Key Advantages To Building Duplexes for Investing In Sydney
It is no surprise that Sydney’s cost of living is higher than in other places in Australia. In fact, according to Numbeo, its cost of living places it 31st out of 509 ranked cities in the world. Still, costs are relative. For example, it is still 9.42 percent less expensive to live in Sydney than in New York City.
Take Advantage of the Opportunity
An increasing number of astute home buyers and real estate investors are making these numbers work for them by building duplexes. Duplex construction, particularly in older, close-in neighborhoods, can pay off handsomely. Some buyers make way for duplexes with a knockdown – perhaps the existing home would otherwise require substantial repairs or updating. Either way, duplex construction is typically far more efficient than building two separate freestanding homes.
Rental Demand is Strong
At the same time, demand is usually strong for duplex rentals throughout greater Sydney. In fact, renters are often willing to pay premium rates for the lifestyle possible in a duplex home. Once they see a duplex, many find they prefer it over a flat. For those with the means to rent a home, many see the benefits of the lower costs often associated with renting a duplex.
Median Rental Costs
As is the case with most major cities in the world, Sydney housing costs increase closer to the city centre.
For example, the median rent of a three-bedroom apartment on the outskirts of Sydney is $2,971.88, but a three-bedroom unit in Sydney’s city centre fetches a median rent of $4,690.02 Even a one-bedroom unit rents for an average of $2,580.89 in the city centre.
According to one statistical model, a typical worker in Sydney spends 41.1 percent of income on rent. Utilities add further to the monthly expenses. Basic utilities for an 85 square metre apartment average $178.75, and high-speed internet services (60 mbps or higher) average $67.67.
Maximising Use of Expensive Land
The price of a block of land is also quite substantial in Sydney. According to CoreLogic, a block of land costs significantly more in Sydney than in any other state capital city in Australia.
In fact, the median cost of $410,000 is more than 25 percent higher than the $299,000 median cost in Perth, the second-place state capital city. In 2015, median prices for land in Sydney increased 20.2 percent.
CoreLogic Australia is part of CoreLogic, the world’s largest property data and analytics firm.
Many Find Duplex Living Attractive
In a thriving city such as Sydney, rental demand tends to remain strong over the long-term. And, there are reasons why many renters covet duplexes over other forms of multi-family housing.
For example, a duplex offers many of the comforts and privacy of a single-family residence. Vehicle parking is often more convenient than parking near flats. Y
oung professionals, retirees and many others often see duplexes as premium rental opportunities. Sometimes, grown children live on one side and parents live on the other. In other instances, two families can split the cost of a block of land, making modern housing more affordable for both.
As long as a prospective buyer/investor successfully deals with the regulatory landscape, duplex construction can pay off in a big way. The Daily Telegraph discussed the advantages of duplex construction in an article entitled, “Duplex builds allow Sydney homeowners to get more bang for their block.”
Government Support for Increased Density
Prospective duplex developers are not the only motivated parties. Governments often find that it is advantageous to increase density to maximise use of infrastructure that is already in place. Compared to single-family residences, duplexes better use resources like gas, power, water and sewerage. Duplexes are an alternative to western Sydney’s broadacre development.
Fortunately, duplex construction is possible in numerous areas. According to the data analyzed by CoreLogic, Sydney’s median lot size is 575 square metres. In some councils, it is possible to build duplexes on blocks of land as small as 450 square metres, although it is important to pay close attention to minimum lot widths and possible requirements governing building height, setbacks, floor-to-space ratios and landscaping.
Research is Essential
Given the numerous variables, it is wise to thoroughly research a project. Unless you already have a block of land, it is a good idea to perform due diligence to determine which areas have sufficient rental demand and which ones support excellent rents.
Advantages to Building Duplexes are Many
Although it does take some careful planning and meticulous attention to detail, the flexibility and rewards of duplex construction for both homeowners and investors are many:
- Build equity, often at a rapid pace
- Enjoy substantial rental income
- Benefit from potential tax savings
- Rent one or both units
- Sell one unit, live in the other
Upon completion of the build, some are able to take money out of their properties to purchase another property within 6-12 months. Relatively modest mortgage interest rates make duplex construction even more attractive and more feasible.
Carefully Select Your Builder
Finally, It is worth considering that an experienced duplex builder is a real asset, because it takes experience and expertise to navigate the special building codes and regulations which apply to duplex homes. An experienced duplex builder is familiar with the various expenses associated with a typical project, including legal fees, architect fees, council fees and town planner fees. A capable duplex builder will also be familiar with soil reports, headworks expenses and various required permits.
Champion Homes has been serving greater Sydney for approximately two decades. Entrust your dreams of duplex development to a company with the required knowledge and construction expertise. It is your turn to reap the rewards that come with a successful investment in a Sydney duplex.