COVID-19 has had a significant impact on the global economy, with the property market facing similar challenges. Historically, during similar tough economic periods, property has always proved to be a stable and successful investment for the astute investor, writes Fabrizio Perilli.
It is important to remember that Australia’s fundamentals in a post-COVID-19 period remain strong, in comparison with the rest of the world, and an investment today will prove successful over the medium to long term.
In NSW over the last five years, the property industry has experienced significant planning delays and a residential downturn, which has dampened the commencement of new projects in the last two years.
Together with the unpredictable impact of the global pandemic, these factors will have a significant negative impact to housing supply and completions over the next three to five years.
However, as our interstate and national borders start to reopen, green shoots will start to emerge quickly and investors and owner-occupiers alike will do well if they enter the property market.
Before investors get back into the market, however, here are a few key things to consider:
The current landscape
Since the start of the pandemic, the Australian government has been working hard with various industry bodies, such as the Property Council of Australia, to keep the property and construction industry buoyant. For example, there have been a number of cost-focused decisions made to assist and incentivise the development industry in starting new projects, such as the deferral of contribution payments.
On the stimulus front, the government is also implementing new short-term policies to help offset the negative economic and job impacts of COVID-19. For example, the NSW government recently announced the temporary abolishment of stamp duty for first home buyers on new homes under $800,000, with a stamp duty discount offered on homes valued up to $1 million.
These grants have several criteria to meet and timelines to adhere to, which means research is essential to not missing opportunities.
By understanding these announcements, investors can take advantage of new initiatives and, where applicable, reduce the initial outlay for their property purchase. They can also monitor what these changes will mean for the market and their existing property portfolio.
Research prior to purchase has always been a critical component to property investment.
The property development and construction sector has been under scrutiny in recent times due to several high-profile cases of defective buildings. This has brought about the appointment of the NSW Building Commissioner, who is focused on identifying risk-prone developers, builders and certifiers and stamping out unscrupulous behaviour. From TOGA’s perspective, this is a welcomed appointment as it will help to overhaul the industry and restore confidence in the market.
As a result, top-tier developers are working harder than ever to deliver design, construction and community excellence in all their projects.
It is important, however, for an investor to always carry out their research into the developer and builder’s track record, longevity and reputation for delivering quality projects.
It is also worthwhile checking the developer’s post-customer sales service performance, as this forms an important part of the experience and journey for a buyer of a new dwelling.
Many old mantras ring true, and “location, location, location” is one that remains vital in the property market. When looking for a property, it is important to consider the fundamentals that will stand the test of time.
Properties that are close to public transport infrastructure such as train stations, light rail and major roads, will provide rental demand as well as long-term growth potential. Development precincts that have access to retail and convenience amenities, an easy commute to the CBD, close proximity to schools or universities, and a lifestyle offering, such as great restaurants, parks or beaches, will always be in demand.
Investing in these suburbs early can produce a higher return when the planned projects are complete.
Take Marrickville, for example, it has exceptional transport connections, such as the newly opened WestConnex M8 tunnel, and future infrastructure projects, including the new Metro line and the WestConnex M4 tunnel due for completion in 2023.
Marrickville is also in close proximity to the Sydney CBD, the airport and universities and offers a vibrant cultural and retail scene. The area is undergoing a revitalisation of the Victoria Road Precinct, with new residential communities such as Wicks Place, set to start construction early next year. All these factors create a highly sought-after neighbourhood, which makes it a strong property investment prospect.
Understand the trends
We have noticed new drivers emerge in buyer behaviour and market interest since the COVID-19 pandemic. These trends will see an increase in demand for specific design, communal facilities and lifestyle elements in communities, making some projects more desirable than others.
Some of these trends include:
Apartments that optimise space and storage while also providing well-designed layouts that allow the occupants to easily live, work and socialise in their home environment. Key features that define this trend include a proper study space, useable balconies, appropriately sized entertaining spaces, and a butler’s pantry.
Provision of dedicated multipurpose spaces within a development that can be transformed into an office, gym, community facility or a wellness area that cater to buyer’s changing needs throughout the years.
Buyers have been starved of dining, retail and entertainment for the past few months, which has seen an increased focus on these features at communities.
Developments that are easily able to take advantage of different modes of transport, including train, bus and car, as well as education, health and public infrastructure, will always be desirable.
After being stuck inside during the COVID-19 lockdown, people have now placed a higher value on genuine outdoor space and close access to nature from their home. We are seeing buyers actively searching for a property that is close to parks and walking tracks to promote a healthy lifestyle.
Investment properties that deliver on the customer’s demands outlined above will be in high demand over the coming years.
By Fabrizio Perilli, CEO of TOGA