Fol­low renters for yield

It’s the ar­eas with a lot of de­vel­op­ment that will give in­vestors good re­turns, writes Prop­erty ed­i­tor Michelle Hele

The Courier-Mail - Property - - INFOCUS -

WITH the ma­jor­ity of new apart­ment de­vel­op­ment stock cur­rently be­ing aimed at and sold to in­vestors, find­ing the sub­urbs where renters want to be is more im­por­tant than ever.

The same goes even for those who want to buy ex­ist­ing in­vest­ment prop­er­ties. If you buy where the renters are al­ready look­ing, you are much fur­ther along the path to se­cur­ing a ten­ant.

Fig­ures from the Res­i­den­tial Te­nan­cies Au­thor­ity show post­code ar­eas in­clud­ing Bris­bane/spring Hill, New Farm/tener­iffe, Bowen Hills/for­ti­tude Val­ley/new­stead, South Bris­bane and Kan­ga­roo Point are the most pop­u­lar sub­urbs for rent­ing at the mo­ment in terms of hav­ing the high­est level of new bond lodge­ments.

Ac­cord­ing to an­a­lyst Lach­lan Walker from Place Ad­vi­sory, there are some up-and-com­ing ar­eas which are claw­ing their way higher up that list, in­clud­ing As­cot and Hamil­ton.

He says the ex­ten­sive de­vel­op­ment around the Northshore Hamil­ton precinct would be re­spon­si­ble for this as hun­dreds of new apart­ments are be­ing built and bought by in­vestors.

Michael Ma­tusik says there are cur­rently 440,000 rental prop­er­ties in Queens­land, up about 7 per cent on 12 months ago.

Fig­ures from RP Data draw­ing on 2006 Cen­sus data re­veal Bowen Hills has one of the high­est lev­els of prop­er­ties which are rented.

The sub­urb is also a de­vel­op­ment hotspot with a num­ber of sig­nif­i­cant res­i­den­tial tow­ers al­ready un­der devel- op­ment and oth­ers pro­posed along with the re­de­vel­op­ment of the RNA.

Other in­ner-city sub­urbs fea­ture promi­nently with rental prop­er­ties, but so do sub­urbs well out­side the in­ner ring, par­tic­u­larly more af­ford­able sub­urbs where in­vestors can buy in rea­son­ably cheaply and there are lower lev­els of owner-oc­cu­piers.

This in­cludes sub­urbs such as Ca­role Park, Gailes and Inala and Woodridge. Me­dian house prices in those ar­eas range from $245,000 to $285,000.

Mr Walker says there is com­mon­al­ity of the sub­urbs with high lev­els of rental prop­er­ties.

The in­ner-city ones are in wellestab­lished precincts, Gen Y dom­i­nated regions and are close to ac­tiv­ity and en­ter­tain­ment.

In­ner and outer sub­urbs have strong public trans­port and quick travel times.

‘‘Prob­a­bly the most im­por­tant fac­tor, how­ever, is em­ploy­ment op­por­tu­ni­ties and the avail­abil­ity of fu­ture em­ploy­ment op­por­tu­ni­ties,’’ he says.

He says in­vestors would be well po­si­tioned if they want a good place to buy a prop­erty to look at ar­eas which are see­ing a lot of de­vel­op­ment now.

The de­vel­op­ment mar­ket has swung around from a few years ago when there was a lot of lux­ury stock be­ing built for the owner-oc­cu­pier mar­ket.

‘‘A lot of stock (be­ing built at the mo­ment) is in­vest­ment-grade stock,’’ Walker says. ‘‘Around 80 per cent of the new prod­uct that is be­ing sold is to in­vestors.’’

He says those look­ing to in­vest in these ar­eas should be look­ing at yields not cap­i­tal gains, as prop­erty val­ues have climbed lit­tle re­cently, so it is yields which are most at­trac­tive to in­vestors.

‘‘What we have suf­fered in cap­i­tal gains (drop­ping), we have made up in yields,’’ he says.

And with val­ues not ex­pected to rise sig­nif­i­cantly in the next few years, yields are a more im­por­tant fac­tor.

He says sub­urbs such as Bowen Hills are def­i­nitely go­ing to per­form and in the long term may over­take New Farm and even­tu­ally the in­ner city in terms of pop­u­lar­ity with renters.

Ac­cord­ing to RP Data an­a­lyst Cameron Kusher the most pop­u­lar for renters tend to be in in­ner-city ar­eas.

‘‘Which is in line with the fact that most res­i­dents as­pire to also live in these sub­urbs,’’ he says.

‘‘Over the years this trend hasn’t changed too much. How­ever, ur­ban re­newal projects have seen sub­urbs such as New­stead and New Farm be­come more pop­u­lar as a greater vol­ume of high-den­sity hous­ing has al­lowed more res­i­dents to live in there.

‘‘In the com­ing years, sim­i­lar ur­ban re­newal of ar­eas such as Bowen Hills and Wool­loongabba are likely to see the pop­u­lar­ity of these sub­urbs in­crease.’’

HOT SPOTS: In­ner-city sub­urbs such as Tener­iffe (top) and South Bris­bane (be­low) are pop­u­lar with renters, while outer sub­urbs such as Inala (above) are more af­ford­able for in­vestors to buy in.

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