Wednesday, February 15, 2012

Conviction of the Inner West Story - UTOPIA!!”

This months Ark Informer relates specifically to property research in the Inner West in Sydney. 
We look forward to your feedback.
best regards
Ivan



Since 3 quarter 2008, Ark Total Wealth has focussed it’s property research gaze on the Inner West area of Sydney and generated some excellent returns for clients in the process. The greater Sydney area as a whole whilst generally having higher prices than other capital cities, is blessed with high natural rental yields of 5.0% +, low vacancy rates, and a chronic undersupply in new dwelling completions. ANZ Economics notes that dwelling completions for Sydney are currently running at about 26,000 (about half the amount of a decade ago) and well below current requirements. They also report a serious disparity with dwelling starts, estimated for 2011 at 130,000, down from the 149,000 of 2010, and well shy of the estimated 180,000 required to fill current demand.
The practical outcome of such numbers are continuing upwards pressure on rents and by virtue of this also capital values, with ANZ predicting rents will rise by "close to double digits".
Drilling down further, since 2008 the inner west as a region has been a consistent out-perfomer in the Sydney property market, as purchasers take advantage of it’s close proximity to the CBD, access to rail and bus transport, a rapid gentrification and urbanisation of many inner west suburbs, and more affordable prices relative to the already highly priced blue ribbon areas of the East and North Shore.
As can be seen below from our past inner west projects (see below), capital growth and market performance in the inner west has been strong in the central core suburbs, and as prices have risen capital growth has radiated in rings outwards from the core, as suburbs such as Annandale, Newtown, Stanmore and Erskineville become less affordable. Thus suburbs such as Marrickville, Arncliffe, St Peters and Dulwich Hill have begun to perform due to the attraction of their lower price point. This is a growth movement we have been following for the last 24 months in terms of our chosen projects.
Research wise and also anecdotally, the inner west has and continues to be the powerhouse of Sydney property price growth.
(quote) “This year's star performers have one thing in common. The inner west is holding its ground far better than most other areas around Sydney.”
  • In 4 quarter 2010, Australian Property Monitors predicted that units would achieve a higher rate of capital growth than houses over the coming year as investors and a limited number of first-home buyers look for affordable properties.   They went on to list their top 10 suburbs in terms of capital growth prospects with Summer Hill, Hurlstone Park, Petersham and Dulwich Hill all getting a mention.
  • In early 2011, St George Bank’s National Property Hotspots Report 2011 was published listing 24 strong investment suburbs around Australia. Arncliffe was among one of 5 Sydney suburbs mentioned, and similar to APM 4 of the 5 suburbs they listed basically adjoin each other, being Arncliffe, Sydenham, Eastlakes and Newtown.
  • In February 2012, PRD Nationwide listed Marrickville their top Sydney property hot spot for 2012 (see below):
When we combine the results of the APM, St George and PRD Nationwide reports we notice an interesting correlation in the close proximity of the prime growth suburbs both have listed.
Red: Aus. Property Monitors listed suburbs
Yellow: St George listed suburbs
Purple: PRD Nationwide
What is clear from the above consensus is that the area featured in the map above is considered a strong future capital growth market by all three research houses.
With a wealth of statistics and external opinions pointing towards the Inner West as being one of Sydney’s potential top performing property markets, further detailed analysis on development particulars help identify value for money and help establish an understanding of how, why and what sort of capital growth is being achieved.
Charting growth of ATW Property in the Inner West
Since late 2008 Ark Total Wealth have strategically recommended a select offering of developments in the Inner West region to their clients, based on the type of forward looking research and statistics detailed above, and also on careful analysis of the projects at hand. Now more than 2 years down the track, our clients have begun to reap impressive results from these acquisitions.
Camperdown – Trio Apartments – 1 bed, 1 bath, 1 car
Exchanged: December 2008, Completed: July 2009
Purchase Price: $470,000
Current Valuation: $570,000 (based on sales evidence)
Current Rental: $560 pw
Balmain – Boutique Apartments – 1 bed, 1 bath, 1 car
Exchanged: April 2009, Completed: September 2010
Purchase Price: $550,000
Current Valuation: $612,000 (based on sales evidence)
Current Rental: $550 pw
Leichhardt – The Factory – 2 bed, 2 bath, 1 car
Exchanged: Mid 2009, Completed: January 2011
Purchase Price: $640,000
Current Valuation: $730,000 (based on sales evidence)
Current Rental: $710 pw
Petersham – The Majestic Theatre Apartments – 1 bed, 1 bath, 1 car
Exchanged: September 2010, Completed: Estimated 2012
Purchase Price: $473,000
Current Valuation: $501,300 (based on sales evidence)
Estimated Rental: $470 pw
An interesting statistic to note is the internal price per square meter for 1 bedroom apartments (psm) of the above three projects which at time of purchase were:
Camperdown: $8,245 psm
Balmain:              $10,000 psm
Petersham:        $9,260 psm
Dulwich Hill:      $8,403 psm (1 bedroom) AVAILABLE
We note that the cost of Utopia at Dulwich Hill on a per square metre basis is broadly comparable with those of our previous inner west project before those projects experienced the increase in capital growth that they have had.
Furthermore, we believe that the slated Dulwich Hill light rail extension due for completion in 2014 will exert a positive impact on property prices in the area. The existing light rail line that terminates at Lilyfield is being extended to Dulwich Hill as illustrated below. This will provide a further public transport access line into the city in addition to heavy rail and bus lines.


The red arrow denotes the proximity of the Dulwich Hill development to the Dulwich Hill light rail interchange. The development is also 600 metres from Hurlstone Park train station. There is a proven causal relationship between construction of light rail lines and property price growth as illustrated below:
(quote) “Property values along light rail corridors could soar, a new report suggests, but experts say governments would need to temper the price rises with more affordable housing....The planned extension of Sydney's light rail, from the Lilyfield terminus to Dulwich Hill train station, is also likely to affect property values in Leichhardt, Haberfield, Lewisham, Summer Hill and Dulwich Hill.”
We therefore believe that given the strong inner west story and the considerable growth achieved thus far, coupled with comparatively similar value for money on an internal pricing basis, Utopia apartments represent good for value for money in what is an area that is trending towards strong future capital growth.
The Utopia Apartments – Dulwich Hill
Situated close to local transport, schools and parks, the Utopia Apartments are a luxury boutique development of only 32 units.
Thoughtfully designed to maximise space and natural light, each home offers a clever floor plan to ensure generous in/outdoor living with style, function and quality finishes without.
Project Name: The Utopia Apartments
Project Description: 32 apartments – 13 one bedroom, 16 two bedroom, 3 three bedrooms                                                        
Size range (selected apartments):  Internal 53.84 sqm to 60.63 sqm | External 11.08 sqm to 28.25 sqm
Car park: 1 car park per apartment
Price:  $429,000 to $489,000 (one bedrooms)
Rental Estimate:  $430 to $460 per week (depending on actual apartment)
Amenities & Environment
  • Dulwich High School                1.5km
  • Trinity Grammar School           900m
  • TAFE NSW                                    3.6km
  • University of Sydney                 6.9km
  • Woolworths Supermarket        500m
  • Hurlstone Park Train Station  600m
  • M5 East Freeway                          5km
  • Marrickville Strip Shopping    2.7km
  • Sydney Airport                            7.4km
  • Sydney Private Hospital         1.8 km
If you are interested in learning more please click here and Alex Lee or Chris Magnus will contact you, or call Ark at 02 926223333.

1 comment:

Mark Sindone said...

I suppose it's good sto see the price of my property in Sydney improving, it may just be a good time to just hunker down and reap in good rental in the area.