International students changing the rental market in Melbourne CBD: HTW residential
Living close to tertiary education institutions is one of the largest forces that drive rental demand in the Melbourne CBD and CBD fringe areas, according to the latest Herron Todd White (HTW) residential report.
The valuation firm took a look at rental yields across the nation to dissect where to find the best returns in residential markets.
With a population of 170,000 people and growing, the CBD is home to people coming from all ages and backgrounds.
Residents range from international students, young professionals and older couples. Melbourne has something to offer everyone
"With two of the most prominent universities located in and near the heart of Melbourne, University of Melbourne and RMIT, international students make up the largest portion of enrolments each year, resulting in a high demand for apartments in the CBD and neighbouring suburbs, ultimately changing the rental market within the area," the valuation firm said.
These latest statistics show that apartments in the CBD are priced at an average of $435,000 and generate $530 per week in rent, earning a 5% to 6% rental yield for investors.
Latest statistics show that apartments in Carlton are priced at an average of $347,000, generating an average of $470 per week in rent, providing investors a rental yield of 7%.
"Previously known as the world’s most liveable city for seven years running, Melbourne is an attractive city for tourists and investors," the valuation firm added.
"Whether it be a short or long-term arrangement, investors are thinking outside the box and finding ways to increase their rental property returns by taking advantage of accommodation hosting platforms such as Airbnb, where most property listings are heavily concentrated in the inner suburbs of Melbourne, particularly within the CBD areas."
The HTW report suggests secondary hot spots for Airbnb listings include areas in St Kilda, South Yarra, Port Melbourne and Brunswick.
The average cost to rent an apartment via the Airbnb platform within the CBD and fringe areas can range from $120 to $190 a night.
"If we can assume that the weekly gross rent that can be collected via Airbnb is applied to the CBD’s medium price for apartments ($435,000), this would generate an upward yield of an incredible 10%.
"With the correct marketing, property and location, there are many different ways an investor can strategically maximise their property in the CBD and fringe suburbs as Melbourne is the destination for tourists, young professionals and international students."