Apartments shield against growing cost of living

More than 1,800 enquiries have been fielded for six apartment blocks currently for sale, as Sydney rental prices soar.

Investors searching for a hedge against inflation are capitalising on opportunities to acquire whole apartment blocks amid Sydney's rental crisis. 

CBRE's Head of NSW Metropolitan Investments Toby Silk and his team are managing the sales which include165-167 Lyons Road, Drummoyne, 24 Wisbeach Street, Balmain & 129-131 Bayswater Road, Rushcutters Bay

“Investors are attracted by the rental growth narrative to increase their return and provide a hedge against higher costs of living,” Mr Silk said. 

“The apartment blocks close to transport, educational establishments, employments hubs and shops are of particular interest”.

“Many of these properties are not actively managed with owners not bothering to increase rents. This allows an incoming purchaser to increase their return in real time by adjusting rents to market. These increases can be staggering in the current market.”

CBRE's newly released Market Outlook Report forecasts that Australian apartment rents will grow by circa 30% over the next five years. 

This follows a staggering 26.9% growth in Sydney residential apartment rentals over the last 12 months according to SQM Research. 

This was set against the inflation rate of 7.8%, the highest since 1991, proving units to be a natural hedge against inflation.

Mr Silk added, “It is forecast that apartment rents will continue to grow due to a shortage of apartments for lease. This is largely caused by a significant amount of investor apartments being sold to owner occupiers over the past two years, fueled by huge borrowing capacity from record low interest rates.” 

The rental crisis is set to worsen being exacerbated by the increase in the migration cap and the expected 40,000 Chinese students to come to Australia as the Chinese government bans online study at foreign universities.