Listen to all the spruikers in the market place. It is as if they are saying… “whatever you buy in the real estate market will make your money, just buy,” the running mantra for every real estate professional selling real estate in Melbourne over the last 5 years.
Truth be known, the fundamental principles of dollar value profit and how to make money out of real estate has been diminished by the two major factors of what not too many people are prepared to talk about
Without providing a detailed analysis, a large proportion of Global purchasers of whom have acquired Melbourne real estate over the last 5-10 year period, have not acquired for the same reason as local purchasers have.
- Global Purchaser
- Generational shift to Gen Y
The disparity between some of Melbourne’s local neighbourhood retail shopping centres and the appetite of local investors continues to bewilder some.
Whilst retailers in general terms continue to complain about the lack of trade and the ever increasing costs of day to day business whether it be the rent or the cost of labour via penalty rates…it seems that unless you are operating a café…you are struggling.
For those baby boomers nearing the end of their working days or those parties that are planning for that retirement period in future years…be careful. The acquisition that you entered into already may be one of the worst financial decisions you have made or perhaps you may have created an untenable retirement period already for the future years ahead.
Let’s face it, the real estate market specific to Metropolitan Melbourne has witnessed a sustainable increase in levels of value unparalleled for many years. More so since the Global Financial Crisis (GFC). The dollar quantum increases in value in fact, is outstanding and no one in their right mind could argue that those parties that have already prudently acquired real estate over the years will benefit when retirement arrives.
Difficulty in obtaining funding for a project to get off the ground is a difficult task in any property cycle. The base rules of most multi unit apartment developments have been fundamentally the same over the last five year period. Developers need to own the land outright, pre sales are a requirement, the construction/builder is to be known to the marketplace and the entity needs to be able to show debt coverage of a percentage plus basis over the total development period. The simple truth is for a project to get “off the ground”, an intending funder has undertaken their due diligence process.