Property Investment Brisbane

What to consider when buying a new apartment in Brisbane as an investment

Brisbane’s growth was recorded population at 1,819,762 in 2006 and is projected to increase to 2,726,836 in 2031 according to the Queensland’s future population 2008 edition. Strong population growth in Brisbane coupled with an increased demand for apartment living have resulted in low vacancy rates, higher gross rental yields and strong capital growth for new investment apartments. Here are the important factors to consider when buying a new apartment for investment purposes.

Where is the property located?

Brisbane’s laidback lifestyle, cafes and restaurants, cultural centre and nightlife are a popular drawcard for apartment living. Traditionally, new apartment developments in Brisbane are located in areas that have a high rental demand. It is important to analyse your desired Brisbane location and check:

• what is the capital growth of the region
• whether there are any major developments or infrastructure planned
• what is the average rent and yield of similar new apartments and
• what is the rate of population growth and the demographics of the area.

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 the area.

What is the potential rental income and yield for your new apartment?

Check rental reports in the Brisbane region you wish to buy an investment property in and find out how other similar apartments in the area are performing so you can find out the potential rent you can charge for your investment apartment. Traditionally, new apartment developments are located in Brisbane areas that have a high rental demand such as:

• within 10kms of the Brisbane CBD
• located near restaurants and cafes
• close to amenities like a shopping centre or hospitals
• access to nearby schools or one of Brisbane’s many universities such as the Queensland University of Technology
• a short distance from public transport and highways and
• located in a region with a diverse industry and employer base.

Buying a new apartment that fits most of these criteria will result in a low vacancy rate, higher gross rental yields and strong capital growth.

What is the capital growth of the area?

Historically, Brisbane’s apartment prices have been more affordable than its eastern city sisters, Melbourne and Sydney. The best performing apartments in terms of capital growth have always been within 10km of Brisbane. Capital growth in Brisbane can be affected by the following factors:

• 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.
• The location of the property. Historically, the best performing apartments in terms of capital growth have always been within 10km of Brisbane.
• Lack of affordability in Brisbane and over supply of apartments may affect potential capital growth.
• Whether there are any major developments or infrastructure planned for your Brisbane location such as a shopping complex or a new highway.

It’s important to research the long term capital growth of the area that you are planning to buy in as capital growth is the one of the main reasons why people purchase new apartments as investment properties.

What are the tax advantages of buying a new apartment?

One of the major drawcards for buying a new apartment off the plan in Brisbane is that there are considerable tax benefits. Any legitimate expense incurred in running your investment property should also be tax deductible against your overall income. These can include:

• loan interest and related bank fees;
• repairs and maintenance of fixture and fittings;
• insurances;
• property management fees;
• any legitimate expense incurred in running your investment property;
• depreciation – the ability to 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.



What are the costs of buying a new apartment off the plan?

Expenses to factor in your budget when buying an apartment investment property include:


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

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

 While the attractive tax benefits of buying new apartments as investment properties 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. 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.


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