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COVID delivers divergent experience for apartment owner-occupiers, investors

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Open space and communal amenities in an apartments complex are a must have for buyers. Photo: Shutterstock

COVID delivers divergent experience for apartment owner-occupiers, investors

An overwhelming majority of owners say their satisfaction with apartment living hasn’t been impacted by the pandemic, but the proportion of people who say they would recommend them as an investment has plunged since the onset of the crisis.

An overwhelming majority of owners say their satisfaction with apartment living hasn’t been impacted by the pandemic, but the proportion of people who say they would recommend them as an investment has plunged since the onset of the crisis.

Australian Apartment Advocacy surveyed around 3,600 apartment owners in April and May, with 70 per cent of respondents saying they would recommend apartment living to others, while 77 per cent said they had not been impacted by COVID-19.

Investor satisfaction, however, took a major hit, with just 47 per cent of investors saying they would recommend apartments to others, down from around 60 per cent prior to the pandemic.

When asked if they would invest in another apartment, just 32 per cent said they would, while an additional 32 per cent said they would consider it.

Australian Apartment Advocacy chief executive Sam Reece said the investor dissatisfaction was likely linked to high vacancy rates in inner city apartments due to the absence of international students and tourists, particularly in Sydney and Melbourne.

“They’re not making the cash they were making before,” Ms Reece told Australian Property Investor Magazine.

“If you have a long-term tenant in your apartment, then you are probably going to be ok, but if you have been relying on the higher incomes that come from short-stay accommodation, you’re probably going to be feeling the pinch now. 

“I think a lot of those investors are taking the chance to renovate their apartments because they could be quite dated, and they are looking at short to medium-term leases now.”

While those investors appeared to be pessimistic in the short term, nearly three quarters (73 per cent) said they expected their apartments to appreciate in value over the next five years.

More than 80 per cent of investors believed they were in line for a value uplift over the next 10 years, the survey said.

“They’re feeling angry about their lack of income but they know their apartments are a worthy investment long-term,” Ms Reece said.

“So there's short-term pain, and if you have a vacancy, you wouldn’t be happy about that.

“It was a very sudden loss of income that not many would have been anticipating and that means they are paying the mortgage entirely.

“I think we are going to find that overseas travellers are probably a good two years away, so a lot of investors are going to have to rethink how they want to pitch their investment property.”

Ms Reece said she had been surprised that overall satisfaction with apartment living had increased since the onset of COVID, a trend that was evidenced even in the states that had been most impacted by lockdowns.

“Satisfaction rates and recommendation rates were up, as compared to 2019, and what was interesting was that now we are thinking about designing apartments with COVID as being a major factor of our everyday life,” Ms Reece said.

“COVID hit fast forward on a number of trends; pets, home office, business centres, amenities like pools and gyms and communal gardens.”

“It’s often the communal areas that will make a difference to your lifestyle because of their ability to draw you outside your home.”

Ms Reece said the survey also suggested that a shift in buyer behaviour and residential needs had occurred.

The survey showed the majority of single person households desired a two-bedroom home, with a formal workspace more important than it was prior to COVID, while business centres within apartment buildings were growing in popularity.

Balconies were also a must-have for buyers, with outdoor living, exterior space and sweeping views high priorities.

“Buyers are looking for bigger living spaces and the number of people who are looking at using some part of their home as a study or a home office means that developers are going to have to think a bit more about how we incorporate that and make those spaces more flexible,” Ms Reece said. 

“The other thing that was surprising to me was the number of people who liked their apartments because of pets.

“COVID, with some of the anxiety that it caused, highlighted the importance of the emotional connection people have with pets, and the importance of having a pet-friendly apartment.”

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