We all know that New South Wales is on a massive infrastructure spending spree don’t we?
Partly it’s coming from the government’s huge stamp duty windfall with billions flowing into its coffers over recent years from the booming Sydney property market.
You’d think that would be enough but it’s not.
In fact, the State Government is also selling off plenty of its properties to finance the program with private investors the most likely winners.
Here’s a startling but true fact: the NSW Government has offloaded some $9 billion-worth of its property holdings over the past six years – and it’s not finished yet!
They’re planning to sell about $1 billion more over the next three years.
With total government property estimated at about $140 billion, the entire planned sell-off represents about seven per cent of the government’s property assets.
So far the government has divested about 20,000 properties and some of these have been in very desirable locations.
The Rocks is an iconic part of Sydney and was home to social housing for decades.
One of the government’s most controversial sales was when it decided to offload a huge proportion of these heritage listed properties.
Many were in bad need of repair, but they were located in The Rocks so were in hot demand from private investors who shelled out multi-millions to own a slice of Sydney’s history.
In fact, the sale of half – or 140 – of the properties has so far brought in a whopping $450 million for the government.
What’s interesting about the government sales thus far is that 4,000 properties, previously owned by the Department of Family and Community Services, have also been sold.
Investors filling the gap
It’s no secret that State Governments have been removing themselves from the provision of social and low-income housing for years.
While investors are often painted as “greedy” by the media and others, what is actually happening is that they have stepped in to fill the void left by the government’s retreat from the rental sector.
If only this social good was recognised more often by the general population and by politicians!
There’s no sugar coating it: without investors active in the market, our homeless population may be much worse than it is today.
Now this isn’t a political blog so we’ll move forward with how private investors can benefit from this massive state government sell-off.
The thing is, many of the properties that are being sold by the government are in investment grade suburbs.
What I mean by that is they’re located in inner-city suburbs, because they were bought by the government many moons ago when prices in these locations were more affordable.
What’s more, they’re often ripe for renovation after having the minimum done to maintain them over the years.
It should be fairly obvious by now that that means ample opportunity for investors to pick up properties in suburbs that are likely to outperform the averages over the long-term.
Then there is the possibility of manufacturing equity or capital growth by undertaking cosmetic renovations to upgrade the property to a premium standard.
Sure the NSW Government is selling down its holdings to fund infrastructure, but its portfolio represents hundreds of opportunities for savvy investors.
I’ve said it before…
The key to a successful multimillion-dollar portfolio is buying properties in locations that will always be in strong demand from owner-occupiers.
It just so happens that the biggest vendor of these types of investments at present is the State Government.
The beauty of this situation is that we know the seller is motivated because they’ve publicly said so.
The bottom line is…
It really is a dream opportunity to pick up some property gems that haven’t been on the market for decades.
You don’t want to miss out.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.