Why adding value to your apartment building is worth the investment

When you invest in an apartment, it is possible to increase its value significantly by improving the building it sits in as a whole.

This can range from as minor a change as hanging a beautiful artwork in the foyer or lobby to much more substantial projects such as improving the facade, upgrading common areas, installing a lift into a modest walk-up or adding balconies to all units.

Paul Morton, chief executive of Lannock Strata Finance, a lender that often provides funds to strata schemes to help them pay for their improvements, says he’s seen projects from the repainting and carpeting of lobbies and corridors for $50,000 to the $50 million redesign and extension of the Sydney apartment building Skye Tamarama.

“Many of them are infill projects, where there’s a space underneath that can be turned into an apartment and sold to raise money, and others where they add a penthouse on the top,” he says.

“Some buildings want more car parking, others want balconies and, especially if there’s an ageing population, some want lifts. We’re getting an increase in inquiries and although some of the projects are quite big, you have to remember that when you’re renovating your own home, you’re solely responsible for everything as well as the cost. With an apartment building, it can be many people sharing and contributing, so it may be a lot less.”

The uptick in value can be way out of proportion to the funds spent. Karen Stiles, executive officer of the apartment owners’ peak body, Owners Corporation Network, says a building next to hers just had its facade rendered, which looks spectacular.

“The owners report that their values have increased exponentially as a result,” she says.

“A unit which might normally sell for around $1.25 million just sold for $500,000 more.

“But the ease of getting most owners to agree to projects like this depends on the community, how bonded and aligned they are, and if there’s a champion in the building prepared to drive the project.

“All investors should understand that the more value they can add to a property, the better the rental returns and capital growth will be.”

As many older apartment buildings age, more owners are now considering how they can improve them, believes Caroline McConnachie, the general manager of construction company MAX Build, which has been renovating a number of blocks.

“There’s definitely a huge appetite for it as a way to address problems and upscale buildings,” she says.

“We’re doing an old 1930s block currently at Ben Buckler with some remedial issues and it’s like something from Grand Designs, with a retractable roof and a car stacker.

“The more this strata renewal becomes known, and the more aware apartment owners are of all the moving parts, with the planning, the financing and building, and often offsetting the cost with selling part of the common property, the demand will continue to increase. People realise assets are worth investing in.”