Buying a CBD apartment – What you need to know

Doing something for the first time, particularly when it involves a good amount of money, can scare anyone to make the big leap. If you are looking at purchasing property in a CBD area, here are things you should consider.

Crucial factors to consider when purchasing a CBD property

Make a shortlist of your CBD home preferences so you can cut down on time spent browsing through listings.

Your budget, property type, size, location, parking, and amenities are all important factors to consider. Knowing your negotiables and non-negotiables can also help fast-track your property search. However, while your preferences are crucial, it would also be prudent to think of your purchase as an investment opportunity by considering if the property will remain desirable to potential tenants and buyers in the coming years.

Why is the CBD a good investment option

Simple answer: location and accessibility. The CBD is conveniently accessible via public transportation, and stores, pubs, schools and parks are within easy reach.

Apartments located in a CBD have access to all of these advantages, which gives the property a higher value in the long run.

What kind of property should you consider purchasing?

If spending hours tending the garden and sitting in traffic on the way to work is not your thing, perhaps you might want to consider a new concept of liveability that makes lifestyle amenities in the CBD, instead of a house with a large block of land, a priority.

CBD apartments offer both affordability and liveability with features such as “a pool, sauna, gym, common entertaining spaces, stunning views, restaurants, and concierge services”.

Generally people purchase existing apartments or “off the plan” apartments from the builder.

What does it mean to buy anything “off the plan”?

Buying a house “off the plan” is signing a contract and paying a deposit for an apartment before it is built. You can look at the unit’s blueprints, go to a showroom to help visualise the final look, and often have a say in the design, layout and finishes in your apartment.

What are the advantages of buying off the plan?

Purchasing a CBD apartment off the plan is fast becoming a popular option due to these advantages:

• When you buy off the plan you’re locking in today’s price, so from the moment you sign the contract you don’t have to worry about the inflation or property price hike. This could potentially result in a quick profit due to higher valuation.
• You can incur savings because an existing home cost more than one that hasn’t been built yet. Pricing is also transparent, and you don’t have to go through the process of being outbid by other buyers.
• It buys you time to save for repayments since off the plan developments often require just a 10 per cent deposit, and a lower amount can be negotiated in some situations.
• Participating as a decision-maker in your brand-new CBD apartment’s design, layout, and finishing could help in your property’s value appreciation even before it is completed.
• A new CBD apartment is less meticulous than an older house when it comes to repairs and maintenance.
• You may be eligible for considerable tax savings “if your purchase turns into an investment and you plan to lease your new apartment in the future”.
• As a first-time buyer, you will be eligible for a stamp duty reduction, which means you will most likely pay no stamp duty. Cities like Melbourne offer additional stamp duty exemptions, so if you’re buying in the CBD, you can rest assured that any excess stamp duty owed will be reimbursed.
• You could be able to take advantage of any developer incentives, which could range from cashback offers to furniture inclusions and more.

What are the disadvantages of buying off the plan?

• Builder goes bankrupt – One of the major disadvantages of buying off the plan is the possibility of the builder going bankrupt, resulting in the off the plan development never getting finished. This will mean you’ve lost 1-2 years, when you could have put that money towards other investments. In some cases, you may lose your deposit as well. you should always do background research on the builder and their previous jobs.
• Problems getting Loan approved – it usually takes about 2 years from the day you put a deposit and settlement happens for your off the plan property. Your financial circumstances may change during the settlement and bank may not approve your loan for settlement. Builders may keep your deposit if you cannot settle during that time.
• Bank Valuation may be lower than the Contract Price – We see a lot of investors making this mistake of thinking that the bank valuation will be same as the purchase price. Bank valuation depends on many factors, and it may be less than the purchase price. You need to ensure you have a safety deposit in case the bank’s final valuation comes less than your purchase price. For example, you may have purchased an apartment for $550,000 but the bank valued it at $500,000. You will need additional $50,000 cash savings for your settle the property

What should I be looking for in a new apartment development?

• Scale. Smaller developments are typically more boutique in style, with more attention to detail and a focus on quality and liveability. Pricing may be steep, but there are boutique CBD apartments that provide the best in lifestyle, amenities, and design excellence while housing up to 300 people.
• Design focused on liveability makes property appreciate in value over time. Be on the lookout for features like high ceilings, large windows, open plan areas, soundproofing, and ventilation.

How long will it take before a buyer can move into an off the plan apartment?

Everything is determined by the size, type, and level of development at the time of purchase. Your property developer should keep you informed about the construction timeline, provide updates, lock-in a settlement date, and give you an opportunity to schedule pre- settlement inspections.

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