Recently, we’re seeing a lot of time, money and focus being put into the communal facilities of new luxury apartment developments around the country. Buildings with shared pools, tennis courts, state-of-the-art rooftop gyms are currently being released in largely CBD areas, with these buildings having very high levels of stock being sold out off the plan.
The big question is, do these shared fitness facilities add value? And if so, what kind of value?
When it comes to evaluating if communal facilities like these add value to an apartment complex, you need to look at it from two perspectives, that of the investor and the owner occupier.
For investors, we see two types of strategies –
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- The investor who purely looks at low rise older style buildings with no facilities or lifts that generally have minimal strata levies, hence low outgoings and potentially less headaches.
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- We then have an investor that’s chasing the higher rents associated with large complexes with good facilities and more depreciation opportunities. Obviously, these buildings have higher strata levies. The trick for these investors is to find a balance of well-designed facilities with reasonable strata levies, as significant strata levies can bring a stigma to a complex and negatively affect values.
For Owner occupiers –
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- These buyers are looking at a whole lifestyle package when deciding on an apartment to live in and a well-designed gym and pool, as well as landscaped gardens and communal barbecue areas impact the marketability.
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- Apartments with high quality facilities create a lifestyle desired by high density, inner city dwellers, are usually in strong demand with this market, and typically have a very healthy ratio of owner occupiers in the building.
While there are many different factors at play, such as buyer type, and scale of the apartment development, and it’s difficult to put a set dollar amount on what certain facilities add or detract in value, it would be safe to say there’d be an around a 10 per cent premium on other similar quality, brand new, luxury apartments lacking such communal facilities.
When it comes to “mid-range” apartment complexes and shared fitness facilities there, the issue is that the wow factor is usually missing. A basic, basement gym is not all that enticing, and perhaps doesn’t add the kind of value investors or owner occupiers are after, and there is a fine balance on the benefits of the facilities vs the cost of the elevated strata fees/levies that these facilities incur.
Our experience when talking to owners and renters in the mid-range apartment complexes is a majority will never use a basic gym set-up and this has increased with the rise of 24/7 gyms and more affordable membership/personal training fees brought on by competition.
This is where developers need to become smarter at how they design and the spaces they allocate to gym facilities to create “a lifestyle” for a potential purchaser and therefore demand premium prices and rents, but also avoid incurring significantly higher strata fees then the rest of the market.
For more on the trend towards high-end shared gym and pool facilities in luxury apartment complexes, and whether they add value for investors and owner occupiers, check out: Why apartment building investors sign up for gyms residents may never use, Domain.com.au
