Melbourne's boutique apartment renaissance: 10 tips for buying off the plan

GUEST OBSERVATION

Melbourne is undergoing a profound shift. It’s a renaissance of sorts – yet, instead of the rebirth emanating from the centre of the city, all the action is happening on the city’s fringes and in nearby suburbs. 

Here’s why I believe this to be the case.

In the inner city, enormous towers are rising up at alarming speeds, often fuelled by offshore investment. In the long-term, these 100 plus level towers simply cannot hold their value as the sheer number of them has a diluting effect.

On the flip side, boutique projects on the fringes of Melbourne are proving to stand the test of time and really hold their resale value. They have enduring appeal for owner-occupiers who seek a great location close to transport and parkland. These buyers also appreciate the fact that they are buying into a smaller development that will be shared with other owners like themselves – instead of disconnected investors.

And, perhaps most importantly for the bank balance, these projects are unique. You want to buy into something that hasn’t been repeated 20 times in a similar area – a property that will retain its value into the future.

The key is to get in early when these one-of-a-kind projects are in their planning stages. By buying off the plan, you will secure a great investment and should reap significant monetary gains in the long-term.

Tips for off the plan purchases

Buying off the plan has its risks and it’s important to be as thorough as you can. Ask yourself key questions about what you’re after, and why; and seek advice at every turn. The more knowledge you have, the closer you’ll come to finding a property that ticks all of your boxes – now and into the future.

Here are my key tips for purchasing property off-the-plan:

1. Know your borrowing capacity 
   
   Find out how much you can borrow, and make sure you’re comfortable with your debt level and the monthly repayments.
   
   
2. Seek boutique, ideally located projects 
   
   For enduring value, seek out boutique projects in well-located positions, close to public transport, cafes, grocery stores, markets, parklands, gyms, or universities.
   
   
3. Investigate the project developer 
   
   Look at their track record and ask around to get an idea of their reputation.
   
   
4. Investigate the project builder 
   
   Find out about the building company (if different to the developer), paying particular attention to their track record for successful, on-time project delivery.
   
   
5. Choose an experienced ‘off the plan’ conveyance 
   
   Not all conveyancers have experience in off-the-plan purchasing, so it is important to ask at the outset what their background is. If they haven’t worked in the off the plan space, look elsewhere.
   
   
6. Read the contract of sale 
   
   Ask for the contract of sale and read it carefully. Pay particular attention to sunset clauses, defect periods/warranties provided by the builder, and estimates of body corporate charges. Ask yourself whether they are realistic or excessive.
   
   
7. Know the size of development 
   
   Find out how many apartments are in the development, and ask yourself if you’re happy with the number.
   
   
8. Review the fit out and specifications 
   
   Ensure that quality isn’t skimped in any area. Pay attention to everything – joinery materials, quality and brand of appliances, heating and cooling appliances, the energy rating, glazing properties, handling of refuse, ducting of exhaust, mechanical ventilation, and so on. If you’re unsure about any of these elements, seek professional advice.
   
   
9. Consider car parking
    
   Find out whether on-site parking is included, where the parking spaces are, or whether car parking is available on surrounding streets.
   
   
10. Beware the ‘added extras’ 
    
    While swimming pools, saunas and gyms sound great in theory, they can erode an investment’s return in the longer term because of excessive maintenance and upkeep fees.

Then, once you’ve bought off the plan and are enjoying your new home as an owner-occupier, I strongly encourage you to join the body corporate. Living onsite, you have a vested interest in the upkeep and smooth running of the building’s public areas – and can help to preserve the property’s value into the long term.

Damon Krongold is director of Beller Project Marketing.

Beller Real Estate has been part of the Melbourne property market for over 50 years.