Top 5 Considerations when Investing in Perth
Today I want to talk about the top considerations you need to think about if you want invest in my hometown of Perth.
There are lots of wonderful reasons why you should consider it, but there’s definitely some quirks about this particular city, which you need to think about if you are living interstate and you’re thinking about becoming a borderless investor and investing into the Perth market.
The number one consideration for me is it’s a boom-bust town.
It’s largely driven by the activity in the northwest of the state around the mines — and a lot of good incomes are generated when the mining sector is booming. Now, Perth is vulnerable at times when the mining sector isn’t booming. Here we are in 2017, and for the last few years it’s been quite flat as this sector has come off. So it’s important to understand that if you’re going to buy in the Perth marketplace, which has principally one product, a rock, and a big customer in China, if this particular part of the market is down, you want to make sure that the properties you’ve bought are strong on fundamentals.
So for me: I’m not that keen on investing in mining towns because it’s a bit of a white-knuckle ride. If you’re in Perth you want to think about the fundamentals of economic activity — human interest and human behaviour. Think about the fact that not everyone’s employed in the mining sector in Perth — there are doctors and accountants and lawyers and dentists and teachers — so there’s still commerce happening in the city. So have a think about what’s really important to these people, and make sure you have properties which take into account the core fundamentals.
This drives into my second point here — what are the lifestyle drivers that exist in Perth?
Principally, when people aren’t working, they’re flocking to the beach, the river or the city — so you want to have proximity to these big three. The Swan River is really large. On the foreshore on Australia Day, it’s a huge party when the fireworks are in place — there’s planes flying, there’s yachts everywhere. It’s a big space for people to get out and enjoy on the weekend — there’s always boats going up and down, they’re going to Rottnest Island; there’s a lot of eateries on the banks of the Swan River. So it’s important to understand that proximity to the Swan River is a large driver.
It’s also proximity to the beach. We have these beautiful, white sandy beaches and a beautiful, temperate climate where you can enjoy the beach year-round. So, aim to get close to the city, close to the river, or close to the beach … these are ideal.
And they’ve got what’s called The Golden Triangle in Perth, which is the coast, the northern bank of the river and then coming across to the city — you’ll see if you have a look at the map — and, really, this is our premier real estate.. You get the sunset every day, it’s amazing. Something that might be interesting for interstate people when they’re investing in Perth is that the western suburbs on the East Coast are usually considered to be the lower demographic suburbs, whereas the western suburbs in Perth are the premier suburbs because they’re closer to the coasts.
So consider what the lifestyle drivers are in Perth. Again: proximity to the city, proximity to the river, and proximity to the beach … and try and find real estate that, ideally takes into account all three of them, but at least takes into account one of them.
I mentioned this before — Perth has a beautiful, temperate climate — so my third point here is to strongly consider outdoor space because people who live in Perth want to take advantage of this.
If you’re buying a townhouse, you want a courtyard. If you’re buying an apartment, you want to make sure there’s some outdoor space. You want to take advantage of the wonderful lifestyle the weather affords you in the Perth marketplace.
For me, the fourth point is understand that parking is really, really important.
Although the public transport in Perth is well and truly improving — I mean, as a kid when I grew up in Perth, I hardly ever went on the train; whereas now there’s a train running through the freeway all the way down to Mandurah, and you’ve got the train that goes from Fremantle through to the city, so people are starting to embrace it more — but it’s still a city heavily dependent on cars. You need a car to get around. So people, tenants and people are living there in general, expect to have the double lockup garage as the standard. They expect to have off-street parking. Whereas, if you’re in investing in Melbourne or investing in Sydney, this is a bonus if you’ve got it; but it’s okay if you don’t. In Perth you really want to make sure you take advantage of having parking available.
Finally, for me, the fifth point is to consider, where you can, larger block sizes.
The typical dwelling in Perth is … still people want to live in a house. But I think this will change over time as the city gets bigger and denser. While public transport isn’t a huge driver right now — in terms of proximity to a train station — this will change over time because as more people move there, the density will start to improve; congestion will start to become more and more of a problem, which will make the convenience of getting around much, much better. But if you’ve got a larger block size, you may have the potential to redevelop it — you may be able to subdivide the back and maybe put one or two town houses on it, for example.
So, for me in that city, while apartment living isn’t massive, I would consider buying the old-style seventies flats in the really blue chip suburbs. Think close towards Fremantle. Think closer to the river, all the way up and down the river, in Scarborough — all of that Golden Triangle area. If you buy the older style flats, which are around the beautiful homes in these areas; I still think they’ve got the potential to go up in in the future, based on the latest insights. But I would avoid the brand new style apartments because I think that’s too far in the future for this particular market.
So there you have it! If you are considering investing into the Perth marketplace, there’s just a few things for you to consider to make sure you don’t bring your interstate paradigms into this market when you’re looking to invest there.
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