One of the most common things we hear in the property world is to always by land. Land, land land. Never an apartment.
However, are we looking at this in the right way?
I’ve always been a big advocate of buying apartments in blue-chip locations. Not any old apartment, but ones that fit a certain criteria.
I like to purchase apartments that are in small blocks, In a premium blue chip location. A small block of units in Bondi Beach is the perfect example.
When buying an apartment, you’re still not really buying the building itself. You’re buying the land that it sits on – or your share of the land.
If we had a block of 12 units, you’re effectively buying one-twelfth of the land component. If the block of units is sitting on 1200 square metres, you own a hundred square metres of that land.
What you’re actually paying for is land value, not land content. The reason you always buy into small blocks of apartments is because when you buy one of 12, you get one-twelfth of the land. If you look at these massive blocks of units that contain 200 apartments – you get one two-hundredth of the land that sits on. Which isn’t much.
It’s another reason why you should be hesitant about buying a new off-the-plan apartment in a huge new development. You’re essentially paying for a new building in a big block of apartments and all the money is going into the apartment itself, not the land value.
That’s why these small unit buildings in premium locations are often something you should consider.
A good example is the case of a Bondi Beach apartment – you’re not just getting the building, but you’re getting it in an absolutely premium location that has land value as well.
When we then start to add in other factors such as views of the water and parking, you can quickly see why this type of investment ticks a lot of boxes.
You’re really getting the best of both worlds. Land value in a blue-chip location as well as features that make it appealing to a host of future buyers.
For me, I’d rather own 100 square metres on Bondi Beach, than 1000 square metres 40 km from the city.