New Apartments Adelaide

Now is the time to get into the Adelaide Property market, but with so many options what is the best way to go

Steady population growth, a laidback lifestyle and an increased demand for apartment living have resulted interest in buying new apartments in Adelaide, the arts, wine and festival capital of Australia. It is projected Adelaide’s population will increase by 18% from 213,823 people to 1,395,812 people by 2027 according to the Australia on the Move report. Here are the important factors to consider when buying a new apartment for investment purposes.

Location

Adelaide always ranks highly as one of the world’s most liveable cities in the Economist Intelligence Unit's liveability poll. Apartment living has been embraced by Adelaide with residents who want to live near cafes, restaurants and be close to sporting, cultural and arts events and the eclectic nightlife. Traditionally, new apartment developments are located in areas that have a high rental demand such the Adelaide CBD, inner suburbs and coastal regions. It is important to investigate your desired Adelaide locality and check:

• capital growth of the region you wish to buy a new apartment in
• average rent and yield is of similar new apartments in the area
• changes to infrastructure or new developments planned that may affect the new apartment you wish to purchase and
• estimated population growth and demographics of the location.

Remember investing in property is a long term strategy and the property market is a cyclical market so make sure you check previous reports as well as current reports and projected planning reports for when planning to buy new apartments in Adelaide.

Rental income and yield

Research rental reports in the Adelaide region you wish to buy an investment property in and find out the average rent for other similar new apartments. The greater the demand for your property, the higher the rent you can charge. Traditionally, new apartment developments are located in Adelaide regions that have a high rental demand such as:

• within 10kms of the Adelaide CBD or close proximity to one of Adelaide’s beachside suburbs such as Glenelg and West Beach
• access to nearby schools or universities such as the University of Adelaide or Flinders University
• within a short distance to one of Adelaide’s many shopping precincts
• located near cafes, restaurants and nightlife
• near to public transport and access to major highways
• located in a region with a diverse industry and employer base.

Capital growth

It’s important to research the capital growth potential of the area that you are planning to buy in. Historically, Adelaide’s apartment prices have been more affordable than Sydney and Melbourne. Capital growth in Adelaide may be affected by the following factors below:

• The location of the property. Historically, the best performing apartments in terms of capital growth have always been within 10km of Adelaide.
• Demographic changes to the region increasing a demand for certain types of property.
• If the apartment is bought off the plan and there is a long settlement period, there may also be potential for capital growth when the property is finally completed.
• Over supply of apartments in popular areas and lack of affordability may affect potential capital growth.
• Whether there are any major developments or infrastructure planned for your Adelaide location such as a shopping complex or a new highway.

Tax advantages

One of the major incentives for buying new apartments in Adelaide is that there are considerable tax benefits. On January 1, 2006, Adelaide abolished stamp duty which makes Adelaide a very attractive option for investors. Any legitimate expense incurred in running your investment property should also be tax deductible against your overall income. These can include:

• depreciation – this is calculated at 2.5% for new apartments in Adelaide and you can claim the cost of replacing fixtures and fittings such as carpets, curtains and so forth in advance of actual replacement; new apartments usually provide a higher rate of depreciation than houses or existing buildings.
• repairs and maintenance of fixture and fittings;
• loan interest and related bank fees;
• insurances;
• property management fees;
• any legitimate expense incurred in running your investment property;

Consult your accountant before buying a new apartment in Adelaide to find out all the possible tax deductions you may be entitled to.

Costs

Expenses, fees and ongoing costs to be aware of when buying an apartment investment property include:

• conveyancing costs
• mortgage insurance (if applicable)
• loan application and valuation fees
• contents insurance as only the building will be insured under the strata plan
• a tax depreciation report and
• body corporate fees.

Other ongoing expenses include property management fees, landlord’s insurance and council and water rates.

Buying an investment property should always be a long term strategy and if you do your research and buy a property in the right location at a good price, the capital gains growth almost always follow. While the attractive tax benefits of buying new apartments in Adelaide remains a strong incentive to buy, financial independence is usually achieved through capital gains growth, that is increases in the value of the property, and not normally just through tax savings.