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Investment Advice

Places you should avoid investing in property

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plcaes to avoid investing in property

Are you looking forward to invest in a property? Well, keep on reading, as we mention the places you should not be investing properties.

property investmentWHILE demand for the real estate might be hot in many suburbs, investors are being warned against buying in Australia’s most oversupplied markets.

According to property analyst Terry Ryder of hotspotting.com.au many investors will end up getting burnt once all proposed stock is built and they can’t find a tenant prepared to pay a decent rent.

He has come up with a list of the top ten markets to avoid and five markets to treat with caution. Half of the markets he advises against investing in, are in Queensland.

TERRY’S TOP TEN MARKETS TO AVOID:

  • Brisbane inner-city, Qld
  • Emerald, Qld
  • Gladstone, Qld
  • Gracemere, Qld
  • Hunter Region, NSW
  • Mackay, Qld
  • Melbourne inner-city, VIC
  • Moranbah, Qld
  • Perth inner-city, WA
  • Port Hedland, WA

 property investmentFIVE MARKETS TO TREAT WITH CAUTION:

  • Canberra, ACT
  • Darwin CBD, NT
  • Gold Coast Qld
  • Mudgee, NSW
  • Sydney inner-city, NSW
  • Source: hotspotting.com (listed in alphabetical order)

Mr Ryder says supply is the factor most overlooked by property investors, but it can have a significant impact on how their investment performs.

“If high population growth was the core element in a good locational choice, the leading capital growth performers in the past five years would have been the Gold Coast and Wyndham City in the southwest of Melbourne,’’ he said.

“The opposite is true in those markets. The forgotten factor is often supply.’’

He says the two current “danger situations’’ in the market are inner city apartment markets and regional centres where a rise in supply coincided with a drop in demand, as is the case in many coal mining areas.

Mr Ryder says that is why Queensland is over represented in the list.

Mining towns have experienced a rapid rise in vacancies and an equally rapid decline in rents and property values, as demand dried up.

“It will be some time before investors can be enticed to buy in such places again,’’ he says.

Mr Ryder says given that Melbourne, Brisbane and Perth already have major surpluses of inner-city apartments, and Sydney, Canberra and Darwin are heading in that direction.

A good strategy for property investors is to simply avoid CBD unit markets altogether.

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Investment Advice

Superannuation property fund ISPT invests in Brisbane malls

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Property

On behalf of its ISPT Retail Property Trust (IRAPT), ISPT is buy a 3741sq m property in Springfield and a 4889sq m neighbourhood centre in Ipswich.

Both were growing areas supported by strong residential catchments, said IRAPT fund manager Cameron Gregson.

“Obviously the quality of the anchor tenants in both centres also was a drawcard for IRAPT,” he said.

The Springfield property comprises of a 3200sq m supermarket leased to Woolworths on a 20-year lease, along with eight specialty retail outlets.

The Ipswich centre, located just 2km from the Ipswich CBD, has a 15-year lease commitment from Coles to open a 4200sq m supermarket in June 2017.

The two properties will be developed by Brisbane private property group Citimark, which has $1.5 billion of diversified development book focused on southeast Queensland.

“IRAPT’s decision to acquire both the Silkstone and Springfield retail centres is a huge show of confidence in these projects and the southwest corridor (of Brisbane),” said Citimark’s director of commercial and retail Jonathan King.

McNab Constructions has been appointed to build the Springfield centre, with completion expected in May 2017, while Hutchinson Builder will build the Ipswich Centre.

Sam Hatcher from JLL and Craig O’Donnell from CBRE managed the sale.

 

Originally Published On: http://www.theaustralian.com.au/

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Investment Advice

Low interest rates cuts negative gearing ATO investor claims in 2012-13

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Low interest rates cuts negative gearing ATO investor claims in 2012-13

Low interest rates cuts negative gearing ATO investor claims in 2012-13

Record low interest rates have shown up in new statistics from the Australian Taxation Office, in a sizable drop in negative gearing tax claims by property investors.

Claim for rental properties fell from around $13.8 billion to $12 billion between the 2011-12 and 2012-13 financial years.

The latest statistics for 2012-13 show that 1.26 million people deducted losses made on investments (including mortgage interest) from their overall income, from the 12.7 million lodged individual tax returns.

The overall cost of negatively-geared rental properties has fallen by $2.4 billion, or 31 per cent, in 2012-13, due to record low interest rates and higher rents.

The Tax Office’s latest statistics shows 1.9 million landlords.

The value of rent returned was up 8.6 per cent to $36 billion but the value of interest claimed was down 6.7 per cent to $22 billion.

While the number of landlords with negatively-geared properties increased by almost 60,000, their tax deductions fell 13 per cent.

​The highest number of property investors claiming tax deductions had a taxable income – after tax deductions – of between $37,000 to $80,000 a year.

By JONATHAN CHANCELLOR

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Investment Advice

How investor Nautilus nearly doubled money on property in 18 months

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How investor Nautilus nearly doubled money on property in 18 months
How investor Nautilus nearly doubled money on property in 18 months

Nautilus purchased this complex of 10 industrial buildings at 93 Burnside Road, Yatala, Brisbane, 18 months ago. Photo: Supplied

 

Nautilus Investments Corporation has made a 75 per cent gain on the value of an industrial property in less than 18 months after fully leasing half empty buildings and selling them off to Sydney-based fund manager Ringmer Pacific.

The Melbourne-based Nautilus purchased the complex of 10 industrial buildings at 93 Burnside Road Yatala, south of Brisbane from receivers in mid 2013 for $10 million.

It has now sold the asset for $17.45 million reflecting a yield of 8.94 per cent.

Savills’ Callum Stenson and Myles Clentsmith negotiated the deal following an expressions of interest campaign that attracted over 50 buyer enquiries and five offers to purchase.

“This was about being prepared to take on the risk profile,” Mr Stenson said. “When they first bought they were looking for something high return, high risk.”

“The complex was in disarray when Nautilus bought it. It had 57 per cent vacancy, there was outstanding infrastructure charges and no certificate of completion,” he said.

“At the time there was plenty of money but limited confidence – people were sitting on their hands, but those who stepped up have reaped the benefits.”

NEW TENANTS

Nautilus spent 18 months fixing the issues, securing new tenants and presenting the 14,500 square metres property back to the market fully leased.

A similar strategy is now being actively taken up by commercial real estate groups such as Lend Lease’s Australian Prime Property Fund.

That fund snapped up an empty ­Bunnings Warehouse in Brisbane in July last year for $21.27 million and Hills Limited’s headquarters for $15.6 million which is to be vacated next year.

Sydney-based fund manager Ringmer Pacific, which purchased the Nautilus asset, said the property has a prime location.

Ringmer Pacific’s Giles Austin said: “The 93 Burnside Road property provides extremely flexible accommodation for local businesses that will be able to adapt to changing tenant needs in this key growth corridor linking the Gold Coast and Brisbane.”

by Matthew Cranston

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