MJM Property Group

July 2005 Issue
Market Trends: The Inner City residential apartment market is not dead
Negative Gearing VS Positive Gearing
MJM's new clients
Worthy Workplace - Occupation & Health Safety

Market Trends: The Inner City residential apartment market is not dead

Since our last newsletter MJM has co-ordinated the sale of two inner city units in conjunction with a boutique city based agency Henderson & Horning Residential.

Firstly, a one-bedroom apartment at 68 – 70 Market Street, Sydney was sold at auction for $430,000. Eight contracts were issued and six registered bidders competed strongly for the property, which sold for $30,000 above the reserve price. Meanwhile an investment unit in a large residential development at Mary Ann Street , Ultimo sold on a private treaty basis for $370,000.

Henderson & Horning Residential's Ken Sharpe and MJM worked together as a team, with MJM in charge of liasing with the vendor freeing up time for the selling agent to do what they are good at - selling the property!

In both cases the team achieved an excellent result for the vendor in the currently very difficult residential apartment market.

Ken Sharpe can be contacted at the office on 9212 2250 or on the mobile 0414 589945.

Negative Gearing VS Positive Gearing

The concept of negative gearing has long been used by Australians to justify investment in various forms of real estate. In a rising market where capital gains can be expected in the short to medium term the idea of suffering a cash flow shortfall in return for a tax saving makes some degree of sense.

However as markets plateau and in some cases fall the whole idea of losing money to obtain a tax saving when the value of the underlying asset may not increase is totally illogical.

In fact the RBA argues that negative gearing is a fundamental issue in the continual boom and bust cycles that affect the Australian investment property market (particularly residential). Because most Australians feel comfortable buying houses and units as investments they are prepared to lose money even in a falling market.

The Home Renovation TV shows are all suggesting that building upgrade works are cheap and easy and will instantly add value to your home or investment property. However all this is doing is making home ownership more difficult for average Australians who can't compete with these speculators who call themselves investors.

The politicians are too scared to make negative gearing less attractive as the new Aussie Dream is not just to Own Your Home but now it includes Own Your Own Investment Unit!

The Answer? HOW ABOUT WE TRY POSITIVE GEARING FOR A CHANGE?

The quality of the underlying asset should be THE major part of the investment decision. Remember if the asset you buy is going to appreciate in value you only pay 25% capital gains tax. Let's buy investment real estate that generates strong cash flows AND goes up in value. If you're looking for a property consultant to talk you into a negatively geared investment, maybe on the Gold Coast or in Auckland …

DON'T CALL MJM!

If you are prepared to examine positive cash flow investments you may have to look at the commercial market or fringe suburban residential property. Feel free to call us to discuss the features and benefits of such a strategy.

MJM's new clients

MJM has been recently appointed to assist a wide range of clients that illustrate the diversity of the services we provide.

An overseas-based client recently purchased a superb older style penthouse in Elizabeth Bay . MJM provided valuation advice on the acquisition and has now been appointed to project manage the complex building upgrade issues that come with an older style apartment block.

MJM recently acted for two small businesses at Bankstown Airport who are horrified by the rental increases proposed by their new landlords. MJM put together a market rental report that provides a strong case for the two lessees to fight all the way to the bank.

Streetbuild Assets Pty Ltd recently purchased a strata office suite at the Norwest Business Park near Castle Hill. MJM were appointed to provide a full report on potential investment opportunities that could house the building consulting business of Mr Graeme Street . The target market was Castle Hill to Hornsby with quality, parking and underlying investment value being the major issues.

MJM conducted numerous inspections with Graeme and negotiated a delayed settlement deal at Norwest that has left the client smiling.

“Michael helped us understand the market, then physically showed us the market and then secured a deal that meets our exact needs”.

Iveco Trucks Australia Ltd are a large Melbourne based company with a small Sydney workforce that needed to be housed under one roof. Rather than leasing expensive serviced offices or B Grade suburban commercial terraces MJM searched and discovered a superb A Grade office suite at Gateway Business Park at Silverwater.

The property was not openly on the market but MJM used its complex network of contacts in the commercial market to satisfy Iveco's rather difficult requirements.

Worthy Workplace - Occupation & Health Safety

	Occupation & Health Safety has become a major issue for small businesses, building owners and occupiers alike. Our new OH & S consulting business goes by the name of Worthy Workplace.
Click on www.worthyworkplace.com.au to contact WW about the services it provides.