Burgers, fries and tax depreciation benefits drive sale of McDonald’s premises

By Larry Schlesinger
Wednesday, 05 June 2013

The McDonald's premises in Preston had the highest number of enquiries of all 21 NSW properties auctioned by Burgess Rawson last month, with attractive tax depreciation allowances a key factor driving investor interest.

Thetwo-year old premises are leased to McDonald’s Australia for 20 years with 18 years still to run.

The premises (pictured below) were advertised as being "built in 2011 with attractive depreciation allowances".

They featured the latest McDonald's design as well as a drive-thru facility.

Burgess Rawson director Dean Venturato highlighted the fact that the premises were only two years old and that such assets “hardly ever come up”.

He toldProperty Observerinvestors would have taken the tax depreciation benefits into account when bidding for the property.

McDonald’s Australia was the winning bidder buying back its own premises and fending off competition from private investors.

It paid $6.45 million for the premises on a 2,621 square metre site reflecting a yield of 5.65% on net income of $365,000 plus GST.

Two other NSW properties that sold as part of the same portfolio auction highlighted their tax depreciation allowances.

A First Choice Liquor outlet in Erina on the Central Coast sold for $4.5 million on a yield of 7.67%. It previously sold for $3.575 million in March 2007.

Leased by First Choice Liquor until 2017 with renewal option to 2037, it features a “modern building with depreciation allowances” on a 2,934 square metre site.

Childcare premises in West Hoxton, leased for 10 years to the Montessori Childcare group with a further 10 year renewal option sold for $1.63 million on a yield of 6.35%.

The free-standing building premises, built in 2008 offered "excellent tax depreciation" allowances were bought by Montessori Childcare.

Under Australian tax law, if you own commercial real estate or commercial property that is rented or used for income-producing purposes you are entitled to claim the depreciation of that property against your taxable income, explains quantity surveyor Washington Brown on its website.

“There are two types of depreciation allowances available: depreciation on Plant and Equipment, and depreciation on Capital Allowances.

“In order to maximise the tax savings on your investment property you'll need a professionally prepared tax depreciation report or tax depreciation schedule, the firm says.

According toProperty Observer commercial property writer Chris Lang, tax depreciation claims, can significantly enhance the overall return on your investment.

He says investors should seek professional advice to ensure they are claiming their full entitlement — and thereby, leave nothing on the ta...

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Date posted: 2013-06-06 | Comments(0)

Property the “hottest investment class” for the next five years: Mark Bouris

By Larry Schlesinger
Monday, 03 June 2013

Investors should get their foot on the property ladder now while interest rates are low and heading lower and as the property market heats up, says Yellow Brick Road founder Mark Bouris.

“I think right now and for the next five years property in the major cities will become the hottest investment class you can possibly think of,” Bouris said in an interview on Channel Nine’s Saturday breakfast show.

Bouris expects the RBA to cut interest rates even further – below 2.5% - with borrowers getting bank mortgage rates at historical lows of between 4% and 4.5%.

“What [these low interest rates do] is reposition house prices upwards,” Bouris says.

“From now until about five years’ time house prices will go up quite a lot and it’s a good time to take the opportunity to invest in real estate.”

Bouris says you don't want to be entering the property market in five years’ time when you are paying the top price.

According to Bouris, property investing is a “cycle game”.

“You need to get in while the rates are coming down and make sure you are not paying the top price.

“Everything in business or investments is all about your entry price or purchase price,” he says.

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Date posted: 2013-06-04 | Comments(0)

Five tips for investing in the Sydney CBD residential market

By Carlie Ziri
Thursday, 30 May 2013

The Sydney 2000 postcode is unlike any other property market in the country.

It is predominantly an investor market with almost two-thirds (63%) of its 14,000 apartments currently leased to tenants.

It is a unique and dynamic market but it can also be fickle and erratic. With over 20 years’ experience selling and leasing inner city property, I am passionate about educating buyers on how to make their investment in our beautiful city work in their favour.

The key to success is to have an innate understanding about what you are buying, and a realistic view of the returns and capital growth you can expect to see in the short, medium and long term.

Within the Sydney CBD, there are three distinct markets with different characteristics that investors need to be aware of:

City North – covers Margaret Street through to Walsh Bay

Mid City – starts from Hunter Street through to Bathurst Street

City South – runs south of Bathurst Street through to China Town

Property prices vary between these precincts, with the City South home to more affordable residences, while the northern tip of the city offers some of the most expensive real estate inAustralia, with apartments achieving over $65,000 per square metre for a small piece of Sydney’s inner city lifestyle.

One thing that is common among all of these precincts is volatility, and the return on your investment can vary dramatically depending on where the property is located and what attributes it has.

For example, in the space of one week, I negotiated a deal where one client made over$300K on an apartment she owned for just 12 months, while another client made a $25K loss on an apartment he owned for over 15 years.

These apartments were located within three blocks of each other; however the latter apartment had no view, balcony or parking, while the former offered all three of these imperative attributes.

At the moment, there is no shortage of premium apartments with big price tags in new city developments; there is however, a high demand for one and two-bedroom apartments in the more affordable price range of $550,000 to $1 million.

With many buyers looking to purchase before the end of the financial year, owners with inner city properties priced between $550,000 and $1 million are in a prime position to achieve a record price over the next few weeks.

The tricky part is finding a vendor who is willing to sell; most I have spoken to are achieving such great returns, they are not willing to sell.

The Sydney CBD offers buyers a secure investment in the medium to long-term, and with the right choice, rental returns are higher than other Sydney suburbs.

However, it is imperative that the property ticks certain boxes.

There are five key things I strongly recommend you look for to ensure your inner city purchase is a successful venture:

1) Building: Purchase in a well-managed and desirable development

2) Views: Harbour or iconic views attain the highest capital growth. If your budget is limited, ensure you at least have a great city outlook

3) Parking: Although not essential, it has a big impact on your property’s re-sale value

4) Outgoings: Ensure outgoings are reasonable and have long-term sustainability

5) Location: ...

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Date posted: 2013-05-30 | Comments(0)

Next two years a good time to be in property with “steady” house price growth expected: John Symond

By Larry Schlesinger
Monday, 20 May 2013

John Symond has delivered a bullish speech on the outlook for the housing market over the next few years forecasting "steady" price gains as one of the keynote speakers at the Australian Real Estate Conference (AREC) on the Gold Coast today.

He also inspired delegates – many of whom tweeted from the conference – of how he had worked as a kid in a fruit shop and then overcome near bankruptcy to establish the Aussie Home Loans business.

Titled ‘It all starts with a big dream’ the Aussie Home Loans founder said the next 12 months to two years would be a good time to be in the property market.

He said house prices had bottomed out and the market would turn the corner after the federal election in September - when more certainty returned to politics - with house prices rising at a steady rate rather than leaping ahead.

"If you want to pick a time to get into housing, you can't get a much better time than now," Symond told a huge industry gathering.

Highlights of his speech were tweeted by those in attendance, including Property Observer blogger Leanne Pilkington, general manager at Laing & Simmons:

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Date posted: 2013-05-21 | Comments(0)

Weakening Australian dollar set to see expats return to Australian property purchasing

By Jonathan Chancellor
Monday, 20 May 2013

The Australian dollar's fall below parity against the US currency will be welcome relief for expatriates thinking of buying back home.

It's still a bit soon, but they will certainly be taking a closer look at residential property following the recent decline in the dollar.

Even with access to very cheap interest rate opportunities overseas, the high dollar stopped many executives and white-collar professionals taking the time to search out for their likely new home during the summer of 2012/2013.

When the dollar was high, Rismark joint managing director Ben Skilbeck noted the high Australian dollar had also made local housing more expensive for expatriates, particularly at the luxury home end of the market.

An anticipated rush home by expatriates after job losses in Europe, Asia and the Middle East, didn't eventuate into an acquisitive trend after the global financial crisis.

Mosman agent Robert Simeon from Richardson & Wrench told Property Observer when compared to pre-global financial crisis Australian expats activity in property markets had been "few and far between."

"Obviously any value declines with the AUD$ would make Australian residences a lot more appealing although there is not enough anecdotal evidence that expats find our real estate as appealing as previous sales activity would indicate," Robert Simeon said.

He said the Chinese market was now the dominant players in his market demographic so a declining AUD$ will not be a market salvation for our expat markets more particularly at the top end.

"When Australia's commercial and investment banks are doing well our top - end property markets respond accordingly," he said.

Last May when the dollar briefly fell to 98 cents, it was noted the fall was possibly not enough to encourage expat Australians to invest back in the local residential property market, according to Greville Pabst, chief executive of property valuers and consultants WBP Property Group.

Pabst noted a falling Aussie dollar was positive news for expatriates, with the improved conversion rate giving them “greater buying power”.

However, he suggested the Australian dollar needed to "deteriorate to or below 90 cents against the US dollar before we expect to see an influx of expatriate buyers."

“A fall of 10¢ in the dollar (AUD) equates to a saving of $53,500 for expats based on the purchase of a property at Melbourne’s current median house price of $535,000.

"This is a great incentive in anyone’s eyes," he said in May 2012.

At noon today (Monday, May 20) the currency was trading at 97.66 US cents, having fallen more than five US cents between May 9 and May 17.

It reached parity with the US dollar in November 2010 and rose to a 29-year high of $1.108 on July 27 2011 before retreating.

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Date posted: 2013-05-21 | Comments(0)