Investors desperate to get their hands on large apartment blocks
Large apartment blocks are becoming an increasingly popular stock for investors looking for a quick return, but the current demand is far outweighing the supply.
While interest in buying entire apartment blocks has never been higher, the sale of these sites is still a “rarity”, Burgess Rawson agent Nick Breheny said.
He just sold a residential block of 14 apartments in St Kilda, in Melbourne, for an undisclosed price and said that he had received overwhelming interest.
The block of 14 apartments in St Kilda has just sold for an undisclosed price. Photo: Burgess Rawson
“In areas like this one, with ease of access to all the amenities, they’re in huge demand,” he said.
“But they’re a rarity. There’s less of them now by virtue of the fact there are fewer and fewer opportunities that haven’t already been subdivided. It’s a very tough ask to find blocks that are all held in one line at the moment.”
A huge block of 30 apartments recently went up for sale in Forestville, 10 kilometres from Sydney’s CBD, with expectations it will fetch more than $10 million.
In close proximity to the new Northern Beaches Hospital, the sale was a “rare investment opportunity”, Knight Frank’s Eugene Evgenikos said.
“It’s quite impressive, and we’re anticipating interest from high-net-worth individuals and syndicators,” he said.
Over in Sydney’s eastern suburbs, a large block of eight apartments on the Bondi waterfront was acquired by a wealthy fund manager for $11.6 million, $2.3 million more than the reserve price, in an “incredibly rare” sale, according to the pre-sale marketing.
The block of eight apartments in Bondi sold for $11.6 million. Photo: Supplied
The Luxora Flats, a boutique art deco block of nine apartments in nearby Centennial Park, is on the market, advertised as a “blue-chip solid investment” with gross annual income from the apartments of $250,000.
The type of investors interested in these larger apartment blocks depends on their potential for renovations, said LJ Hooker Woollahra’s Michael Stavrianos. If there’s room for development, investors looking for a quicker return would jump, but if not, it was more of a long-term play.
Mr Stavrianos is handling the sale of the Centennial Park site, and said such blocks are often passed down through generations of the same family.
“They’re very tightly held and some people hold onto them in the family for very long periods of time,” he said. “There’s no development potential with this block so the majority of people looking at it are medium to long-term investors.”
The block of 9 apartments in Centennial Park, in Sydney. Photo: Supplied
Those apartment blocks that can be developed and resold quickly were especially popular. When Mr Stavrianos listed an apartment block in Bellevue Hill that did have renovation potential, he received 250 expressions of interest in just five weeks.
The attraction of these sites was that the entire building was for sale, and that’s what made them so rare, Killen Thomas’ David Marks said.
He is currently overseeing the sale a set of 10 apartments in a block of 16 in Malvern, but because not all of the block is up for grabs, investors haven’t shown as much interest.
“Most of the investors have wanted to buy but when they hear that it’s not the whole block they lose a bit of interest,” Mr Marks said.
“They don’t like the idea of not having control of the whole block.”
