One trend that homebuyers and property investors look towards is landlocked blue chip areas where new dwelling supply is chronically limited.
An alternative approach is to look for properties with a high land value content in areas that are less than perfect today, but have the potential to gentrify significantly over the decade or two ahead.
Gabba upgrade
Here's one such example in Brisbane: Woolloongabba.
The 'Gabba' will undergo some dramatic changes over the decade ahead, including a new Gabba precinct, new apartment developments, the $600 million South City Square regeneration, a cricket ground upgrade, the exciting Cross River Rail project linking into the City, and much more.
Here's the Gabba transport precinct today (OK, I took this photo a couple of weeks ago).
It's not much to look at in 2018, admittedly, partly due to the ongoing demolition in preparation for the Cross River Rail.
And now, here are the future Cross River Rail visuals...
Source: Cross River Rail Queensland
...and those for South City Square.
Source: South City Square
And so on.
Woolloongabba is located only 2 kilometres or so from the heart of the City, so simple geometry dictates that quiet, quality streets in the suburb and land will retain an inherent scarcity value, and the suburb is becoming more liveable with each passing year.
Woolloongabba is located only 2 kilometres or so from the heart of the City, so simple geometry dictates that quiet, quality streets in the suburb and land will retain an inherent scarcity value, and the suburb is becoming more liveable with each passing year.
It's important to buy the right type of property for the location, being one with a strong land value component, and ideally a property with the opportunity to add value too.
Here's an example property that we bought this week: a post-war Queenslander with a superb opportunity to raise the home up and create a 5-bedroom, 3 bathroom executive home, with parking a a pool, and greatly improved district views towards the city.
Some of the homes on the street have been renovated; but, to date, many have not.
So, that's one great example, with enormous upside potential over the years and decades ahead.
Entry level opportunities on decent-sized blocks come with a fair price tag, but it's an area where a turnkey executive home on a 500-600 square metre block that appeals to a professional family could achieve very high prices over the years ahead.
In a constrained lending environment the buy, hold, and then renovate strategy can offer tremendously powerful leverage and bang for your buck in Brisbane.
In a constrained lending environment the buy, hold, and then renovate strategy can offer tremendously powerful leverage and bang for your buck in Brisbane.
Minimum 16 perch (405 square metre) blocks are ideal for Brisbane - unless you're in New Farm or Teneriffe, in which case just the best block you can afford! - and 24 perch (or 607 square metres) is even better.
Oxley hub
What about if you have a lower budget?
Another example suburb where we've bought many properties in recent years is Oxley, which is located about 10 kilometres from the Central Business District (CBD) of Brisbane.
Another example suburb where we've bought many properties in recent years is Oxley, which is located about 10 kilometres from the Central Business District (CBD) of Brisbane.
I know from previous industry experience that Woolworths will never invest in new stores unless a location fulfils hundreds of key criteria.
So when the new Woolies store and shopping centre was announced for Oxley I intuitively knew it would be an area that's going places.
So when the new Woolies store and shopping centre was announced for Oxley I intuitively knew it would be an area that's going places.
To be frank, the locale wasn't all that appealing 10 or 15 years ago, but already today there are coffee houses, places to shop, and great connectivity to the city.
I often stop in for a caffeine shot or a brekkie these days, which says almost everything about how much the area has improved.
As is so often the case with real estate, much of this comes down to simple common sense.
When the adjacent suburb of Corinda - which has the same postcode - is consistently recording home sales of above $2 million (and considerably higher in many cases), then eventually homebuyers will ripple outwards to the next available more affordable suburb as the city population grows.
Every time you visit Oxley you'll note further improvements in the area itself, and in terms of the modernisation of the dwelling stock.
As ever, property type and especially location are key - after all, you can't change the location of a property once it's bought.
As ever, property type and especially location are key - after all, you can't change the location of a property once it's bought.
You don't want to be a 35-minute walk from the train station, or way out on the other side of the motorway, assuming the budget permits.
And you also don't want to buy generic and small apartments.
A strong land value content and future potential are ideal criteria, if the budget allows.
Here's an interview I recorded recently with James Freudigmann of PMC Property and Richard Jefferies of Newbridge Financial on the housing market in south-east Queensland.
Unlike me, James is a Queenslander born and bred, and you'll note that he too is keen on Oxley as a hub with fantastic potential over the medium to long term (and James would remember the area when it was very different!).
In fact, the whole interview is worth a listen as James adds some great advice here.