Episode Details

Our property markets are changing in front of our eyes, but a couple of things are changing that you may not be aware of.

One of those things is the ghost towers in Sydney. What's a ghost tower?

You'll find out in this episode. It may not be what you expect.

I'm also going to have a chat with Andrew Mirams about the changing finance markets and bust some myths about finance.

In my mindset moment, we'll talk about 12 things that are more important than money.

Listen in and by the end of the show, you'll be a more informed businessperson, investor, or entrepreneur.

Sydney Ghost Tower warnings

The ghost towers that are springing up across Sydney aren't haunted buildings, they're empty apartment buildings.

By the end of this year, around 54,000 new apartments will have flooded the Sydney market in just two years. This has led to an oversupply of apartments for sale or for rent.

Of course, this has occurred at a time when first-time buyer incentives have worked, with one in four people in the Sydney property market currently buying their first homes. It just hasn't been enough to soak up the extra apartments, though, and ghost towers are on the rise in Sydney.

These vacancies have created a tenant's market, giving tenants the upper hand in lease negotiations. Landlords and property owners need to keep their rents the same when the lease expires, and may even need to drop their rents when their property become vacant in order to find new tenants.

Metropole's Sydney vacancy rates are at about half the general market industry average, and they're currently sitting at around 2%.

A large factor in this is the type of properties that we bought for our clients over the years – established apartments in small blocks that are close to amenities, that are still in strong demand and that have some uniqueness to them.

Those apartments are holding their values well and they're leasing more quickly.

The problem is we're building too many of the wrong type of apartments, and there are too many of the wrong types for sale or lease.

Currently, the apartment market is being artificially propped up by developers manufacturing scarcity by holding onto their stock.

They're not releasing a lot of their vacant apartments on the market because the market is saturated.

At the same time, many investors are not putting their properties on the market for lease. They're keeping them in brand-new condition and waiting for better times.

Developers built high-rise apartments aimed at foreign investors and a new generation of local investors who really didn't understand what made a good investment.

This has led to high vacancy rates.

Investors are going to lose out not only because they're not getting their rent, but because they're unlikely to see an increase in the value of their properties for at least a decade. Those who wish to sell or have to sell are going to have trouble finding buyers.

Established apartments, the ones that used to be called flats, are outperforming new apartments.

They're what we call "investment grade" apartments because they appeal to a wider range of more affluent owner-occupiers, not just investors.

They're located in the right places, a short walking distance to lifestyle amenities.

They have street appeal and good views, they offer security, and they usually have the ability to add value. And they have a high land-to-asset ratio, which is very different to the big buildings.

The bottom line is that buying an investment-grade property is all about following a proven blueprint laid out by successful investors.

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