6 tips on property investment in Melbourne

Real estate is a good investment in Australia because of its strong, stable yields, and high capital growth potential. Plus it’s the second most transparent real estate market in the world. And when thinking of where to invest in Australia, many are looking toward Australia’s most liveable city for property investment – Melbourne.

Why invest in Melbourne property?

Melbourne property investment offers glamorous investment opportunities to both residential property investors and commercial real estate investors. The city ticks many boxes – location, population, industries and economy.

Home to 4.9 million people, Melbourne makes up 19 per cent of Australia’s population and is on track to becoming the nation’s largest city. It is Australia’s cultural hub and a financial juggernaut (the finance and insurance sector’s total output is worth $34.48 billion).

With a triple-A credit rating, Melbourne’s state of Victoria accounts for 22 per cent of Australia’s GDP and even competes with some of the biggest economies in South East Asia.

It’s hard to argue against the city’s investment potential. But before deciding where to invest in the Melbourne property market, there are a few fundamental tips you should consider.

1. Understand the property market

Melbourne has a very competitive property market.

Because there are so many property investors in Victoria, property prices can be pushed up higher than you might find in other cities. Higher demand and lower supply means sellers can put a bigger price tag on properties.

Understand the median values of properties in your target location and try to find assets in the lower end of that price bracket. The cheaper properties might need a little fixing up. But this is where the opportunity for capital growth comes in; by getting your hands dirty.

2. Know what is a good return in Melbourne

Residential property in Melbourne will typically provide return of between 1 per cent and 3 per cent, and it’s not uncommon for capital growth to be in the double digits after holding onto an investment-grade property for five to 10 years.

Commercial real estate usually provides much higher yields to Melbourne investors than residential properties, ranging between 5 per cent and 7 per cent, and sometimes much higher if the right property investment is chosen.

Because of its huge population, logistics centres and warehousing in Victoria are an essential need. This is why an investment to consider is in industrial property. We’ve seen industrial assets in Melbourne fringe suburbs generate a yield of 8 per cent and even higher.

If you’re interested in a good return for Victoria commercial property investment, ask us for more information.

3. Invest near amenities

Consider lifestyle in Melbourne.

Sure, it’s a cultural hub for Australians. It’s also cold and wet for most months of the year. People are less likely to be found at the beach and more so inside a warm café or restaurant. So, proximity to local amenities – like trams and train stations, cafes and restaurants, maybe even the MCG – should be a major consideration if you’re looking to invest.

Proximity to local amenities – like trams and train stations, cafes and restaurants, maybe even the MCG – should be a major consideration if you’re looking to invest.

If your focus is Melbourne commercial real estate, knowing how a tenant interacts with their surrounding precinct is crucial to finding a good investment.

An industrial property tenant might love the bars and cafes in Melbourne CBD, but would hate the city’s lack of room to navigate big trucks and the long drive to major arterial roads. Instead, they would be better placed in fringe suburbs like Laverton North where they can access key arterial links and manoeuvre vehicles with ease.

> Read 5 reasons why industrial real estate is the most resilient commercial property sector

Want 5 reasons why industrial real estate is the most resilient commercial property sector? Check out our blog post.

4. Build relationships in the industry

Real estate agents, leasing agents, property buyers agencies, and even property valuers, can all lend a hand in finding you a great property investment in Melbourne.

Once you’ve found Melbourne’s leading property professionals, don’t just leverage their expertise. Build a relationship with them.

If you’re just starting out in property, you may find the stable returns will keep you in the game for a long time. So, it may be no time before you’re calling these professionals again for help with your next property acquisition.

5. Find off market properties

By now you’ve realised property investment in Melbourne is competitive. That’s why many property investors – like us at Properties & Pathways – turn to off market properties.

Off market properties, or unlisted property investments, are properties that have not been advertised to the public. This might be because the owner wants to sell to a high quality buyer with little fuss, or even to avoid the marketing costs that come with a property sale.

Off market properties don’t have the competition of listed properties, nor do they have the huge price tag. But they can be extremely tough to find without knowing the right people.

Almost every property we buy is off market. We actually get flooded with off market opportunities each week – and turn many of them down.

6. Consider investing alongside professionals

Instead of going it alone, consider investing alongside the experts. That’s right, putting your money in Melbourne property investment with property professionals in an unlisted property trust.

Unlisted property trusts also takes out the guesswork and replace it with strong, stable returns. You can leverage professional relationships built from years of industry experience and enjoy the comfort of a set-and-forget property investment.

Properties & Pathways is a dynamic commercial property investment firm. For more information on investing in Melbourne real estate, get in touch with us today.