NEWSLETTER

Monthly Sydney Property Insights

Retained by our dentist client as his Sydney buyers’ agents to find and buy a two bedroom investment apartment in the northern Sydney CBD, we first concentrated on due diligence into his initially preferred building to validate our opinion that it was an unsound investment destination. We moved into full search mode after our client had considered the results of that due diligence and thanked us for having saved him from making a mistake.

Within a fortnight, we found a north facing apartment in a tightly held and prestigious building with main Sydney harbour views and an exorbitant $1.35 million dollar price expectation.

The selling agent sought to justify the asking price by relying on the sale a year earlier for $1.2 million of an apartment with the same floor plan but one floor higher which had parking for only one car whereas the apartment he was marketing had double tandem parking. Aggregating that figure with the $142,550 achieved on a recent sale of a single car space in the same building, the agent and his asset rich vendor were very confident about achieving their asking price.

That confidence evaporated after our due diligence uncovered another and more recent sale of an apartment with the same floor plan two floors below for $1.18 million. This sale was not recorded on any third party databases. Although technically having a single car space, measurements we took of that space and obtained of various makes and models of cars confirmed that it was in fact long enough to accommodate two medium sized cars in tandem.

Shortly after we relayed this evidence to the vendor and other prospective buyers at two open inspections, we exchanged contracts to purchase this property at $1.28 million. That decision was supported by our usual and other extensive due diligence including, in this case, an assessment of the likely effects on the property of the neighbouring Barangaroo Development.

The property manager from whom we had obtained an independent rental appraisal leased the property a week later for a rental that exceeded our client’s cash flow projections.

Thank you once again for your excellent work and diligence. I’m very happy and impressed with how smoothly everything has gone.

Applying the hindsight test ™*

A three bedroom apartment one floor below with an inferior, south western aspect and city rather than harbour views sold six months later for $12,022 per square metre in contrast to the $11,743 per square metre paid by our client. This equates to an increase of 2.35 % in six months for an inferior apartment on a lower floor than the subject.

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