Property>Property Investment

The 2016 federal election is behind us.

Amongst others, the Labor Party’s proposed changes to negative gearing was one of most disputed policy challenges of the election campaign. These changes proposed to restrict negative gearing from existing properties, whilst allowing owners to continue deducting net rental losses against their wage income to new properties only.

In his first video blog, Executive Property Investment Adviser Stephen Phillips tells us how these changes would have altered the Australian rental market.

 

There is no denying the inner south of Melbourne’s residential property market, such as Prahran, Port Melbourne, Windsor and St Kilda, has seen consistent popularity and growth over recent years. And whilst it remains true that these areas are still experiencing strong property appeal, there has more recently been a distinct shift to developing inner urban areas toward the north of the Yarra River with apartments in areas such as Brunswick East and Northcote becoming increasingly popular amongst investors.

Quite simply, north is the new black.

Location, location

According to Charter Keck Cramer*:

‘Locations with more attractive attributes have greater attraction for residential apartment dwellers. For example, Melbourne’s largest apartment markets are within the central and inner-city suburbs, which enjoy multiple attractive location features.’

Whilst areas to the south of the Yarra may enjoy easy access to the coast, areas in the inner north enjoy their own attractions.

Northcote, for example, is only five kilometres to the Melbourne CBD and its village-like feel comes to life through its boutiques, cafés, bars, restaurants, eclectic retail and all the day-to-day conveniences that make a suburb feel like home.

Similarly, Brunswick East is located within close proximity to Melbourne CBD (4km), as well as a number of park and recreation spaces such as Princes Park, Royal Park and the Melbourne Zoo.

These locations also play host to some of Melbourne’s best restaurants and night spots, creating a sense of atmosphere and buzz which in turn is driving the popularity and demand of these suburbs.

With easy access to multiple public transport options, Melbourne’s inner northern suburbs are well connected, ticking all the boxes for potential renters. Northcote, alone, has five train stations within its boundaries.

A new way of life

As people flock to these northern hotspots, pushing a continued shift in demand towards city fringe lifestyle suburbs, the scope for continued development of higher density dwellings in these areas is extended.

Charter Keck Cramer reports:

‘It is anticipated that apartment living will become an increasingly preferred choice for many households in Melbourne over the long term for a range of economic, social, environmental and demographic reasons.’

As the nature of the household structure continues to change, with the fastest growing segments being singles and couples without children, it becomes clearer why apartment living is increasingly becoming a more favoured option.

As John Hopkins has said on many occasions, when a property purchaser is weighing up their prerequisites in terms of what they want out of their investment, there are some fundamentals they are often not willing to comprise on, such as location, access to amenities or price. However, the one thing investors are progressively shifting on is the size of the property, hence the shift towards apartment living.

This, along with a significant acceptance of living in apartments by all generations (perhaps in part caused by increased exposure to apartment living in international cities) tips the balance favourably toward apartments from a demand sense.

Number crunching

Whilst location remains a force in determining demand, and is an important factor in property investment considerations, it is also important to consider other contributing factors such as population growth and demographics.

According to Urbis, the population in Northcote is forecast to increase from 25,800 in 2015 to 32,900 in 2036, representing 28% growth in the number of residents. Forecast population growth is indicative of growing demand for dwellings as new residents require residential properties.

Similarly, the ABS reports that the population in Brunswick East in 2006 was 7,412 people. By 2011, the population was 8.484 showing a populating growth of 14% in the area during that time. And this growth is set to continue, especially in the younger rental and first home buyer market with such easy access to the city’s best universities and hospitals – on top of the enviable lifestyle opportunities.

These statistics help provide insight into future demand of apartments in these areas, as well as the varying groups who are drawn to living in these areas, thereby providing some understanding into the type of tenant you may expect.

It is important to note this article does not form an exhaustive list of considerations for would be investors and it remains prudent to seek advice before making investment decisions. The Hopkins Group currently has a number of Recommended Properties located within Melbourne’s inner north.

For more information on these properties or to discuss the content of this article further, please call 1300 726 082 and ask to speak with one of our Property Investment Advisers.

 

*Abbotsford Apartment Market Context and Project Assessment Summary, Charter Keck Cramer

Image: Barry – High Street, Northcote

This blog post was written on behalf of The Hopkins Group (John Hopkins Property Pty Ltd). This blog post contains general advice only, which has been prepared without taking into account the objectives, financial situation or needs of any person. You should, therefore, consider the appropriateness of the information in light of your own objectives, financial situation or needs.

Negative gearing is hot on the agenda in Australia at the moment. From the water cooler to the halls of Parliament, it’s the talk of the town.

The Hopkins Group Executive Chairman John Hopkins, Director of Accounting Rachel Williams and Head of Advice Shane Light discuss negative gearing in Australia, how it works, who it benefits, and how Labor’s proposed federal changes could create a distorted housing market.

The team also walks us through the state of Australia’s current housing market, how it compares to 30 years ago and what to expect in the near future.

To find out where you stand with negative gearing, contact The Hopkins Group on 1300 726 082.

 

Sydney may have the harbour and Melbourne’s known for its graffiti laneways, but why is everyone talking about Brisbane at the moment?

From an investor’s point of view, it has so much to offer. Strong economy? Tick.  Increase in council approvals? Tick. Growing population? Tick.

As investors are being priced out of the market in Melbourne and Sydney, attention is turning to Brisbane where it is still affordable to invest in property. However, it won’t stay like this forever. Prices are rising and it won’t be long before Brisbane catches up to the other major metropolises. Median house prices have increased to $610,000 and auction clearance rates have also steadily increased.

So the time to strike is now. Conditions are ripe for exploring opportunities in Brisbane thanks to a number of factors.

Population growth

Queensland’s population is growing – but where are they all going to live?

Previously, the sunshine state’s population growth has been stimulated through overseas migration and natural births. However, with the cost of living in Sydney becoming unaffordable, the recent increase in population can be linked to the number of people moving north from Australia’s major cities. Queensland is experiencing the highest percentage of interstate migration than any other state as people seek a ‘sea change’ and more affordable lifestyles and housing. This in turn creates long term demand for housing and opportunities for investors to capitalise on the current housing shortage.

Diversified economy

In recent years, Queensland has been known for its resources boom, but as the saying goes, you can’t put all your eggs in one basket.

The state has a diversified economy and remains the jewel in Australia’s tourism crown. International visitors are ensuring the state’s tourism industry remains buoyant with Tourism Research Australia figures showing that foreign tourists injected a record-breaking $4.6 billion into the Queensland economy in the year to June 2015. International visitors arriving in Queensland were up 7.7 percent on the previous year.

And there’s no sign of it slowing with the lower AUS dollar encouraging overseas holidaymakers.

Starwood’s W Hotel, which is one of the world’s most prestigious hotel chains with hotels in Paris, New York, Beijing, will be building its first Australian hotel in Brisbane in 2018 in preparation for Gold Coast’s Commonwealth Games and the opening of Queen’s Wharf. These tourism related projects act as a catalyst and stimulate the entire state economy – especially within the property and business sectors.

HIA senior economist Shane Garrett said residential building was making a crucial contribution to economic growth at a time when other areas of investment were weak.

According to Master Builders Queensland Executive Director Grant Galvin, the building industry had recorded its best figures since the global financial crisis.

“It’s driven by low interest rates and no change in unemployment,” he said.

“As mining has come off, housing and construction have picked up. We’re buoyed by the residential sector driving the economy at the moment.”

Approvals boom

Local councils are coming to the party and giving the greenlight to building developments like never before.

According to the Courier Mail, there has been a 22 per cent increase in the number of residential house approved by councils compared to the previous year, taking it up to 30,000 approvals in 2014. This is good news for investors, as developers are being given the greenlight to start new projects.

Urban Development Institute of Australia Queensland boss Brett Gillan said the approvals boom had been a growing trend for the past 12 months. While Sydney and Melbourne prices continue to soar, the development boom is expected to continue in Brisbane and in doing so, stimulate the local economy.

Rental yield

Investors can feel confident that their properties will deliver a return in Brisbane.  CoreLogic data reported last year that Brisbane delivered the highest rental yields of any of the five mainland capitals with houses returning 4.4 per cent and apartments sitting at 5.4 per cent at the end of August.

Investing in Brisbane

The Hopkins Group has long identified Brisbane as an untapped market for property investors. Our portfolio offers a number of recommended properties in the sunshine state and we see the potential in this major metropolis for investors who want to think outside the square.

Click here for a recent webinar on why we’re investing in Brisbane and click here to view our latest recommended properties including projects in Fortitude Valley, Lutwyche and Cannon Hill.

The Queensland housing boom is here for the long term. Now is the time to get in early before this major metropolis becomes another Sydney or Melbourne. You don’t want to miss the boat.

 

Resources

• Building on Housing Boom, Matthew Killoran, Jeremy Perce and Jacinda Tutty, Thursday 3 September 2015, Courier Mail
• Investors drive up Brisbane prices, Michael Bleby, Thursday 3 September 2015, The Australian Financial Review
• Metro Property Development – News, Jimmy Huynh, Thursday 3 September 2015
• Construction boom to flow into 2016, Courier Mail, Tuesday 1 December 2015

Monica Jiang is a Property and Contracts Coordinator with The Hopkins Group (John Hopkins Property Pty Ltd). This blog post contains general advice only, which has been prepared without taking into account the objectives, financial situation or needs of any person. You should, therefore, consider the appropriateness of the information in light of your own objectives, financial situation or needs.

John Hopkins Property and Lantern Property Partners have been awarded four out of five stars by SQM Research Pty Ltd.

Excellent; we are thrilled for our property team.

SQM Research is led by Louis Christopher. It would be fair to say his organisation could reasonably lay claim to being Australia’s preeminent property industries rating house.

SQM researches everything from the economy, the property market around Australia, individual properties, general investment vehicles through to organisations in the investment world, including property organisations.

In order to assure the various individuals and organisations (both large and not so large) that accept our advice with property recommendations and due diligence processes, we undertook this lengthy, arduous and intrusive process. We put ourselves, our past and our present out there to be exposed and to be judged by the best.

This meant the collation of a mountain of documents, thorough inspection of everything from our financials and our balance sheet to our staff and our leaders, contracts and relationships with external organisations and individuals, lists of properties purchased by our clients over thirty five years, our philosophies and values and systems. Ten months later, we have been rewarded with a brilliant result.

Now our aim is to improve even further. Although Louis rang me prior to the formal disclosure of our rating score to explain that his organisation had never delivered a four out of five star rating for an organisation first time up, and he was very pleased to tell me in person.

I really hope you don’t think I am skiting too much, it is just that we are so thrilled and so proud.

We have been involved in property for a long time and to have an independent house with the credentials of SQM recognise our commitments to our clients, associates and the property industry at large is really heartening.

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General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

SQM Research Star Rating:

Investment products are awarded a star rating our of a possible five stars and are placed on www.sqmratings.com.au

Following are descriptions for each of the star ratings, which have been developed as a guide for dealer group research teams and investment committees:

– 4.5+ stars – Outstanding. Highly suitable for inclusion on APLs.

– 4 stars to 4.25 stars – Superior. Suitable for inclusion on most APLs.

– 3.75 stars – Favourable. Consider for APL inclusion.

– 3.5 stars – Acceptable. Consider for APL inclusion, subject to advice restrictions.

– 3.25 stars – Caution required. Not suitable for most APLs.

– 3 stars – Strong caution required. Not suitable for most APLs.

– Below 3 stars – Avoid or redeem. Not suitable for APL inclusion.

SQM Research has no involvement with Lantern Property Partners, The Hopkins Group, or any of the organisations contained in their product disclosure statement. This assessment does not constitute an investment recommendation. It is designed to provide investment advisers with a third party view of the quality of this fund, as an investment option. SQM Research charges a standard and fixed fee for the third party review. This fee has been paid under the normal commercial terms of SQM Research.

On behalf of John Hopkins Property, we were very honoured to have been invited to attend and present at the 2015 Maybank Property Talk in Malaysia on Saturday 13 June, entitled ‘To Hold or Be Bold.’

Maybank is Malaysia’s largest bank and financial services group, and the Maybank Group is amongst the top five banks in South East Asia with significant banking operations in Singapore, Indonesia and the Philippines.

To put it simply, Maybank is to Malaysia what the Commonwealth Bank is to Australia.

Six hundred of Maybank’s’ high net worth clients were invited to attend this annual premium event and I, along with one other key note speaker, had the great privilege to present and also join a panel discussion on global property investment.

My presentation was entitled ‘The Rules For Global Residential Property Investment Have Not Changed.’

The event was held at the Mandarin Oriental Hotel in Kuala Lumpur, a beautiful hotel with  impeccable service, in a function room that seemed like the Colosseum; not that I felt I was being thrown to the lions (as my hosts and the guests attending were particularly gracious) however because I really wanted to perform well.

The crowd, a combination of clients, guests and bankers, were all well educated in money and investment.

For my presentation, my message to them (for now and the foreseeable future) for successful global property investment was; the rules have not changed. By that, I meant the rules are exactly the same as they were one year ago, ten years ago or fifty years ago.

The same for you, the same for everyone.

I have been living and breathing these rules for the past forty years, and they can be found on our property services page.

The first crucial rule (and maybe the most obvious but often ignored) is to only invest in property that exists in a strong and stable social, geo-political, economic, and legal  situation.

Purchasing property in countries that do not possess these features, no matter how good the property purchase opportunity seems, simply cannot be considered an investment; at best, it would be a speculation or a trading proposition; probably a gamble.

Therefore, in today’s circumstances, to buy property as an investment in Athens would not be a good idea because Greece is on its knees. Damascus and Baghdad of course would not be wise to purchase in, it is awful to witness but Syria and Iraq, to state the obvious, are in a terrible state. The geo-political and consequential economic and social elements at play are dire.

Beijing, Shanghai and Djakarta are also definite no’s. With China and Indonesia, avoiding purchasing property in these countries is for reasons to do with unusual legal and political circumstances; trusting the system is not possible for locals; it is impossible for a foreigner. With regard to Moscow, due to ongoing political turmoil, business and investment dealings for foreigners are very risky (what an understatement).

So, in terms of sound situations, countries that would be considered sound from a  geo-political, economic, social and legal perspective are (to name some of the obvious ones) France, Germany, North America, Canada, the U.K. and our own Australia.

I could write for pages more about the principals of being a successful global property investor (the rules of which, as I noted before, are timeless), however I will save this extended version for our next publication