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Penthouse - Does the high life make for great returns?

Tips

3 March 2017

There’s nothing more glamorous than a luxury penthouse set high in the sky. But will a buyer make their money back?

In November 2016, a new Australian apartment record price was set with a buyer paying $27 million for a penthouse at the landmark Opera Residences building. That price equated to $96,000 per square meter in living space just a few 100 metres away from Sydney’s iconic Opera House. It beats the previous record of $25 million for a penthouse taking up the entire 100th level of what will be Australia’s tallest building, Australia 108.

In 2009, $19.3 million was spent for an East Melbourne penthouse. It came just a month after a $10.5 million penthouse sold in what will be Sydney’s tallest tower, the 235 metre high Greenland Centre.

But will an owner-occupier find their penthouse’s value struggling to keep pace with the market?

Tim Rees, Senior Director at CBRE Residential Projects in Sydney says luxury penthouses are a different kind of market.

“This market has a whole different mindset, and people buy into it for lifestyle reasons with the size and aspect of the entertaining area assuming a much greater importance than its future value.

“In this market, a great view is paramount. If you looked at two identical penthouses and one had a view of the Harbour Bridge or the Opera House, that one would be more likely to keep pace with the rest of the market than one which is looking the wrong way.”

Rees says the penthouse market in Sydney is similar to Hong Kong, where uninterrupted water views and an impressive entertaining space drive values in the upper brackets of the market.

Andrew Leoncelli, Director at CBRE Residential Projects in Melbourne, agrees that views are paramount but says there are other factors penthouse buyers can look at for better capital growth prospects.

“First and foremost the quality of the real estate is the number one issue – by that I mean proximity to retail amenity – shops, cafes, restaurants, cinemas plus the surrounding lifestyle amenity and access to public transport. Views are important, but interior design and quality of the finishes matched with the efficiency of the floor planning is the ‘total package’.”

Leoncelli points out that Melbourne has been slow to adopt penthouse living but says take-up has been buoyed over the last five years by an increasing number of quality options, with 3 bedroom sales jumping 75% over that period.

Coming from a low base but many providing developers with the highest sales rate per square meter, recently CBRE delivered $25million for the 100th floor genuine penthouse at Australia 108. 

What to look for in a penthouse:

  • Views: Think harbour, sea-views and Opera House in Sydney; city skyline in Melbourne, Perth and Brisbane.
  • Right Location: Unlikely to be built out.
  • Floorplan: Generous open-plan living, outdoor entertaining areas below level 20.
  • Car Parking: Multiple spaces on title.
  • Neighbourhood: Close to CBD, walking distance to lifestyle hubs.

 

If you are currently in the market for a penthouse, our team here at CBRE Residential Projects recommend you consider:


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