A guide to purchasing your first luxury investment property in Sydney

May
18
2017

So you've decided that you'd like to get your hands on some luxury real estate in Sydney? Good decision – the NSW capital is an affordable but growing luxury property market, the latest Knight Frank Wealth Report indicates. But how do you go about looking for the right investment property?

We'll take you through the key things you'll need to do. By the time you finish reading this, you should be well on track to purchasing your very first luxury investment property.

Identify the optimal location

You're probably already familiar with Sydney's luxury housing market, but you'll still need to do some thorough research into current property values in different suburbs. Location is crucial when considering luxury investment. Investing in the right place can mean incredible capital gains, while purchasing property in a suburb experiencing a slump could set you up for severe financial losses. 

So what makes a good location for luxury real estate?

Pick Sydney suburbs with high growth potential in coming years. Pick Sydney suburbs with high growth potential in coming years.

You'll be looking at areas of Sydney that are likely to experience consistently high growth and have a number of current and planned infrastructure projects. The Sydney property market as a whole has been experiencing significant growth during 2017, but certain suburbs will perform better than others.

Western Sydney is expected to undergo massive growth over the next decade, with the construction of the new airport at Badgerys Creek, and other projects in the works such as the WestConnex motorway. Suburbs such as Parramatta will be a smart choice for investors, as they will benefit enormously from the infrastructure pipeline. The Green Square area has received $13 billion worth of investments for urban renewal projects, making suburbs such as Waterloo equally good choices.

In addition to high growth, you'll need to look at rental yields. If rent is high in comparison to property values, then you can expect to pocket more.

Low vacancy rates, indicators of high demand, are another promising sign. If vacancy rates are high, it's probably because the area isn't attractive to tenants. 

Choose the right kind of property

You'll need to decide whether you want to purchase a house or apartment. This really depends on your personal preference, but something to consider is that an apartment is smaller and subsequently easier to maintain. That being said, you will be up for body corporate fees with apartment complexes.

Will you invest in a luxury house or an apartment?Will you invest in a luxury house or an apartment?

Another thing to consider is whether you will be purchasing an existing house or apartment or one off-the-plan. Off-the-plan developments are generally more economical and in NSW you could also be eligible for government grants and tax concessions.

The risk with buying off-the-plan is that you can't see the finished product until you've already committed yourself financially, which is why it's important to choose a developer that has a proven track record of completing their constructions to a high standard.

Look for unique and attractive features 

Your property needs to appeal to as many segments of the luxury rental population as possible, so look for features that will attract different kinds of renters.

The majority of renters will take proximity to commercial centres and business districts as a positive sign. Families will be looking for a property that is close to good schools and universities, while young and middle-aged couples will appreciate being nearby good dining and nightlife spots.

Consider whether there are good transport connections – an attractive feature of any property, luxury or otherwise.

Look for properties with unique features that will appeal to as many luxury renters as possible.Look for properties with unique features that will appeal to as many luxury renters as possible.

The features of the house or apartment complex itself are also very important. Look for lifestyle facilities that tenants will love, such as swimming pools, gyms, retail outlets, rooftop bars, gardens and communal areas with attractive features. The Waterfall by Crown Group complex in Waterloo will feature vertical gardens and a seven-storey man-made waterfall cascading down the side of one of the buildings. It's innovative design elements such as this that will make tenants choose your property over others.

Look for lifestyle facilities that tenants will love.

Weigh up all the costs 

After considering all of these things, you'll need to get into the nitty gritty of negotiating the mortgage. As with any property purchase, you should think about up front costs such as your deposit and stamp duty.

There may also be additional fees if you decide to use solicitors, brokers or property managers to assist you with the purchasing process. Added to this will be the costs of pest and building inspections, insurance, body corporate fees (if you purchase an apartment), and council and water rates. Ongoing repairs and maintenance will also need to be factored in.

Taking that first step towards investing in your first luxury property is exciting, but it can also be overwhelming. We hope these steps will make the process a little easier for you. 

Crown Group is one of the leading luxury property developers in the Asia-Pacific region, with a number of exclusive apartment complexes for sale in Sydney. Talk to us about our exciting offerings today.

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