Most urban Australians will purchase a unit as their first property. Whether it be a first home or a first investment property, the high entry cost of established houses – detached or attached – will be prohibitive for most. Investors are often – and rightly – told to invest in modest units in high demand areas.
This means that in order to keep running costs like strata fees down (and thus improve return on your investment), investors are encouraged to avoid features such as lifts, pools, gyms, rooftop cinemas, and tennis courts.
Home owners have to make similar sacrifices. Due to none of the ‘running costs’ of a home (aka principal place of residence) being tax deductible; first home buyers are also encouraged to avoid splurging on lavish features in the interest of keeping costs down, to enable them to hack away at their mortgage faster.
As an investor I normally encourage others to keep these costs down; purchasing units and apartments that have only modest features and require minimal recurring maintenance. However, there may be a few exceptions to this rule. I do believe that apartment and unit complexes offering something genuinely unique to their market or suburb are a worthy investment. Providing the maintenance costs for such features are not too extreme, unique features can become unique selling points, and thus can add exponential capital growth to a property, resulting in a the property being a worthy and profitable investment over time.
Even as first home buyers, buying in buildings with unique features can be a good move. First home buyers may ultimately want to trade up their unit to a larger house, over the next 5-10 years, as their family grows and the need for more space. Or, as better school zone location or the desire for more open space overrides their urban lifestyle desires. At this point, a wisely bought first property that has seen accelerated capital growth can assist in trading up to a bigger home later on.
Before I list some examples of property developments that I think do offer something genuinely unique to the market, and will most likely appreciate exponentially in the market in the mid-term, I must stress three key things:
1) These development types are usually sold on this ‘uniqueness’ from the outset, so be sure to do your due diligence to ensure you are not overpaying at the beginning. If the features will add perhaps an extra $30K of value to the unit, yet the original sales price is $50K greater than a similar unit without the feature; it still is not a good buy
2) This buy type will not work for you if you are only wanting to own the property for a couple of years. You likely won’t see any growth (and yes, perhaps even negative growth) in the first couple of years of ownership of almost any newly built property. Properties with unique features tend actualise growth better over a 5-10 year ownership period
3) ‘Unique’ features really need to be just that – unique! I.e. a pool, gym, common garden, or tandem garage, may be a nice feature that you’ll pay handsomely in maintenance costs for, but it is not unique. These are not the features I’m referring to..
So, here are some examples of developments offering something truly different, and that may appreciate in growth over the mid-term, faster than similar developments in their surrounding areas.
This complex offers a lot of clever and fashionable features – European designed and fitted kitchens/bathrooms, ceiling to floor glass windows, great views, and resort style complex amenities. However, it is the vertical garden and ‘heliapad’ feature that sets it apart from, well, just about everything else. Not only is Central Park the world’s largest ‘vertical garden’ building, but the Heliapad that juts out near the top of Tower #1 offers something that no other building does – a sky high garden view unlike anything else.
A low-rise development in the heart of the city. Where other developments in downtown Adelaide are following the trend of Sydney and Melbourne – I.e. trying to pack as much stacked taller unit blocks on to as little real estate as possible – Ergo apartments are creating an entire ‘village sprawl’ in the heart of the city. The development creates lots of open communal outdoor spaces, and offers shared facilities that others in Adelaide CBD and surrounding areas, do not.
Seemingly appearing as yet another tall unit block nearby to the Brisbane River, it is the Milton’s shared communal facilities that offer privacy and opportunity to entertain guests on a large scale, that sets it apart. The features include a large common lounge where you can entertain larger groups of guests by booking in advance; a shared observation deck with great city views; and several individual bbq ‘pods’, each with their own outdoor furniture and green space surrounding it.