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Investors taking big hits offloading empty Melbourne CBD apartments

23 April 2021

Melbourne apartment investors are taking some big hits selling off dwellings they’ve been unable to fill with tenants since COVID hit.

CBD apartments have been getting sold off at losses of up to 40 per cent over the last few months, with some of the hardest hit being smaller apartments usually filled with university students.

John Sdregas from JMRE Real Estate in North Melbourne told Domain about a recent sale of a one-bedder in Swanston Street for $180,000 that was 30 per cent less than the the price paid for it 15 years ago.

“It had been sitting vacant for nine months, and they simply couldn’t afford to keep it,” Mr Sdregas said.

“We are seeing this a lot,” he said. “Vendors can’t find renters. They are distressed, and they’re prepared to sell at a loss. That’s if they can find a buyer.”

“Some apartments are sitting on the market for three to six months. The investor market in the inner city has diminished. No one wants to buy an investment property at the moment,” he told Domain.

Mr Sdregas said he expects the pain to continue for as long as the international border remains closed.

“We don’t know how long it’s going to be until international students can come back. It could still be another six, 12, 24 months away,” he said.

“You won’t be able to give them away if you’ve got no students to rent them.”

Vacancy rates in Melbourne’s CBD peaked at 14.6 per cent in October but have improved slightly to record 11.4 per cent in March.

As well as the fall in students, there were plenty of people living in the city who moved to the suburbs after COVID hit and Mr Sdregas told Domain it might be hard to ever get them back.

“Even though more and more workers are being asked to come back into the office one or two days a week, I think many people would rather commute for those couple of days and have that bigger house in the suburb than a little apartment in the city,” he said.

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