Quality is King!

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August 30, 2017
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August 30, 2017

Why is the focus on quality so important when it comes to buying an investment property and does it make any difference to risk and return?

Without doubt one of the best things about working at Aviate is getting to see projects that no one else knows about yet; not our clients, not the general market, not the media.

Once a project has made it through our research and selection process and we have negotiated the best terms for our clients, we often get to visit the site and meet with the team behind the project. We get to hear and see things that are not possible to glean from a spreadsheet or a research report. This insight is invaluable.

Recently we had the opportunity to spend time with the development team behind Amira in the sleeper suburb of East Brisbane. This stunning new project is a quintessential Aviate project; high-end, owner occupier standard in a great inner-city suburb that generates high demand from both purchasers and renters, but limited in supply.

If I was to compare East Brisbane to a Sydney suburb it would be Woolloomooloo; a great water side location but overlooked for a long time by the many for the more well-known surrounding suburbs. However, with a spate of new developments and trendy restaurants and bars Woolloomooloo has come into its own. This will be the case with East Brisbane; beautiful location, but to date not known as the first-choice for young home seekers. There have been some stunning new developments built in East Brisbane these past few years but Amira will be the cream of the crop when it’s complete. Having seen the design and listened in detail to the development team we can make that statement with supreme confidence.

East Brisbane is adjacent to high-density Kangaroo Point – a suburb that will continue to see construction of a high number of brand new apartments over the next few months and years. To use a Sydney comparison again, think of Surry Hills and Waterloo. Neighbouring suburbs separated by an imaginary line but two very different stories in terms of supply levels and consequent performance.

Surry Hills Unit Median Price*

1 bed – $730,000

2 bed – $1,150,000

Waterloo Unit Median Price*

1 bed – $621,000

2 bed – $888,000

*Source: CoreLogic

Capital Growth (12 months) *

Surry Hills 9.59%

Waterloo 1.18%

*Source: Realestate.com

Without a shadow of a doubt, quality is increasingly becoming the great differentiator of investment property, not only in capital growth but rental yield and vacancy risk. Tightly held suburbs with smaller, higher quality buildings generate greater demand and that demand translates to performance. The flight to quality is not just a meaningless industry term to justify purchase of a new property; it is real, it is demonstrable, it is measurable.

The easiest way to achieve quality is through a reputable developer with a track record of delivering very appealing, industry award winning high-quality projects, year after year.

It’s important to evaluate the general market and take into account a city’s growth prospects, especially when it comes to economic activity and infrastructure development. But to lump all houses, apartments, townhouses, terraces, luxury penthouses and heritage cottages into a single “property market”, it’s silly to think they’ll all achieve a similar return, in line with “Brisbane’s” or “Australia’s” aggregated numbers.

In reality, every property is unique. No two apartments are the same, no two markets are the same, no two cities are the same, no two states are the same. What makes the difference is quality and you can only find quality through pain staking and sometimes tedious research. Wading through the average to find the exceptional.