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Case Study: Melbourne investors turn to Perth for inner-city affordability

Friday, 24th Aug 2018

As the property markets in Melbourne and Sydney slow down following unsustainable growth of property prices, local and interstate investors are beginning to turn their attention to the recovering market in the west.

With the relative affordability of Perth’s property market, these investors are realising the unique opportunity at hand to invest in prime, inner-city housing stock before the market enters its forecasted cyclical upswing.

In our latest case study, we look at how our property acquisitions team helped two Melbourne investors jointly secure an inner-city development site in the heart of Perth’s vibrant eastern corridor, and we take a look at how this compares to similar opportunities in the Melbourne market.

A case study: Melbourne investors turn to Perth

Recognising that the eastern market had reached its cyclical peak, two Melbourne investors approached Momentum Wealth seeking opportunities for development in Perth. Their strategy was to develop immediately to take advantage of low construction costs, hold the properties, and then sell the assets further down the line as the market strengthens. Their brief included:

  • Immediate development potential for minimum four dwellings
  • Budget of approximately $900,000
  • Close proximity to the CBD
  • Walking access to nearby transport and café amenities
  • Site with high growth prospects

Following close analysis of the local market, our research and acquisitions team identified East Victoria Park as a vibrant, inner-city suburb that met the client’s brief and budget.

After carrying out in-depth research into numerous investment opportunities, our property buyer’s agent identified a key property of interest – a single residential dwelling on a 1012 sqm block zoned R40, offering development potential subject to council approval (STCA). The site was located 5km away from Perth’s CBD, in close proximity to the Burswood Entertainment Complex, and within walking distance of a train station, shopping centre and a nearby café strip. Despite the prime location of the site and the level of interest from buyers, our property acquisitions specialist expertly navigated the negotiation process, successfully purchasing the property at auction for $850,000.

The development is currently being managed by Momentum Wealth’s development team, who have to date achieved DA approval, with construction expected to commence soon.

How does this compare to the Melbourne market?

When we compare the site to inner-city opportunities in Melbourne, the clients would have been facing significantly higher costs to purchase a property with similar specifications and development potential in the eastern market. For a development site situated along the train line and approximately 6km in distance from Melbourne’s CBD, the clients would have been looking at suburbs such as Moonee Ponds and Ascot Vale, where transaction prices for development sites average at around $2 million.

For a development site in the same price range as that secured by our buyer’s agent, the investors would have to look a further 8km down the train line in suburbs such as Jacana and Glenroy, which are located around 13-14 km from the Melbourne CBD.

This is a clear example of the inner-city investment opportunities available in Perth that you simply wouldn’t find for the same price range in the eastern market. Paired with the cyclical upswing that many are now predicting, the WA market is offering a prime opportunity for investors to take advantage of relative affordability before competition, and implicitly property prices, pick up.

If you are looking to invest in the WA’s property market and would like to talk to our Perth buyer’s agents about potential investment opportunities, visit our website to organise an obligation-free consultation with our property acquisitions specialists.