21/02/02

INNER CITY RENTAL SURVEY REPORT ­ JANUARY, 2002 CENTRAL EQUITY APARTMENTS OUTPERFORM THE GENERAL MARKET

A survey this week of over 2,300 Central Equity apartments and terraces completed during the last six years, shows a vacancy rate of 1.24%.

This is effectively full occupancy as it means 98.76% are let. It is virtually impossible to achieve 100% simply because of the dynamics of leasing and re-leasing.

From the above table the strongest sector of the market is the Southbank and environs which has an occupancy of 98.85%. Though all areas of the portfolio are performing better than what is considered to be the general Melbourne market at the present time.

Central Equity apartments significantly outperform the general market for many reasons with the general vacancy rate of approximately 4%. Although Central Equity says that is quite a manageable figure within the industry.

In analysing the results between one, two and three bedroom Central Equity apartments, the survey showed a strong demand in all categories with the strongest being in the one bedrooms apartments. What may not be readily apparent is that the three bedrooms also performed quite strongly. In light of the fact that as there are fewer three bedroom apartments offered on the rental market in the right price range, when they do become available, they are keenly sought due to restricted supply.

In considering the levels of rental, benchmarks should be set as follows:
One bedroom Apartment: $280-$380 per week
Two Bedroom Apartment: $300-$450 per week
Three Bedroom Apartment: $450-$700 per week

These figures of course apply for well located new developments offering amenity and resident facilities.

Tenants are generally young professionals with a high disposable income. They sign on for a one year tenancy, but it is estimated that the average duration is two years. Returns on Central Equity Southbank properties start at 6% and should quickly grow to 7%.

Tenants are usually aged between 25 and 40 years of age, are well educated and they value their lifestyles. Typically they will own a late model motor vehicle, have a rewarding profession, love of travel and dine out regularly. Renting a brand new inner city apartment fits in with their quality of life.

That is not to say that just because an apartment is new it will rent well. A place to live has to be seen as more than just a place to sleep by this new and affluent group of tenants.

This latest research of a large sample disproves the anecdotal market rumours of softening rentals. One of the problems with dealing with the market as a whole of course, is that figures become biased and jaundiced by older properties of some 20-30 years in outlying suburbs which do not provide amenity, technology, recreational facilities, security parking, or access to high employment areas. Old flats and houses designed with yesterday’s lifestyle simply cannot compete.

Central Equity is pleased with having established Melbourne Inner City Management, its specialist property management arm. The success of Melbourne Inner City Management is based on providing professional service exclusively to Central Equity clients and looking after its buyers’ requirements for property management, leasing, body corporate management and resales.