Signs of cooling but Glen Waverley still active investment hub for Chinese: HTW

Investors are very active in Melbourne’s eastern suburbs, in particular Glen Waverley, says valuation firm Herron White Todd.

The HTW month in review suggested that typically investors in the Glen Waverley residential investment market are from overseas.

"Residential stock located within the Glen Waverley Secondary College zone and within walking distance of The Glen shopping centre and Glen Waverley metropolitan train station are particularly appealing to investors.

"This is typically due to Glen Waverley Secondary College’s academic reputation among the local and Chinese communities and the practicality of being near a major transport hub and shopping centre.

"Looking at detached housing specifically, investors can be attracted to dated dwellings in original condition on at least circa 650 square metres which may be suitable for future subdivision or redevelopment."

The HTW report goes on to state that under the Monash Planning Scheme, dwellings within close proximity of Glen Waverley Secondary College and The Glen shopping centre are typically located within a General Residential Zone Schedule 2 (GRZ2).

"The planning schedule to this zone outlines that there is no maximum building height requirement for a dwelling or residential building within the zone. This feature encourages higher density living and development in the area.

"The entry price point for a typical original single level detached brick veneer dwelling on a 650 square metre site located within the Glen Waverley Secondary College zone is around $1.3 million.

"The entry price point for a typical circa 650 square metre original single level detached brick veneer dwelling located outside the Glen Waverley Secondary College zone is around $900,000."

Typical yields for newly completed two storey brick veneer detached dwellings with a double garage range from circa 2% to 3%, says the November review.

"Typical yields for newly completed townhouses in Glen Waverley range from circa 3% to 4%.

"Typical yields for newly completed apartments range from circa 4% to 5%."

The review also notes that speculative off the plan apartments have been of considerable interest to investors in the Glen Waverley area.

"Recent apartment developments within walking distance of The Glen shopping centre have almost sold out within hours of being put to the market for sale with strong interest from investors.

"Such apartment complexes include the Galleria tower  that media reports have said sold 100 apartments in just 90 minutes in early October 2015.

"The Ikon apartment complex located directly adjacent to the Glen Waverley train station also experienced a similar rush in under 24 hours from overseas investors wanting to buy in the popular area when they were first offered to the market in 2012."

The HTW report suggests that 2015 has seen a strong increase in capital values in the area, however recent legislation changes to foreign investment regulations in conjunction with lenders tightening lending criteria to investors (both local and foreign) has led to signs of market conditions cooling in recent weeks.

However premium properties or properties which offer a point of difference are still hotly contested and achieve strong results, says the valuation firms review.

"Should a significant change in current market conditions occur whereby investor demand significantly dropped we would expect to see a decline in property values in the area, especially in those properties which have risen sharply over the past 24 month period."