Understanding what the right property means isn’t as straightforward as going for the best dwelling in the suburb to get maximum appeal, or the worst dwelling in the suburb to get the best bargain. The selection of a specific property involves a more intricate process of determining a deeper sense of the underlying demand, now and in the future. In finding the right market, larger regional dynamics were considered. In finding the right property, the dwelling itself will be considered as well as its immediate surrounds. The micro-factors of our research model address the six key components to be considered when assessing a property. This is our way of determining the right property within a market.
The factors related to the specifics of the property as well as its proximity to local services are the first aspects I’ll discuss:
- Amenities
- Transport
- Quality
- Design
Amenities
Amenities come in two forms. The first is more immediate and involves the amenities included in the development itself. It could be a rooftop pool in an apartment complex or a playground in a house and land estate. It might seem that the more internal amenities there are the better, but with amenities come costs, so a balance must be maintained. Too many amenities is considered overcapitalisation, whereas not enough amenities would be considered undercapitalisation. This is discussed further when addressing quality. Larger developments tend to have more amenities because the cost can be distributed across more households, yet some tenants and home buyers prefer the suburban feel of more modest buildings or estates. Therefore it is important to know the local demographic rather than acting on your own tastes and personal experiences.
The second form of amenities borrows from the phrase location, location, location. They are external to the property itself and blend with infrastructure. Once again, understanding the local demographic is vital in understanding what external amenities hold more value against others. In past generations, religious institutions were the centrepiece of Australian culture and routine. Today, with ‘no religion’ the highest religious affiliation recorded in the country, caffeine seems to be the new Catholicism. Corner stores have been replaced by supermarket chains but, interestingly, Starbucks has not taken a stranglehold of Australian culture like it has in other western countries. From barber shops to burger joints to tailors, Australians have developed a defiance of many ‘cookie-cutter’ amenities found elsewhere in western civilisation and the effect is felt well beyond capital cities.
Transport
Obviously, life in Australia still exists beyond the local café and supermarket. As a population swells, the ability to efficiently move people from one place to the next becomes more vital. Just a generation ago, proximity to a train station was considered an unfavourable trait. Today, there is a whole new acronym that defines a preferred style of property: the TOD, or transport-oriented development. Cities across Australia have implemented bus lanes, grown their rail network, built bicycle lanes and accepted ride-sharing applications to respond to this challenge effectively. As a result, the once derelict transport hubs from South Bank to Bondi Junction are now hotspots of activity and demand.
To understand the importance of transport to a community, it must first be understood where they need to go and how long it will take. Urban, suburban, regional, rural and remote communities all have different priorities when it comes to transport. City executives are selling their cars and accepting public transport as a more effective means to get to work, whereas regional seventeen-year olds are chomping at the bit to get a provisional licence for more independence and freedom.
Quality
Quality and standard of finish are often underestimated due to the investor’s obsession with asking price. The quality of a property can be assessed in two primary ways:
Structural integrity: the quality of build, materials used and their relevance to unique local factors like climate. As an example, tropical homes are now constructed with cyclone-rated materials.
Fixtures and finishes: the quality, reliability, longevity and aesthetics of the internal features of a dwelling such as appliances, light fittings and windows. External features such as the façade and outdoor areas such as gardens, patios, courtyards and balconies also determine the quality of the dwelling.
Builders, developers and investors risk over- or undercapitalisation if they do not match the quality expected of the local demographic. Overcapitalisation occurs when the materials used are excessive for the means of the local demographic. As an example, a family of lower socio-economic status would unlikely prioritise a high-quality gas oven if this meant paying an extra $20 per week in rent. Inversely, a high socio-economic inner-city couple with considerable disposable income and ‘frenemies’ to please would place considerable weight on having superior quality fixtures like a high-quality gas oven.
Design
Design and quality are complimentary, much like transport and amenities. Where good quality is reflected in materials and craftsmanship, design is reflected in architecture and draftsmanship. The three primary functions of design are:
Aesthetics: often attributed to the architect, the aesthetic design of a building is the function of design that complements quality. The external design of a building can establish it as iconic in both positive and negative ways. Extreme examples of this include the Chrysler building in New York City or Parliament House in Canberra.
Use of space: the efficient use of space has become an increasing priority as the global population has swelled (especially in cities), making access to space more expensive. For this reason, floor plan design and the reduction of wasted space such as hallways are often desirable.
Practicality: design can influence aspect and outlook, as well as access to natural light, avoidance of unwanted noise and environmental factors such as wind and rain.
The right design ensures you are getting the most out of the resources at your disposal. As above, those resources include the materials, the space and the environment.
That sums up the property specifics and their access to services enhancing liveabililty. Part 2 of Investing in the Right Property will address the remaining micro-factors of the research model.
