Should I buy a negatively geared investment property?

A negatively geared investment property is commonly considered a tried-and-tested approach to property investing, however this strategy certainly isn’t suitable for everyone. Here’s why.

Although negative gearing can be beneficial as it allows property investors to reduce their taxable income, it shouldn’t be viewed as a standalone investment strategy.

If an investor buys a property purely for its negative gearing benefits, they’re likely to be left with an under-performing investment that doesn’t align to their wealth creation strategy.

Cash flow or capital growth?

Typically, the goals of any given property investor fall under two broad groups – that is they either want additional cash flow through rental income, or they want to increase their wealth via capital growth of the property.

Negative gearing is not suitable for investors who want additional cash flow. That’s because it actually costs money for investors to hold a negatively geared property because the rental income doesn’t fully cover the repayments for the loan (and therefore the investor has to use their own money to meet the balance of the repayments).

Investors who want additional cash flow need to target positively geared properties – these are typically newer residential properties but commercial properties generally make the best cash-flow positive assets because they offer higher rental yields than residential.

So what about investors who want capital growth – should these people seek a negatively geared property? In short, no.

Understanding your priorities

For investors who want to increase their wealth via capital growth, negative gearing should not be a priority.

Instead, the priority should be on finding investment properties that will record superior capital growth. By doing so, investors will be better positioned to grow their personal wealth.

Put simply, negative gearing should only be viewed as a by-product of properties that offer high capital growth prospects. So it’s important to stress that negative gearing should not be used as a standalone strategy.

In summary, for investors wanting to increase their personal wealth, choosing a property should always be based on its capital growth potential and not its negative or positive gearing benefits.

What about properties with high capital growth and high rental yields?

Typically, residential properties will either offer high capital growth prospects or high rental yields.

There can be rare instances when properties do offer both, but these are generally for only a short period of time. For example, take some rural towns in Western Australia and Queensland that experienced double-digit capital growth and yields of 10%+ during the resources boom.

Therefore, investors who want to increase their personal wealth should focus on properties that are set to achieve high capital growth over the long term.

Simply seeking properties with the best negative gearing benefits could lead investors to acquiring an under-performing asset that will fail to optimise their returns.

Top 6 considerations when subdividing the family home

If you’re contemplating subdividing the family home there are numerous issues you need to weigh up to ensure you’re making the right decision. Here are the top 6 things you need to consider when deciding to subdivide your property.

Owner occupiers are increasingly deciding to subdivide their family home as areas in our capital cities are rezoned for higher-density development to make way for our growing populations.

Carving up the family block isn’t a step to be taken lightly as there are many issues that need due consideration. Here are the top 6 points you need to weigh up before making a decision to subdivide your own home.

1        It could inhibit the future sale price of your home.

Subdividing your family home impacts its value. To which extent will depend on the size and type of your home as well as the way it’s subdivided. For example, you may have a large 4-bedroom, 2-bathroom property suitable for a larger family, however if you subdivide the property and sell the backyard, this may deter prospective buyers in the future and impact the sales price of your home if you wanted to put it on the market.

2        Can you use the equity in your home instead?

When subdividing a family home with the goal of realising the value of the property, another option would be to use the equity in the home instead. This way you’re able to keep the property as is, but you can then draw the equity to use as desired.

3        Will you make a profit?

After you have subdivided your property and taken all costs into consideration, will you make a profit? This includes costs of a land surveyor, selling agents fees as well as any negative impact on the value of your existing home.

4        What are the tax implications?

A common mistake made by those who subdivide their family home is a lack of understanding about the tax implications. Make sure to speak to a qualified accountant so you’re aware of what you’ll need to pay the tax man.

5        It allows you to downsize without moving

If you’re an empty-nester and your children have grown up and moved out of the family home, you might be considering downsizing, particularly if you have a big backyard that requires considerable upkeep. If you can keep the existing dwelling, subdividing the backyard off from your family home can be a good way to downsize without the headaches of moving. You may also prefer to subdivide the land, build on the new lot and move into the new dwelling before selling or holding the old house.

6        Is it better to sell or hold?

While subdividing the family home and selling a vacant parcel of land can provide a financial boost, it may be better to build on the new parcel of land and lease the new property. By doing so, you will receive rental income and can take advantage of future capital growth.

Everyone’s situation and goals will be different when it comes to subdividing the family home, but it’s important to weigh up these considerations to determine what’s right for you.

Case study: Knowing motivations key to good deals

When it comes to buying or leasing commercial property, it can be highly advantageous to understand the motivations of the seller or lessor.

Once you understand these motivations, you can use this knowledge to negotiate harder on these specific points to secure a better outcome.

This worked particularly well in one instance with a Momentum Wealth client, who was seeking a commercial space to lease.

The client, a financial services firm, had been leasing in East Perth for several years but with their lease due to expire, and an unreasonable landlord who was unrealistic during new contract negotiations, the client engaged us to find them a new space.

The brief included:

• Circa 1,500sqm of open-plan office space with 30-50 car bays
• Ready to go with existing systems (such as AV, high-speed internet, furniture in breakout rooms, desk and chairs etc.)
• Preferably in West Perth (or close to but not in the Perth CBD)
• Scalable floor plan allowing room for expansion

Armed with the brief and a 6-month deadline, our commercial property consultant began the search and issued a request for proposals.

After shortlisting several properties and showing them to the client, our consultant began initial negotiations with a handful of potential landlords and leasing agents.

During the process our commercial consultant learned that one of the shortlisted premises would be negotiated under a sublease agreement.

The existing tenant in the premise had several years remaining on their contract but had recently consolidated their office premises to another location amid financial pressures. The tenant was also dealing with some major and very public disruptions to their operations, which proved to be a large distraction to the company as a whole.

In short, the existing tenant wanted a quick resolution to subleasing the office space that they had recently vacated. Understanding this, our commercial property consultant was able to negotiate hard on price and incentives.

The A-grade office space was a perfect fit for our client and included 40+ car bays, circa 1,800sqm of space and included a high-specification fitout, including reception space, tables and chairs, AV equipment and breakout amenities.

Although negotiations for the space proved complicated, having to deal with the existing lessee and the lessor, our commercial property consultant knew the outcome would be very beneficial for the client.

Understanding that the existing lessee was motivated to sublease the space immediately, our consultant was able to secure a highly favourable agreement at a significant market discount with favourable incentives for up to a 9-year term.

Subsequently, the client was able to move into a larger, more modern office space on much more competitive terms.

Every commercial property seller or lessor has a problem to solve, and by gaining a more in-depth understanding of this problem, you can help resolve the issue faster and secure a more favourable deal.

Young Perth suburb offers major potential to investors

Padbury offers some major benefits to property investors, following the recent rezoning for higher density development and a soon-to-be finished $80 million shopping centre upgrade.

Padbury is located within the City of Joondalup and is approximately 17 kilometres north-west of the Perth CBD.

The suburb is well serviced by public transport with bus services running through all main arterial roads as well as offering the Whitfords train station and Greenwood train station along the Joondalup train line.

Neighbouring suburbs include Craigie and Kallaroo to the north, Hillarys to the west, Kingsley to the east and Sorrento and Duncraig to the south.

Padbury is a relatively young residential suburb, only being named in 1971 after the Western Australian settler Walter Padbury followed by the start of residential development of the area in the late 1970s.

It wasn’t until the late 1990s that the area was fully built out, fuelled by the development of the Whitford City Shopping Centre and Hillarys Boat Harbour.

Padbury is predominantly low-density residential, with the majority of the suburb zoned R20.

However, in early 2016 the City of Joondalup implemented an R20/40 split zoning for certain pockets of the suburb to encourage higher-density development.

This will help diversify the composition of dwelling types in the suburb, which currently stands at 92.6% houses, 7.4% semi-detached, row or terrace houses and townhouses and 0% flats, units or apartments.

79% of properties are either owned outright or being purchased, while 19% of properties are being rented. The median house price is $540,000.

Padbury has a population of 8,183 residents with a median age of 37 years. 21.2% of the suburbs residents identify as professionals (19.9% WA and 21.3% national averages), while 19.1% are technician and trades workers and 16.8% clerical and admin.

Features of the suburb include Gibson Park, Macdonald Park, Hepburn Heights Conservation Area, Padbury Primary School and Padbury Shopping Centre.

There is also Whitford City Shopping Centre (1km) and the Hillarys Boat Harbour (3km).

The $80 million redevelopment of Westfield Whitford City Shopping Centre is now nearing completion with less than 70 days to go on its construction calendar.

Residents of Padbury are set to benefit from the increased vibrancy the upgrades will bring with plans including a casual dining piazza with 10 new restaurants as well as an entertainment precinct with an eight-screen Event Cinema complex.

The suburb is bound by Whitfords Avenue in the north, Marmion Avenue in the west, Hepburn Avenue in the south and Mitchell Freeway in the east.

The main arterial roads nearby are Giles Avenue, Gibson Avenue, Hepburn Avenue and Whitfords Avenue.

Deals and Don’ts – Woodvale, Leederville, Belmont

Here we take a look at just some of the different properties on the market and explain why they’re either deals (that represent a good investment) or don’ts (that should be carefully avoided by investors).

Deals

Woodvale

Purchase price: $581,000

Purchase date: May 2017

Block size: 729sqm

Specification: 4 bedroom, 2 bathroom, single garage, below ground pool, built in 1979, zoned R20/60.

Deal: This green-title property represents a deal because its split zoning means it has good development potential, and it is located just 500m to Whitfords train station. The property is also highly presentable with a good fit-out, meaning that it’s highly rentable and would attract quality tenants.

Leederville

Purchase price: $776,800

Purchase date: June 2017

Block size: 243sqm

Specification: 4 bedroom, 2 bathroom townhouse, built in 2002, high specification finish.

Deal: This townhouse on a strata lot represents a deal because of its location and specification. Tucked away in a quiet street of a blue-chip suburb, it is situated within 3km of the CBD, 100m to the vibrant Leederville café strips and 600m from Leederville train station. The high-quality build, which features 3 living spaces, means the property should be easily leased at a yield close to 4%.

Belmont

Purchase price: $491,000

Purchase date: May 2017

Block size: 713sqm

Specification: 3 bedroom, 1 bathroom, single garage, below ground pool, built in 1974, zoned R20/50/100.

Deal: This green-title property represents a deal because of its significant development potential. Located within 7km of the Perth CBD and within 2km of the Swan River, the property has good growth drivers for the future as well. Over 90% of the value exists in the land component yet the property is still in good rentable condition. It is also located within 500m of Belmont Forum Shopping Centre.

Don’ts

Thornlie

For sale price: $355,000

Block size: 680sqm

Specification: 3 bedroom, 1 bathroom house built in 1987, zoned R17.5.

Don’t: This property doesn’t represent a good investment because it’s located on a busy road (Forest Lakes Drive), which is a high frequency route for public transport buses. Although good for overall amenity, the bus and car traffic would frequently disrupt the property with noise and traffic pollution, restricting demand from tenants and buyers, and lowering its overall capital growth potential.

Should I sell my investment property?

“Should I sell my investment property?” is a question that will likely be a serious consideration for most investors at one time or another, whether it’s a structured sell down as part of your property investment strategy, or because the asset isn’t meeting your expectations.

Here are 6 questions to ask yourself first to help ensure selling is the right move for your property investment strategy.

1. Does the property meet long-term investment criteria?

When using the buy-and-hold strategy to capture capital growth of a property, it’s important the asset meets long-term investment criteria. Investors need to consider the macro factors, such as population growth and employment prospects, as well as micro factors, such as local amenities and demographics, for example. It’s not uncommon for investors to start to doubt the quality of the property if it doesn’t rise in value as expected. Therefore, investors must recognise if they’re being impatient (and the property does meet long-term investment criteria) or if the property is likely to continue to under-perform.

2. Is the decision to sell being driven by temporary financial pressures?

A change in life circumstances, unexpected costs or a strain on your cash flow could create financial pressures that may lead you to reassess if holding an investment is the right decision. Before deciding to sell, it’s essential to determine if these short-term financial pressures can be alleviated by refinancing your loans or through budgetary adjustments, for example. Selling an investment property may end up costing you more when taking into consideration selling agents fees.

3. Is it a good market to sell?

The cyclical nature of property markets may mean that selling straight away might not be the best option. If the market is in a downturn it could be better to hold on to the property until conditions rebound or at least stabilise. Consider the conditions of the wider property market as well as the sub-market in which the property is located. Is it a seller’s market, or is it a buyer’s market?

4. Are there loan debt structure issues that could impact the sale or expected proceeds?

In instances where loans are cross collateralised, lenders will typically revalue any co-secured properties. If your borrowing capacity has changed or a property has dropped in value, the amount of money received from the sale may be reduced. In some extreme instances, lenders may force investors to sell a second property to maintain a specific loan-to-value ratio.

5. Are there any opportunities to add value to the property before sale?

If you’ve decided the answer to “should I sell my investment property” is yes, then you’ll want to maximise your property’s value first. Tidying garden beds, applying a fresh coat of paint, installing modern blinds or laying new carpet are a few options that can rejuvenate a tired and ageing property. These types of cosmetic upgrades and add-value opportunities can help demand a higher asking price.

6. Are there likely to be changes to the property’s zoning?

If a property’s zoning is likely to be reclassified to allow for higher-density development, it might be worthwhile holding the asset to achieve a higher selling price. For example, a property that’s appropriately zoned for 4 dwellings is likely to be worth more than a property in the same suburb that is zoned for only single dwellings.

Be the master of your money

Money management is the foundation to building a large property portfolio and should be implemented before starting your investment journey. Here’s what you need to know to be the master of your money.

The first thing that many start-out property investors will do is begin their search for a suitable investment property, whether by trawling property web portals, attending home opens or brushing up on market insights.

However, this is typically useless if you don’t have adequate money management systems in place that will show you how much cash you can allocate each week to servicing (i.e. repaying) a loan for an investment property, after allowing for the income on a property. Most higher growth residential properties have negative cash flow in the first few years if you borrow around 80% or more, so understanding what it costs is vital.

When it comes to building a property portfolio, your personal cash flow is critical because this will allow you to hold your investment properties by meeting your loan repayments, and subsequently capture the capital growth of the assets over time.

This is why every investor should create a household budget that will detail their income and expenses to determine how much surplus money (i.e. cash flow) they have left over at the end of each month.

What should my budget include?

In short, your budget should detail all of your income and all of your expenses – whether on a weekly, monthly or annual basis.

Your income will include your salary from your job as well as any government payments, dividends from shares, rental income or interest accumulated from savings deposits.

Your expenses should comprise an estimate of all your outgoings including household (utilities, groceries, council rates, mortgage repayments, insurance etc), transport (fuel, car registration, repairs, public transport etc), health (gym, doctor, dentist, cosmetics, haircuts etc) and personal expenses (clothes, entertainment/eating out etc).

Your budget should also set aside money for holidays and funds for upgrading your car, as well as any other expenses you might have.

By allocating a certain amount of money to ‘entertainment’ you don’t have to account where every dollar is spent, such as $17 per week on coffee or $40 per month on movies, for example.

The money allocated to ‘entertainment’ can be treated as your weekly pocket money that can be spent on any discretionary items.

In addition to helping you manage your money, a budget will also alleviate any guilt or buyer’s remorse you might feel when buying a new leather jacket, booking a holiday or purchasing your morning cup of coffee. If you’ve allocated money to these things in your budget, then you know the funds have been set aside and are there to be used, while you’ve also allocated money for ‘savings’.

When making a budget, you obviously have to be sensible about how much money you allocate to ‘non-essential’ items, and perhaps make some compromises. For example, if you have Foxtel which you rarely use, it might be worth considering stopping your subscription. Instead of buying a coffee every day, perhaps start buying it every other day.

It’s all about finding what works for you. You don’t want to make your budget so conservative that you have to live on baked beans for the next 10 years, but if there is room to make some savings then try and make them.

With your budget set, you will know your surplus cash flow and can allocate part of this as repayments for an investment loan.

Finding a property that suits your cash flow

Depending on the type of property you buy, the rental income will help you cover either part or all of your investment loan repayments. Typically though there’s likely to be a shortfall that you’ll have to cover.

However, you can target different types of properties that will suit your cash flow circumstances.

For example, if you have limited cash flow available, you can target properties that are neutrally or positively geared, meaning the rent will cover all of the repayments.

Typically these types of properties will be villas or apartments and are generally more modern builds. Generally, the downfall of these types of properties is they will deliver lower capital growth.

On the other hand, if you have a high cash flow then you can target properties that are higher growth and lower cash flow, meaning the rent won’t cover the loan repayments and you’ll have to cover the rest from your own pocket.

Typically these types of properties will be older houses on larger lots. Generally, the benefit of these types of properties is they record higher capital growth.

There are other factors to consider when determining what type of investment property is right for you, such as your risk profile, your investment strategy and your borrowing capacity.

However, by mastering your money management by creating a budget, you’ll form the foundations needed to build a large property portfolio and help avoid financial distress from buying the wrong type of property.

Syndicate given green light for construction

Momentum Wealth’s Silk Oak residential syndicate received development approval recently, paving the way for construction to begin on the 38-apartment project early next year.

The Silk Oak Fund was launched in early 2016 before raising $6.4 million from a group of investors for the residential development syndicate.

Following the raising, Momentum Wealth’s research and residential syndicate teams identified and acquired 3 adjoining sites in Highgate in an off-market transaction.

A key feature of the sites is their superior location, being just 2km north of the Perth CBD, 400 metres to the local train station, 400m to the popular Beaufort street café strip and opposite a lush park.

To complete design of the project we engaged Scanlan Architects, who have designed some of Perth’s most recognisable buildings including the Indiana Teahouse in Cottesloe.

Given the existing supply of ‘box-on-box’ style apartments on main arterial roads in the area, the design brief was for a premium market product that’s suitable for young professionals and downsizers.

The end result was a modern design that reflected the character of the existing streetscape and included green vegetation and mature trees, while the spacious 1, 2 and 3 bedroom apartments have been formed to a high specification, many with double car bays.

Following the 38-apartment project being granted development approval last month, construction is expected to begin early next year and take approximately 12 months to complete.

Returns for investors are expected to be circa 15%-20% per annum with payments to occur in mid-2019

New rail and redevelopment to gentrify suburb

Forrestfield is located within the Shire of Kalamunda and is approximately 15 kilometres south east of the Perth CBD.

It is bound by Welshpool Road in the south, Tonkin Highway and Abernathy Road in the west and Sultana Road in the north. Its main arterial roads include Tonkin Highway, Roe Highway and Hale Road.

Forrestfield has a population of 11,811 with a median age of 37 years.

Neighbouring suburbs include Maida Vale and High Wycombe to the north, Wattle Grove to the south, Lesmurdie and Kalamunda to the east and the Perth Airport to the west.

Forrestfield is an established residential suburb with settlement dating back as far as the late 1800s. The area wasn’t significantly developed until the 1950s with rapid growth occurring up until the 1970s. Population has stayed relatively stable since the 1990’s.

The majority of Forrestfield is currently zoned R20, with pockets of R25 and R30. A proposed amendment to the local planning scheme will allow for dual-density coding across the suburb from R20/30 up to R25/60.

The suburb will greatly benefit from the $2 billion Forrestfield-Airport Link, which is under construction.

The Link will provide a brand new train station to Forrestfield, connecting it with the Perth Airport and the Perth CBD by rail.

The station will be located adjacent to Dundas Road, east of the Forrestfield freight marshalling yard and south of Maida Vale Road.

It has been designed as an end-of-line station with parking bays for 2,500 vehicles and 180 bicycles.

Houses in areas surrounding future train stations often experience above average capital growth as was seen when the rail lines to Joondalup and Mandurah were completed.

Transperth currently provides peak-hour and off-peak bus services to and from the Perth CBD, as well as bus services to Midland or Cannington Train Stations.

Approximately 90.4% of dwellings in the suburb are houses, 7.6% semi-detached, row or terrace house and townhouses and 0.6% flat, unit or apartment. The median house price is $408,500.

About 73.1% of properties are either owned outright or being purchased, 21.6% of properties are being rented.

Just 10.4% of the population identify as professionals (WA and national average is 19.9% and 21.3%, respectively), while 19.3% are technician and trades workers and 17.9% clerical and admin.

Features and amenity of the suburb include Hartfield Country Club and Golf Course, Darling Range Sports College, Hartfield Park and Recreation Centre and Forrestfield Forum and Marketplace.

Deals and Don’ts – Bibra Lake, North Perth, Lynwood

Here we take a look at just some of the different properties on the market and explain why they’re either deals (that represent a good investment) or don’ts (that should be carefully avoided by investors).

Deals

Bibra Lake

Purchase price: $461,500 Purchase date: May 2017 Block size: 696sqm Specification: 4 bedroom, 2 bathroom, double garage, built in 1982, zoned R20.

Deal: This property represents a great investment because it is subject to rezoning, which would change its coding from R20 to R40, allowing for higher density development. The property is also appealing as it sits on a corner block, allowing for greater design specifications, it is also on a pleasant streetscape and a short walk to a local park. It was also purchased at an excellent price point, more than $50,000 less than the median house price for the suburb.

North Perth

Purchase price: $682,000 Purchase date: April 2017 Block size: 253sqm Specification: 3 bedroom, 2 bathroom house, fully renovated to a high specification

Deal: The property represents a deal because of its location and condition, which provides good yield and capital growth prospects. Tucked away in a quiet cul-de-sac of a blue-chip suburb, it is situated just 3km from the CBD and walking distance to multiple café strips. The recent, high-quality renovation means the property could be easily leased at a high yield.

Lynwood

Purchase price: $414,000 Purchase date: April 2017 Block size: 812sqm Specification: 4 bedroom, 1 bathroom, enclosed single garage, built in 1967, zoned R30.

Deal: This property represents a good buy as it’s situated on a large land lot and within close proximity to the Perth CBD. It’s located on a quiet, attractive street just a short walk from local parks. Its zoning allows for future subdivision.

Don’ts

Redcliffe

For sale price: $490,000 Block size: 627sqm Specification: 4 bedroom, 2 bathroom house, built in 1998, zoned R20.

Don’t: This property doesn’t represent a good investment because it backs onto the recently completed Gateway WA road project and is located under the Perth Airport flight path, both of which would provide significant noise impediments.

Expanding your medical practice: Opportunities for growth

For medical specialists seeking to expand their practices in Perth, location is key and can be the difference between lucrative growth or a financial black hole. So which Perth suburbs should medical practitioners be targeting?

When considering expanding a medical practice, there are a number of ‘big picture’ locational factors to consider.

The current spatial framework and development blueprint for Perth – Directions 2031 – sets out a plan and hierarchy for primary and secondary activity centres so that they may grow and develop as community focal points.

These centres feature higher-density housing and commercial precincts to comprise retail, entertainment, civic/community, higher education and medical services.

Activity centres vary in size and diversity and some present better opportunities than others for medical practitioners – population growth, demographic shifts and public and private investment will have significant influences on these areas, for example.

Perth’s key activity centres

Second only to the Perth CBD on the activity centre hierarchy, primary centres are large urban nodes that are intended to provide entire regions with a full range of economic and community services.

The Western Australian state government places important focus on the connectivity of these centres, with passenger rail and or high frequency bus transport considered essential to their operation in the long term.

Directions 2031 outlines Cannington, Fremantle, Morley and Stirling as the four primary metropolitan centres for the Perth central sub-region.

Due to major visitor drawcards, such as department stores, supermarkets, major offices and state government agencies, medical spaces in and around these centres present good opportunities for medical practitioners looking for high rent returns and strong capital growth.

Specialised centres are a slightly different hub to typical activity centres as each has a strong specialised role based on a major institution within the centre.

Directions 2031 identifies the major specialised centres of Perth as Murdoch, UWA/QEII, Bentley/Curtin and the Perth Airport.

Both Murdoch and UWA/QEII are focussed on delivering high-quality education and health services, Bentley/Curtin provides education and technology while the airport’s primary function is aviation and logistics.

Murdoch and UWA/QEII present opportunities for the development of complementary medical activities nearby and allow for benefits from agglomeration to be gained, however medical practitioners should be cautious of these centres as competition is high and many strong medical practices are already well established here.

Sitting beneath primary centres are the slightly smaller secondary centres, which are generally dominated by retail but can also include office, housing, community services and recreational activities.

They share similar characteristics with primary centres but serve smaller catchments and offer a more limited range of services.

Directions 2031 outlines Belmont, Booragoon, Claremont, Karrinyup, Leederville, Mirrabooka, Subiaco and Victoria Park as the central sub-region secondary centres.

These centres play an important role in the wider economy and provide residents within their catchment with essential goods and services.

Medical spaces within these centres are common and present an excellent prospect for specialists.

They are designed to service up to 150,000 persons, enough to provide steady demand for health care needs, and property within or around these centres is generally more affordable than the higher profile primary centres.

At the bottom of the hierarchy, servicing the daily and weekly needs of residents are district centres and neighbourhood centres.

Their smaller scale means they have a greater local community focus and can provide the immediate residents with services that reflect the particular needs of their catchments.

Hubs such as Dog Swamp, South Perth, Kardinya, Jolimont and Noranda are all examples included in the long list of district centres identified in Directions 2031.

Medical specialists can uncover opportunities in these centres by targeting specific suburbs with demographics that require frequent medical needs.

For example, certain health services might succeed in a district centre with a catchment that includes a high proportion of aged residents as this demographic hold a strong and steady demand for health care.

Population growth and favourable demographic shifts

The population of Greater Perth has grown rapidly since the turn of the millennium and despite a recent dip in growth rates, the region remains on track to hit 3.5 million residents by the year 2050 as pre-empted by the state government.

Not only is the population growing, it is ageing and this shift in demographic will become increasingly pronounced in the years to come.

The latest census data shows that the biggest proportion of over 65s are residing in areas within the western suburbs as well as Fremantle and its surrounds.

It is this information that medical specialists should consider as they select locations that will facilitate strong demand and therefore have the best chance of receiving high rent returns and strong capital growth.

As outlined in Directions 2031, areas earmarked as major activity centres will be the target of increased residential density and with the popularity of mixed-use developments increasing, new spaces and opportunities are becoming available.

Medical suites and pharmacies are commonly proposed tenancies for such mixed-use developments. Taking advantage of such initiatives, which create greater amenity and act as major drawcards for local residents, present good opportunities for medical practitioners.

What’s more, investment opportunities aren’t solely limited to these new developments as the surrounding streets or nearby commercial precincts may also benefit and provide favourable opportunities as such areas are transformed.

Thorough research, analysis and feasibilities are needed, however, to ensure any medical spaces in these areas perform as expected.

There are also site-specific demand factors that medical specialists need to consider, such as parking, exposure, accessibility and location of competitors and referral partners, for example, that need to be taken into account to help ensure the success of any expansion.

This article is an extract from Momentum Wealth’s Perth Medical Property Report. For more information on what medical specialists need to know when expanding their practices, click here to download your free copy of the report