CBD investment is sound: agents

Local real estate agents have countered claims by investment advisor Terry Ryder who is warning apartment investors away from the CBD.

Mr Ryder’s annual No Go Zones report claims the “single biggest danger” for investors this year was “buying apartments in some of our major cities”.

In Melbourne’s case, he highlights the CBD, Docklands and Southbank as areas to avoid, claiming that 2.8 per cent of CBD apartments were vacant in November 2017.

“A good strategy for property investors is to simply avoid high-rise unit markets altogether,” he says.

Hocking Stuart principal Scott McElroy said: “These sort of articles are annoying to say the least as you well know there are more than just one type of apartments in the huge market that makes up the city and surrounds. There are people enjoying capital gain and also losses, but this is not only confined to the city.”

NPM principal Sam Nathan agreed, saying the local apartment market should not be viewed as a single entity.

“With a maturing apartment market comes the emergence of different segments within the central city region. These segments can be defined by location or as we are increasingly observing, on a building specific basis, with individual neighbourhoods in the central city or individual buildings catering to different purchaser requirements/objectives, be they owner occupiers or investors, and behaving accordingly, often differently to the broader market,” Mr Nathan said.

“Local investors have the opportunity to study the market holistically and secure a stronger understanding of the drivers and ambience of the neighbourhood location of individual buildings, the drivers behind that precinct, the position and behaviour of individual buildings and the influences likely to impact on them going forward.”

“The central city is a broad market, catering for a broad range of objectives. Increasingly however, buildings catering to established resident needs are taking their place in the fundamental housing market as the structural shift continues towards higher density, more centralised living patterns. Investors able to identify these buildings and make a well considered and researched decision around which opportunities are likely to reflect the changing context of the housing market are likely to be better placed.”

Mr Nathan said CBD towers had a vacancy rate as low as 1 per cent.  He cautioned that vacancies would be greater at the end of the academic year and statistics should not include new buildings that had just come onto the market.

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