While we are all familiar with the old adage, “the value is in the land”, purchasing large parcels of land in blue chip locations in Sydney is not something that is going to be affordable for everyone.
Fortunately, there are other ways to purchase land in high-quality locations if you’re prepared to look at buying an apartment. One of the most effective strategies is buying apartments in smaller boutique blocks as they can offer the best of both worlds.
Here are some of the advantages of this approach.
Land component
When you’re buying an apartment, you’re not just buying the structure itself, you’re really purchasing a portion of the land the building sits on. For example, if you buy a unit in a block of four, you’re getting a quarter of that land.
On the other hand, if you’re looking at buying into a large 300-plus apartment complex, then you’re not going to be getting all that much land component at all.
Small complexes are a great way to get exposure to land in high-quality areas without having to pay the high price for a freestanding house.
Demographics
When we invest, we ideally want to be buying into high-quality, blue-chip locations. We do this because these are the areas that are in demand. Typically, they are surrounded by rivers and beaches and have good access to jobs and amenities. Just think about the Eastern Suburbs of Sydney and everything it has to offer. There’s a reason people want to live there.
The other thing that these locations also do is attract plenty of people who are prepared to pay high prices. This is because buyers here are likely to be high-income earners.
Again, buying a house in a blue chip location in Sydney is not possible for everyone, but if you buy a high-quality boutique apartment, you again get to piggyback on these demographics.
Costs
One of the key drawbacks of buying apartments is that they normally have high ongoing costs such as strata fees that can really hurt your yield and make it very difficult to hold onto over the long term. We see this a lot with newer buildings that have plenty of features like pools and gyms, which are great for renters but not so good if you’re the one picking up the bill.
When you’re buying boutique apartments, there are some that won’t actually have strata fees. This makes these buildings incredibly appealing, and not only will you get a far better yield on your investment, but you can be sure, there will be strong demand if you want to sell in the future.
I always want to be buying the best possible asset I can afford in the very best location. And if you’re looking for a cost-effective way, to purchase a blue chip asset, it’s well worth looking at boutique apartments.
If you are interested in the above, feel free to reach out to a Henderson buyers agent today for more information.
