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Unlocking Value: How Community Facilities Boost Property Investment Returns

CM Law's Ultimate List: The top 50 FAQs on Buying a Residential Investment Property #43. Community Facilities

Introduction

When investing in residential property in Australia, community facilities are a key factor that can enhance both the appeal of a property and its long-term value. Parks, schools, public transportation, shopping centers, and healthcare facilities all play a significant role in determining whether a property will attract long-term tenants and experience capital growth. In New South Wales (NSW), where property demand continues to rise, proximity to quality community amenities is often a deciding factor for renters and buyers. This guide will explore how community facilities can affect the value of residential property investments and why they should be an important consideration for investors.

Key Community Facilities Impacting Property Investments:

Schools and Educational Institutions:

One of the most important community facilities for many tenants is proximity to quality schools. Families with children prioritize properties near good schools, and as a result, properties located within catchment areas of top-performing public and private schools often command higher rental yields and property values. In NSW, suburbs near sought-after schools such as Sydney Grammar School or Northern Beaches Secondary College typically see strong demand and property price growth.

According to research from CoreLogic, properties located within 2 kilometers of a high-performing school can experience a premium of 5-10% in property prices compared to those further away. For investors, purchasing properties in these areas can translate to steady rental demand and better capital growth over time.

Parks and Recreational Facilities:

Access to parks, green spaces, and recreational facilities is highly valued by tenants and buyers alike. Properties near parks or reserves, such as Centennial Park in Sydney, often attract tenants looking for outdoor space and a healthy lifestyle. Urban areas that offer a mix of recreational facilities, including sports fields, playgrounds, and walking trails, tend to see higher property values, as they provide an improved quality of life for residents.

In NSW, proximity to parks and recreational areas has been shown to increase property values by 3-7%, according to Domain Group. Investors looking to attract young families, professionals, and retirees should consider properties close to green spaces, as these locations offer long-term desirability.

Healthcare Services:

The availability of healthcare facilities, including hospitals, clinics, and general practitioners, can also enhance a property’s investment potential. Properties located near major hospitals, such as Royal North Shore Hospital or Prince of Wales Hospital, tend to attract healthcare professionals, elderly tenants, and families seeking convenient access to medical care. Additionally, access to healthcare services can increase the perceived safety and convenience of a neighborhood, further boosting property values.

Properties near healthcare facilities have been found to appreciate at a higher rate compared to those in areas without such amenities. For example, properties within 5 kilometers of major hospitals in metropolitan Sydney have seen value increases of 4-8% over the past decade, according to research from Real Estate Institute of NSW (REINSW).

Public Transport and Accessibility:

Easy access to public transportation is a critical factor for property investors. Properties near train stations, bus routes, or major highways are highly desirable for tenants who commute to work or school. In NSW, projects like the Sydney Metro and WestConnex have made properties along these routes more attractive due to reduced travel times and improved connectivity.

Properties located within walking distance of public transport hubs can command premium rental rates and higher property prices. For example, properties within 800 meters of Sydney’s Metro Northwest Line have seen a 10-12% increase in value since the line’s opening in 2019, according to data from NSW Department of Transport. Investors should prioritize properties with good transport links to ensure strong rental demand and long-term capital growth.

Shopping and Entertainment:

Access to shopping centers, dining options, and entertainment venues is another factor that drives the desirability of residential properties. Neighborhoods with vibrant retail precincts, like Chatswood or Parramatta, tend to attract tenants who seek convenience and lifestyle amenities. Properties near large shopping centers or entertainment venues, such as Westfield Sydney or The Entertainment Quarter, often see strong demand from young professionals and families.

According to CoreLogic, properties within close proximity to major shopping centers can command rental premiums of 5-8%. Investors targeting areas with retail and entertainment options are likely to benefit from both rental income and capital growth, as these areas remain highly sought after by tenants.

Behaviour of the Participants:

Investors often find themselves caught between chasing lower property prices in less developed areas and purchasing properties near well-established community facilities. One investor, eager to take advantage of Sydney’s booming market, purchased a property in an area with limited access to schools and public transport. Despite initial hopes of rapid capital growth, the property failed to attract long-term tenants, leaving the investor in financial distress.

On the other hand, another investor recognized the potential of purchasing a property near a newly opened hospital in Western Sydney. With healthcare professionals flocking to the area, the investor saw immediate rental demand and capital appreciation, validating the importance of community facilities in making successful investment decisions.

Legal Process and Court Involvement:

Legal disputes can arise if investors are misled about the proximity or availability of community facilities when purchasing a property. In the case of Smith v Camden Property Group [2019] NSWLEC 1105, the buyer sued the developer for falsely advertising the proximity of a proposed public park. The park, which was meant to enhance the community and attract new tenants, was delayed for several years, affecting property values in the area. The court ruled in favor of the buyer, awarding compensation for the drop in property value due to the delay.

This case highlights the risks of relying on future infrastructure or community facilities when making investment decisions. Investors must ensure that claims made about local amenities are supported by factual evidence and timelines.

Financial Consequences:

In the Smith v Camden Property Group case, the investor experienced significant financial consequences. The property, originally purchased for $1.2 million with the expectation of capital growth driven by the new park, lost nearly 10% of its value due to the delay. The investor also incurred $80,000 in legal fees and lost potential rental income as the area failed to attract tenants.

Major assets affected in this case were the property’s location and its perceived value based on future infrastructure developments. Investors must carefully evaluate the risks of relying on proposed community facilities when making property purchases.

Considerations for Investors:

  1. Evaluate Community Facilities: Before purchasing an investment property, assess the availability of key community facilities such as schools, parks, healthcare, and public transport. Properties with easy access to these amenities are likely to see stronger demand and capital growth.

  2. Research Infrastructure Developments: Keep an eye on upcoming infrastructure projects that will enhance community facilities in certain areas. However, be cautious about relying on proposed projects, as delays or cancellations can impact property values.

  3. Tenant Preferences: Understand the types of tenants you want to attract. Families may prioritize schools and parks, while professionals may look for proximity to public transport and shopping centers.

  4. Monitor Property Value Trends: Use data from local councils and property analysts to track how community facilities impact property prices in specific areas. Focus on areas with growing amenities for long-term investment success.

Statistics:

  1. School Proximity: Properties within 2 kilometers of top-performing schools in NSW can achieve price premiums of 5-10% (Source: CoreLogic).

  2. Parks and Green Spaces: Proximity to parks increases property values by 3-7% in metropolitan areas of Sydney (Source: Domain Group).

  3. Healthcare Access: Properties within 5 kilometers of major hospitals in Sydney have seen a 4-8% increase in property values over the past decade (Source: REINSW).

  4. Public Transport Impact: Properties near train stations or bus routes command rental premiums of 5-12%, depending on the transport link (Source: NSW Department of Transport).

  5. Shopping Centers: Properties near large shopping centers, such as Westfield Sydney, experience rental price premiums of 5-8% (Source: CoreLogic).

  6. Retail Growth: Areas with strong retail infrastructure have seen property price increases of 6-10% annually (Source: Domain Group).

  7. Hospital Proximity: Properties within 3 kilometers of major hospitals in Western Sydney saw price increases of 7% annually over the past five years (Source: CoreLogic).

  8. Public Transport Delays: Delays in public transport projects can reduce expected property growth by 5-8% (Source: NSW Planning).

  9. Tenant Preferences: 60% of NSW tenants prioritize access to community facilities when choosing rental properties (Source: NSW Tenants Union).

  10. Vacancy Rates: Properties lacking access to key community facilities experience vacancy rates 15-20% higher than well-connected properties (Source: REINSW).

Essential Resources:

Government Resources:

Non-Profit Resources: