The Investment Dilemma

 

Property Investing: New or Established?

These days property investors are confronted by any number of wealth creation companies and often financial advisers that direct investors in the direction of new projects or alternately new house/land packages located out in new estates. Taking the buy new route certainly provides greater tax benefits in regard to depreciation along with the stamp duty savings to be had and some developers do provide impressive facilities with appealing landscaping and facilities adding to the general amenity but perhaps these come at the expense of the strong capital growth that only great position can assure. Usually, strong capital growth is most assured by being in close proximity to the city centre whereas new housing estates by necessity are out in the burbs and require lots of commuting. New estates, while more affordable can have their drawbacks as well, often covenants will restrict among other things the type of construction and materials used which tends to lead to a lack of diversity in the streetscape creating the impression that everything looks the same, not a great look over the long term as today’s popular fashions all date together to create the slums of the future particularly in new estates where the size of the building allotments and stingy frontages in which garage doors by necessity become the main architectural feature, given they occupy almost half of the building block’s frontage.

It is fairly common knowledge with sophisticated investors, that it is the land that appreciates in value while the buildings erected on any lot depreciate which leads to a number of issues when deciding whether to invest in new housing estates or to pursue established property. Ultimately while position triumphs the other interesting aside is that in general, the lot sizes of land created 30 -60 years ago tend to be much bigger than the postage stamps people in new estates are being offered and which are as already noted, quite some distance from the city centre and all its attractions and if the bubble bursts it will be the properties furthest out which will be hit the hardest.

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