therefore a swimming pool is seen to be more a danger and a chore than a source of pleasure.
- They like level and clear land with not too many trees (especially protected species such as gum trees, which are not always possible to remove).
- They like low-maintenance properties (e.g. paved backyard as opposed to cottage-style garden).
- They prefer high side of the street and generally dislike properties that have an entrance below street level.
- They have a preference for newer properties and less of an appreciation for older-style features such as an ornate ceiling or picture rails, etc. Therefore, a heritage-listed property usually does not appeal to Chinese buyers.
- Position is important, and many Chinese buyers will not want to purchase properties that are at a T-junction, for example.
- Aspect is also important, and Chinese buyers typically prefer morning sun than afternoon sun.
- Some feng shui-related features are important.
A window into Chinese buyers' thoughts
If you're interested in understanding the Chinese buyer, look no further than the Chinese developers, says Taylor. Particularly those who are developing in Australia, as often this is to attract Chinese investors.
“I had dinner with two small Chinese developers this week, both with projects worth around $65 million. They just purchased several blocks of land on the coast in Queensland and New South Wales. Their requirements are that the land be close to schools or close to good hospitals. Their target market is investors, especially Chinese investors, who will rent out to locals," he says.
In December, he wrote  for Property Observer <a target="_blank" href="/news">four tips for those looking to sell their property to Chinese buyers</a>.
We've also recently written about <a target="_blank" href="https://www.propertyobserver.com.au/news/marketing-your-property-to-chinese-buyers/2013092465226">marketing your property to Chinese buyers</a>.
Which cities are seeing interest?
Measuring activity on Juwai.com, comparing January and August 2013 (including page views, searches, search results and enquiries) the following trends emerge.
China’s Top Aussie Cities 1. Sydney 2. Brisbane 3. Melbourne 4. Gold Coast 5. Adelaide  
China’s Fasting Growing Aussie Cities 1. Melbourne 2. Perth 3. Mandurah, WA 4. Launceston, Tasmania 5. Canberra 6. Adelaide  
Source: Juwai.com
This week, Century 21 Australia and New Zealand chairman, Charles Tarbey, mentioned to Property Observer that <a href="https://www.propertyobserver.com.au/news/lack-of-stock-behind-price-rises-exclusive-interview-with-charles-tarbey/2013102365923" target="_blank">Adelaide has been starting to market developments to Chinese buyers </a>more heavily.
Next page: Chinese Australian buyers and the changing wants of buyers
 
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Chinese Australian buyers
Sophie Jiang, from The Vision China Times, told Property Observer that it is definitely hard to generalise about what Chinese buyers want in a property. Budget, purpose, personal background and situation are, of course, game changers for every investor.
However, some constants are definitely clear from what the experts are saying.
Jiang notes that she has spoken to a number of different development groups, such as AVJennings, Fraser Property, Payce and Legacy group, and that this has created a fairly clear picture in her mind as to what is being marketed and snapped up.
However, it's not just non-resident Chinese buyers that are purchasing. Chinese Australian buyers, obviously, are looking for a certain type of stock.
"For owner occupiers especially those with young kids, quality schools are always on the top of their criterion list in selecting location, followed by the access to public transportation, amenities, neighbourhood," Jiang lists.
"Many Chinese Australian buyers are family oriented so they like to live close to each other and  still be able to enjoy the same lifestyle as in China. That is the reason why those suburbs with large Chinese population have been enjoying high demand," she explains.
When looking at the specific property, Chinese buyers steer towards double brick with large land content, due to opinions that this creates solid capital growth.
"Good position and floor plan in compliance with Feng Shui are also very important," she says.
A Feng Shui inappropriate floorplan may include features such as the front door looking on to another door, doors being in too close proximity (known as "arguing doors"), too many windows and doors in a row, and bedrooms that are situated over specific rooms that are not deemed peaceful (e.g. over a garage).
New apartments and townhouses, due to their low maintenance appeal, are also being favoured by Chinese buyers. While, for solely investment buyers, new and off-the-plan in the inner city are more important.
"Popular features are location (proximity to transport, university, shopping, CBD, beach), architectural design, finishes and amenities," Jiang concludes.
Taylor agrees with this, also listing the following themes:
- Water views and frontage
- New or recently renovated construction
- Proximity to educational institutions
- Proximity to Chinese Australian communities
- Easy access to amenities, shopping and transport The changing wants of buyers
While all of these factors may sound fairly prescriptive, the sands are regularly shifting around buyers' profiles and their wants.
“In Australia, I’m constantly surprised when I hear from agents. There’s always a new suburb where vendors are benefitting from having these investors show interest in their property. Whether it’s in the Northern Beaches of Sydney, semi-rural Dural, or an outer suburb of Adelaide, Chinese buyers are turning up in places they seldom did before," Taylor says.
“I don’t think Australia has ever seen a group of foreign investors as numerous as the Chinese. As they learn more about Australia and come to love it, they are exploring new communities and property types. That’s why you see Chinese buyers in more suburbs now than you did just a year ago."
Similarly, observer Terry Ryder notes that they are not always achieving what they want from property. This will, likely, change.
"I think Chinese buyers [want] something they are not getting: they want good investment properties at market prices. At the moment they are sold bad investments at inflated prices," Ryder explains.
"They are being targeted by Australian developers with properties they can't sell in the local market because of oversupply, particularly the inner-city areas of Melbourne and the Gold Coast."
He says that he was speaking at a seminar in Melbourne, and was approached by a man in the audience who had flown from Shanghai to hear the talk, telling Ryder later that his family and friends had been ripped off by developers and marketers in the past, buying the wrong stock.
Commercial property is also emerging as being of interest to this buying group. Read Property Observer on Monday for some more information.
In the meantime, you can read observer Pete Wargent's thoughts on the <a target="_blank" href="https://www.propertyobserver.com.au/trends/the-chinese-buyer-phenomenon-pete-wargent/2013101565710">reasons behind the Chinese buyer 'phenomenon'</a>.
 
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jduke-EHk3XBmHkn

What do Chinese buyers want?

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When you've been attending a number of open homes, you quickly realise what is and isn't unusual for a property in the area. "Unusual" isn't always a good thing to associate with your investment property, but a desirable, scarce and highly valued difference can ensure that your property is in good stead for future growth.
This concept comes up consistently from a number of investment professionals. Yesterday evening, at WBP Property Group's ‘Property Investment Symposium’ event, which Property Observer attended (you can read all of the tweets from the event, and some reader questions, via <a target="_blank" href="https://twitter.com/search?q=%23propertyobserving&amp;src=typd">#propertyobserving</a>) this concept was heavily talked about.
<blockquote class="twitter-tweet">
WBP philosophy: capital grth is king, historic performance crucial, high Land value, scarcity <a target="_blank" href="https://twitter.com/search?q=%23propertyobserving&amp;src=hash">#propertyobserving</a> <a target="_blank" href="https://twitter.com/propertyobs">@propertyobs</a> <a target="_blank" href="https://twitter.com/search?q=%23wbpsymposium&amp;src=hash">#wbpsymposium</a>
— Jennifer Duke (@JennieDuke) <a target="_blank" href="https://www.propertyobserver.com.au/https://twitter.com/JennieDuke/statuses/392929851125936128">October 23, 2013</a>
</blockquote>
Disputing the myths, WBP Property Group's property adviser, Phil Manning, stopped at a slide that said 'Location, location, location' and said that the reason we say it three times isn't because location is important enough to be mentioned thrice. In fact, it's because we should be looking at three location factors when it comes to a property:
Location in the suburb
Location in the street
Location in the block
<blockquote class="twitter-tweet">
Phil Manning wants to give us some basic thoughts/fundamentals <a target="_blank" href="https://twitter.com/search?q=%23propertyobserving&amp;src=hash">#propertyobserving</a> <a target="_blank" href="https://twitter.com/propertyobs">@propertyobs</a> <a target="_blank" href="https://twitter.com/search?q=%23wbpsymposium&amp;src=hash">#wbpsymposium</a> <a target="_blank" href="https://t.co/JSNFAntcqx">pic.twitter.com/JSNFAntcqx</a>
— Jennifer Duke (@JennieDuke) <a target="_blank" href="https://www.propertyobserver.com.au/https://twitter.com/JennieDuke/statuses/392928808778469376">October 23, 2013</a>
</blockquote>
He later brought up an example of a property that they purchased. He noted that it had several 'scarcity' aspects to it, that ensured it would stack up. Not all of these would have been apparent to someone looking at the properties - and not all of those in the block would have had the same result.
For instance, it had views of Melbourne's skyline that could not be built out due to a heritage overlay. Those on the ground floor level would not have this view, and so would not be considered as having investment grade scarcity. It also had a pull down ladder to storage space in the roof - something very few units have, which counters many buyers' concerns about the difficulties of storage in apartments.
For this reason, apartments in large towers may not be the most preferable asset choice for investors with this strategy.
The concept of scarcity ties in nicely with supply and demand, in that it is a scarce type of supply. However, it's a little bit more difficult to determine. Without regularly viewing properties in the area, it can be hard for an out-of-town investor to know what is common within a property and what is not, and which factors are desirable. For instance, buying a weatherboard house in a primarily brick area, something Manning refers to as buying property that is anomalous to that in the area, could be to your detriment.
Monique Sasson Wakelin <a target="_blank" href="https://www.propertyobserver.com.au/news/properties-that-will-double-in-value-in-seven-to-10-years-monique-sasson-wakelin/2013091265003">previously told </a><a target="_blank" href="https://www.propertyobserver.com.au/news/properties-that-will-double-in-value-in-seven-to-10-years-monique-sasson-wakelin/2013091265003">Property Observer</a> that scarcity applies to both houses and units. "The same criterion applies to apartments. With apartments you want anything from 1930s through to about the 1970s. Those are the assets that really confer and satisfy that criterion of scarcity value," she said.
"When it comes to houses we like to choose investments that are anything from the 1880s probably to about the 1940s or 1950s."
For the reason of scarcity, Manning also said that you shouldn't go into every purchase leaving your emotions behind. Remember, the next buyer down the track will likely be an owner occupier buying based on emotion and you want to be aware of how they may feel towards a property, and how it suits their lifestyle.
<blockquote class="twitter-tweet">
Lifestyle offers that property makes is crucial. Transport is assumed. Walk to recreational says Manning <a target="_blank" href="https://twitter.com/search?q=%23propertyobserving&amp;src=hash">#propertyobserving</a> <a target="_blank" href="https://twitter.com/propertyobs">@propertyobs</a>
— Jennifer Duke (@JennieDuke) <a target="_blank" href="https://www.propertyobserver.com.au/https://twitter.com/JennieDuke/statuses/392932367620243456">October 23, 2013</a>
</blockquote>
Be emotional when you enter - see whether it has a feeling that appeals. Is the bay window, or fireplace, or similar, that you don't see much in other properties, that you could easily see an owner occupier paying a premium to have? Is it the view? Is it the slightly larger garden? See how it is located to desirable factors e.g. bike paths, recreational centres, and similar.
Where you don't want to be emotional, he said, is with the price you pay.
{module Do you consider scarcity value when considering investment properties?}
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Assessing capital growth potential: Scarcity factor

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If the past 10-15 years in real estate has taught us anything, it’s that no amount of regulation and legislation can protect consumers from bad advice or crooks hell-bent on ripping them off.
The 1990s was the era of the get-rich-quick seminar, when tens of thousands of Australians were duped by two-tier marketeers, seminar gurus and others into paying inflated prices for badly-located real estate or grossly over-priced “mentoring” services.
Eventually, the level of consumer outcry reached levels where politicians had to act. Queensland enacted the PAMDA laws in 2001 and in the following years most of the other states revised their real estate legislation, supposedly to stamp out the worst excesses of the residential property industry.
But in most cases the politicians sought advice on what should be done to protect consumers from the real estate industry. It was tantamount to asking the mafia for advice on how to stamp out the drug trade.
So, essentially, nothing has changed. Dummy bidding is still part and parcel of the auction process. Agents still over-quote to win listings and under-quote to attract auction crowds. Crooked operators continue to run seminars which promise to make people overnight millionaires. Shonky businesses still claim to possess “wealth secrets” which they will reveal for a hefty fee. Marketing operations receiving huge commissions from developers continue to describe themselves as “buyers agents” or “clubs” purporting to represent the interests of buyers.
As I recorded <a href="https://www.propertyobserver.com.au/https://www.propertyobserver.com.au/hotspots/sorting-out-the-good-the-bad-and-the-downright-ugly-of-investment-property-advice-terry-ryder/2013082664566" target="_blank">in a previous column</a>, the Melbourne Home Show in August was teeming with dodgy operators seeking to exploit consumers rather than provide genuine services.
If anything, matters have got worse. It’s an open secret that accountants and financial advisors, with all the required qualifications and registrations, earn commissions of up to $35,000 per deal whenever their clients buy developer stock. Not only is the advice based on vested interests, but the consumer is paying a price inflated by the outrageous marketing fees – and invariably in a project located in an under-performing market, because developers need to pay massive commissions only when they’re struggling to sell their stock.
We have developers building high-rise apartments in over-supplied markets because they can sell them at inflated prices to uninformed distant investors. In the late 1990s and early 2000s they went interstate or out west to find gullible punters. Now they take roadshows to China. Then they run ads telling Australians they should be buying because the Chinese are – and we all know how much research the Chinese do.
The problem with regulation is that it’s only as good as the enforcement. And, across Australia, there are few government bodies willing to take responsibility for enforcing laws designed to protect real estate consumers. All states and territories have offices of fair trading or consumer protection but, with the exception of the Western Australia body, they are all toothless tigers.
The only way real estate consumers will be protected is through education. Real estate needs to be taught in schools. It’s a basic life skill everyone needs. Everyone will become a tenant, so we need to teach the rights and responsibilities of tenants, and two-thirds will eventually become home owners. Many will seek also to be investors.
But, as I observe day after day, most wannabe investors have little idea on how to proceed. They don’t have clear objectives, nor strategies for achieving the objectives, nor an understanding of finance options, nor the first clue on where to go for the information they need to make informed choices about what, where and when to buy.
The lack of knowledge displayed by most real estate consumers is little short of tragic.
We will never be able to pass laws to adequately protect Australians from the rip-off merchants who prowl the real estate industry. The best we can do is give them some tools to protect themselves by providing a basic real estate education, starting in high school.
<hr>
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank" rel="nofollow" style="font-size: 14px;">hotspotting.com.au</a> and you can contact Terry via <a href="https://mailto:%20ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://twitter.com/hotspotting" target="_blank" style="font-size: 14px;">Twitter</a>.
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