Is buying a property in Toorak a good investment?

Last updated on December 20, 2023

Yes, the analysis of Melbourne's property market is included in our pack

If you've enjoyed the upscale homes and prestigious atmosphere of Toorak, you may have thought about calling this affluent Melbourne suburb your tranquil and sophisticated residence.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Australia, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in Toorak?

Toorak in Melbourne stands out as a highly sought-after location for property buyers, primarily due to a blend of factors that distinguish it from other areas.

Understanding what makes Toorak so attractive requires a look into its unique attributes, its evolution as a real estate hotspot, the type of residents it draws, and also, quite importantly, its potential drawbacks.

Firstly, Toorak's reputation for luxury and exclusivity is well-earned. This suburb is known for its opulent homes, large estates, and beautifully manicured streets. The architectural styles here are varied, offering a mix of historic mansions and modern residences, which adds a unique character compared to other Melbourne suburbs.

This diversity in housing, coupled with high-quality construction and design, makes Toorak a standout in the real estate market.

Moreover, Toorak's location contributes significantly to its appeal. Nestled close to the city center, it offers easy access to Melbourne's business and cultural hubs. Yet, it maintains a sense of tranquility and seclusion, buffered from the urban hustle.

The area boasts excellent amenities, including upscale shopping centers, gourmet restaurants, and prestigious schools, further enhancing its allure to potential buyers.

The popularity of Toorak as a prime real estate destination isn't a recent phenomenon. It has been a favored location for Melbourne's elite since the early 20th century. This longstanding status as a prestigious suburb plays into its current appeal.

As for the future, the continued demand for properties in Toorak seems likely, given its enduring qualities. The suburb's history of maintaining high property values, even in fluctuating markets, supports this expectation.

The demographic drawn to Toorak is quite specific. It generally attracts high-income individuals and families who value privacy, luxury, and proximity to central Melbourne. These residents often seek the prestige associated with living in one of Melbourne's most exclusive suburbs.

However, Toorak is not without its weaknesses. The high cost of property here can be a significant barrier for many. The exclusivity that adds to its charm also means it might not offer the diversity or vibrancy found in other Melbourne suburbs.

Additionally, the focus on luxury and large estates means there are fewer options for those seeking more modest or affordable housing.

Make a profitable investment in Melbourne

Better information leads to better decisions. Save time and money. Download our guide.

Why is Toorak a nice place to live?

Toorak is renowned for being a pleasant place to live, and several factors contribute to this reputation.

Let's delve into what makes life in Toorak so appealing, covering aspects like lifestyle and culture, the expat community, living costs, safety, amenities, infrastructure, and accessibility.

The lifestyle in Toorak is often described as upscale and refined. It's a suburb where luxury is not just a term but a way of life. This is reflected in its wide, tree-lined streets, elegant homes, and the overall serene environment. Culture-wise, Toorak has a sophisticated charm.

It's not uncommon to see art galleries, high-end boutiques, and gourmet dining spots dotting the area. This creates a culture that is both refined and relaxed, offering a blend of leisure and luxury.

The expat community in Toorak is quite significant. Many expatriates are drawn to the suburb for its high standard of living and the quality of amenities available. These individuals often come from diverse backgrounds, contributing to the cosmopolitan feel of the neighborhood.

Living in Toorak does come with a high price tag. It's one of Melbourne's most expensive suburbs, with property prices and living expenses reflecting its upscale status.

In terms of safety, Toorak is considered one of the safer suburbs in Melbourne. Low crime rates and a strong sense of community contribute to a feeling of security among its residents.

Amenities and facilities in Toorak are top-notch. For educational needs, there are prestigious schools like Toorak College and Loreto Mandeville Hall. Healthcare is well catered for, with facilities like The Alfred Hospital nearby.

Shopping enthusiasts have access to high-end shopping centers like the Toorak Village, known for its luxury boutiques and fine dining options.

The quality of infrastructure in Toorak is exemplary. Roads are well-maintained, and utility services, including internet connectivity, are of high quality. This ensures residents experience minimal inconvenience in their daily lives.

Accessibility is another strong point for Toorak. It is well connected to other parts of Melbourne, making it easy to travel in and out of the suburb. Major transport hubs like Melbourne Airport are reachable with ease, adding to the convenience of living in Toorak.

Public transportation options are plentiful. Toorak is serviced by various tram routes, and the South Yarra Train Station is nearby. These public transport services provide easy access to Melbourne's CBD and other surrounding suburbs, making commuting hassle-free.

How much does it cost to buy real estate in Toorak?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Australia.

When considering buying a property in Toorak it's essential to understand the unique aspects of this real estate market.

Toorak is known for its luxury and exclusivity, and this is reflected in the types of properties available and their prices.

In Toorak, you'll find a range of residential properties, including apartments, houses, and luxury villas. The most sought-after properties are often the large, detached houses and luxury villas, given their space, privacy, and often unique architectural features.

Regarding market trends, Toorak has a mix of both new developments and resale properties. Given its established and high-status nature, resale properties, especially those with historical or architectural significance, tend to dominate the market.

New developments, when they occur, are often high-end and designed to complement the upscale nature of the suburb.

The price range for properties in Toorak is at the higher end of Melbourne's real estate market. Prices per square meter can vary significantly depending on the type of property, its size, location within the suburb, and its unique features.

It's not uncommon for luxury homes in prime locations within Toorak to reach prices well into the millions of Australian dollars.

Over recent years, property values in Toorak have generally shown an upward trend, consistent with its status as a premium residential area. This trend is supported by the suburb's ongoing desirability, limited supply of properties, and the high demand among affluent buyers.

Looking at future developments and city planning, any new projects in Toorak are closely watched. Developments that offer unique luxury features or that enhance the area's overall appeal can have a positive impact on property values.

However, these developments are typically subject to stringent planning controls to maintain the character and exclusivity of the suburb.

Predictions for the Toorak real estate market in the coming years suggest a continued interest in high-end properties. The suburb's appeal is unlikely to wane, given its reputation, location, and quality of life.

This could mean a steady or even increasing demand for properties in Toorak, especially those that offer something truly unique or luxurious.

Several factors indicate the potential for an increase in property values in Toorak. These include the ongoing demand for luxury properties, the limited availability of land for new developments, and the suburb's established reputation as one of Melbourne's most prestigious areas.

Additionally, improvements in amenities, infrastructure, and connectivity to the rest of Melbourne can also contribute to increasing property values.

Where is the best area to buy a property in Toorak?

Identifying the best area to buy a property in Toorak depends on various factors including the buyer's preferences, lifestyle, and budget.

Toorak, known for its prestige and luxury, offers different atmospheres and property types across its expanse.

Different parts of Toorak have their unique charm and characteristics. The area closer to the Yarra River is known for its serene, leafy environment, making it highly desirable for those seeking tranquility and a connection with nature.

Here, you'll find more expansive properties, often with larger gardens or grounds. The prices in this part of Toorak are typically at the premium end due to the size of the properties and their exclusive locations.

On the other hand, areas closer to Toorak Village tend to be more vibrant and are favored by those who enjoy being close to high-end shops, cafes, and restaurants. Properties in this area often include luxury apartments and townhouses, appealing to those seeking a more urban lifestyle. While still expensive, these properties can be slightly more accessible price-wise compared to the grand estates near the river.

When looking for an up-and-coming area within Toorak, it's important to consider that the suburb is already well-established and highly sought after.

However, areas undergoing redevelopment or those where new luxury apartments or townhouses are being constructed can be considered 'up-and-coming'. These areas offer modern amenities and are often designed to offer a more contemporary lifestyle.

For those considering buying property in Toorak, focusing on areas near well-regarded streets like St Georges Road, Albany Road, and Lansell Road is a good idea. These areas are renowned for their beautiful homes and proximity to excellent amenities, including schools, parks, and shopping districts.

Conversely, areas adjacent to major roads might be less advisable for those seeking the quintessential Toorak tranquility. These locations might experience more traffic and noise, slightly detracting from the secluded and exclusive feel that many buyers seek in Toorak.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Australia.

Area	Atmosphere	Property Types	Price Range
Near Yarra River	Serene, leafy environment	Expansive properties with larger gardens	Premium end
Near Toorak Village	Vibrant, urban lifestyle	Luxury apartments and townhouses	High, slightly more accessible than riverfront
Redevelopment Areas	Modern, contemporary	New luxury apartments or townhouses	Varies, often high due to modern amenities
St Georges Road, Albany Road, Lansell Road	Exclusive, prestigious	Beautiful homes, close to amenities	Very high
Adjacent to Major Roads	Potentially busier, noisier	Varied, possibly less secluded	Lower than core Toorak areas

Don't lose money on your property in Melbourne

100% of people who have lost money in Australia have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

Is there a strong rental demand in Toorak?

Toorak is known for its luxury and exclusivity, and these factors significantly influence its rental market.

Understanding the rental demand in Toorak requires looking at the nature of the rentals, the target demographic, types of properties in demand, and potential returns on investment.

Rental demand in Toorak is predominantly for long-term rentals rather than short-term. This is largely due to the suburb's profile; a prestigious residential area with a stable, affluent community.

Short-term rentals do exist, but they are less common and usually cater to a niche market, such as high-end tourists or business executives on temporary assignments.

The target demographic for rentals in Toorak is quite specific. Tenants are often high-income professionals, families, and sometimes expatriates who value the suburb's tranquility, safety, and prestige. These potential tenants are typically looking for quality and luxury in their rental properties.

They prefer spacious, well-maintained homes, often with modern amenities and tasteful interiors. Apartments, especially those that are part of well-managed complexes with additional facilities like gyms or pools, are also in demand.

In terms of specific areas within Toorak, those closer to amenities like Toorak Village, with its range of upscale shops and restaurants, are particularly popular.

Similarly, areas near good schools and parks, like those around St Georges Road, are sought after by families.

Amenities play a crucial role in reducing vacancy rates in rental properties. Features like secure parking, private gardens or terraces, modern kitchens and bathrooms, and access to communal facilities like swimming pools or gyms can make a property far more appealing to potential tenants.

Additionally, properties that offer a balance of privacy and accessibility to the city center tend to be more attractive.

Regarding returns on investment, Toorak stands out as a suburb with potentially high rental yields, especially for premium properties. While exact numbers vary, rental returns in Toorak are generally competitive, reflecting the suburb's status and the quality of the properties available.

In terms of property types gaining more demand and potentially better yields, luxury apartments and well-maintained, spacious family homes are increasingly sought after.

These properties cater to the high standards expected by Toorak tenants and are likely to appreciate in value, both in terms of capital gains and rental income.

Make sure you understand the real estate market in Melbourne

Don't rush into buying the wrong property in Australia. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

Is it easy to buy a property as foreigner in Toorak?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Australia.

Buying a property in Toorak, Melbourne, as a foreigner can be a more complex process compared to local buyers, due to specific regulations and considerations that come into play.

Firstly, foreign buyers in Australia are subject to certain regulations. The Foreign Investment Review Board (FIRB) is the key regulatory body overseeing foreign property purchases in Australia.

As a foreigner, you need FIRB approval before purchasing property in Toorak or elsewhere in Australia. This process involves an application fee and requires compliance with specific conditions.

Generally, foreigners are allowed to buy new properties or vacant land for development but buying established dwellings is more restricted.

The purchasing process in Toorak for foreign buyers is similar to that for locals, but with the added FIRB approval step. After choosing a property, you make an offer or bid at auction.

If accepted, you enter into a contract and pay a deposit. The settlement period then follows, leading to the transfer of ownership.

There are primary risks associated with property investment in Toorak, as with any real estate market. These include market volatility, changes in property values, and potential rental yield fluctuations. The high-end nature of the Toorak market means that while potential gains can be significant, so can losses.

Classic pitfalls for foreigners buying property in Australia include underestimating the importance of location, neglecting to consider additional costs (like stamp duty, legal fees, and FIRB application fees), and not fully understanding the legal and tax obligations.

Unique to Australia, and particularly relevant in a high-value area like Toorak, is the issue of underquoting – where a property’s potential selling price is understated by the agent. This can lead to foreigners overpaying for properties.

Working with a local real estate agent or lawyer is highly advisable for foreigners. A local expert can provide invaluable insight into the Toorak market, help navigate the legal and regulatory landscape, and assist in avoiding common pitfalls.

They can also facilitate negotiations and ensure compliance with all legal requirements, including those specific to foreign buyers.

Common exit strategies for property investors in Toorak include selling the property for capital gain, particularly if the market has appreciated since purchase, or holding the property and earning rental income.

Due to the high-value nature of the Toorak market, these strategies can be particularly profitable but also come with higher risks compared to other areas.