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Why West Melbourne is the Investment Hotspot for Investors
The state government has unveiled its blueprint for the 56 ha Arden precinct in North Melbourne, which over the next 30 years could be developed to accommodate 15,000 residents and 34,000 jobs. The area will be built between Macaulay Rd, Dryburgh St and the Upfield train line in conjunction with the $11b Metro Rail project and could see building in the area kick off as early as 2018.
“West Melbourne appeals as the hidden value gem of inner-city apartment living – for those on a budget looking to get in the housing market as owner-occupier or investors,” says Domain Group chief economist Andrew Wilson. It is fast becoming an apartment hotspot in close proximity to Flagstaff Gardens, the Queen Victoria Market, RMIT and the University of Melbourne. “With a current median of just $440,000, well below neighbouring Docklands’ $610,000 and Southbank’s $565,000, West Melbourne has clear potential for capital growth over the median to longer term as Melburnians are set to increasingly embrace inner city apartment living,” he says. “Investors will also be attracted by the current gross yields of 5.4 per cent and rising rents.”
The $250m redevelopment of Melbourne’s Queen Victoria Market could deliver $1.2 billion in net benefit to the community, an analysis by SGS Economics and Planning shows. The benefit to cost ratio is 6:1. The project would also pull an additional 11,560 jobs into the area around the market from across Melbourne.
West Melbourne has a unique demographic driving apartment demand, according to the ABS over 58% of West Melbourne residents are couple families without children. This demographic is well suited to apartment living that will drive demand into the future. Currently 62.6% of all properties are apartments with 47.3% of those being 2 bedroom apartments. Couple households in West Melbourne without children earn on average $2,558 p.w. which is 18% more than Greater Melbourne couples at $2,166p.w. DINKS have less expenses and more disposable income to spend on rent and lifestyle, making them good quality tenants.
Residex has recorded 4.78% p.a. rental yield (Aug 2015- 16) for apartments in West Melbourne compared to Greater Melbourne at 4.30%. In addition SQM Research has recorded a 1.8% vacancy rate for West Melbourne in Oct 2016 compared to Greater Melbourne at 1.9%.
The City of Melbourne has purchased a $1.7 million property in West Melbourne as part of Council’s plan to increase open space in the municipality by 24 hectares over the next 15 years. The park will expand from 821 square metres to 1800 square metres. The tender for works will begin in October 2016.
Railway Place and Miller Street Reserve, and Spencer and Dryburgh Street Reserves will be amalgamated to create a significantly larger open space that includes a dog off-leash area and multipurpose recreation space.
The new significantly larger open space will open in early 2017.