Investors are again turning to property with some looking at property development, hoping for better returns.
It can promise more riches than simple investing but has more potential traps for beginners, and a whole new world of knowledge to master.
Author, property developer and university lecturer Peter Koulizos says there is a great opportunity to make money in property development, “but there is also a great opportunity to lose a lot of money, because the risks are higher”.
“Most capital city house prices are still below their peaks of three years ago and interest rates are very low, so it makes property development more affordable for the average mum-and-dad developer.”
Koulizos says research is the vital first step. “That starts with the council,” he says. Every council has a development approvals process and plans that outline minimum block size, minimum street frontage and other issues.
Developers need to research prices and know how much a property is worth. Koulizos says long-term investors may pay an inflated price for a property but are still winners if they hold it for 10-15 years, but a developer looking to turn it over faster does not have as much time to make up for their mistake.
“Get a fixed-price contract from a builder, and one where they guarantee the build time,” he says. “In development, time is money. The longer it takes, the more your holding costs. And avoid changing plans once you have signed off on them.”
Koulizos recommends writing down the worst-case, best-case and probable scenarios, and you should aim to make a gross profit of 20 per cent on the project.
Metropole Property Strategists chief executive Michael Yardney says now may not be the best time to start a new development, because house prices have already picked up and developments usually have long time frames – often a two-year process.
“A good way for the beginners to start is through renovations. It has much shorter time frames and you also learn budgeting, dealing with builders and dealing with banks,” he says.
Yardney says it is vital to start small. “You are going to learn most of what you will learn in the first two or three developments. It’s going to cost you more than you thought.” But property development is a great strategy because you are not just waiting for the market to rise – you buy assets at wholesale prices and are able to create capital growth, he says.
Yardney says it is vital to surround yourself with a good team of experts. “If you are the smartest person in your team, you are in trouble,” he says.
SOL Results property coach and developer Stan Kontos says his top rule is to ensure you make your money when you buy the property, not upon sale.
“Undertake a feasibility study for costs such as demolition, subdivision and so on, based on today’s price, not a projected future price,” he says.
“Don’t depend on it going up and, if and when it does, consider this a bonus.”
Kontos says people who do not like risks should not go into property development.
“Find a mentor, be teachable and get taught. Don’t make the mistake of learning as you go.”
Kontos says beginners need equity of about $50,000 to $100,000, plus a steady cash flow, and should only pick developments they can afford.
“Start by researching a specialist area,” he says. “The risk is reduced when you understand the area and the council zonings, as well as any future changes.”
EIGHT STEPS TO SUCCESS
1. Before looking at land, work out your finance and team of advisers including real estate agent, solicitor, architect and development manager.
2. Check the local council’s policy toward development and come up with a concept.
3. Buy land at a price that allows you to make a commercial profit.
4. Get development approval, which can take months.
5. Get working drawings prepared so you can then obtain a building permit.
6. Obtain quotes from builders and finalise finance for the construction period.
7. Next comes the building stage, lasting 7-12 months. Most developers never get their hands dirty, and are more like a producer of a movie.
8. At final completion, the project is refinanced and leased, or sold. Be sure to always have an exit strategy before you start.
Source: Metropole Property Strategists
Original article published at www.news.com.au by Anthony Keane, News Limited Network 11/1/2014
Property Group Buys Land Plots for Development in Brisbane’s North
The land parcels total 6.72-hectares at Graham Road, Morayfield, and each lot will provide a new house ranging from 300 to 687sq m. The acquisition will take CFMG’s pipeline to more than 1,000 lots across Queensland and Victoria.
CFMG managing director Scott Watson said pre-release marketing had generated strong sales enquiry from both owner -occupiers and local volume builders looking to secure land for their clients.
“The momentum of the project is expected to continue with official data indicating the demand for quality affordable projects in strong growth corridors forecast to continue,” he said.
Since 2009 Morayfield has experienced an average of 2.5 per cent population growth, higher than the state average of 1.8 per cent.
The project also benefits from close proximity parkland facilities, schools, childcare, shopping centres, specialty retailers and public transport networks.
CFMG Capital operates two core divisions: a residential communities’ development business and residential funds management business which has raised more than $90 million in third party equity.
According to the company, sales in Morayfield have already been strong with 40 pre-sales already in place and current contract exchanges totaling a sales value of $7.2 million.
In the first half of the 2017-18 financial year CFMG secured more than 200 sales across six separate projects in Queensland and Victoria.
“Through most of calendar year 2017 we saw significant spikes in both enquiry and ultimately sales, and as a result we were able to achieve incremental price growth across multiple projects without noticeable impact on sales rates,” he said.
“Particularly in the back half of 2017, there was a strong appetite for land registering in early 2018 which could attract a premium price.
CFMG recently secured a 6.8-hectare land parcel in Bridgeman Downs, 12 kilometres north of the Brisbane CBD.
Originally Published: theurbandeveloper.com
$250 million mixed-use development a boon for north Brisbane suburb
Moreton Bay Regional Council has given the green light to a 1.7-hectare mixed-use development which will transform one of Queensland’s fastest growing areas.
With Brisbane-based practice Richards and Spence as lead architects, the Laguna development will be built in the heart of the suburban area of North Lakes, 26 km north of Brisbane.
It will feature 5,000 square metres of fashion, food and beverage retail space; a 140-room hotel; 2,000 square metres of health and wellness facilities; a 1,500-square-metre “resort-style” restaurant and bar; a convention and events centre and a publicly accessible aquatic centre with a lagoon-style pool.
Moreton Bay mayor Allan Sutherland said at the time of approval that the project would add to the 7,700 jobs in the North Lakes area, provide public green space and bolster the suburb’s reputation.
Originally part of Mango Hill, North Lakes was gazetted as a separate suburb in 2006, with its name derived from the masterplanned estate developed by property group Stockland. The suburb’s population has since grown exponentially, with the 2011 census recording a population of 15,046 and the 2016 census recording 21,671 people living in the area.
Richard and Spence director Ingrid Richards said “middle-ring” or “fringe” suburbs such as North Lakes often lack the cultural and social amenity associated with living close to the city. She said that as Australian cities grow outwards, developers, retailers and councils alike have “not just an opportunity but an obligation to help alleviate this shortcoming.”
“It’s critically important to provide quality retail and mixed-use amenity for the population that will call these areas home,” she said.
The Laguna development is intended to deliver this amenity all in one go. Richards said, “It’s got a complexity, and it’s got a depth to it as a suburb, as a fully functioning place.”
The precinct will be centred on a tree-lined, pedestrian-orientated high street, to be known as Laguna Drive, which will feature retail, cafe and outdoor dining space.
“We’re trying to raise the bar of what is good public space, of what is a good, exciting, engaging retail environment,” Richards said.
In addition to the retail and hospitality offerings, the project will also feature 10,500 square metres of office space across two buildings designed by Nettleton Tribe.
Richards said it was vital that jobs were created through the development.
“As a complete, masterplanned development…you can actually work there,” she said. “Everyone’s not necessarily driving to Brisbane for work, because there is business there. So, it’s not just a housing development, and that’s an important distinction to make.”
The project is being developed by the George Group in conjunction with Pointcorp.
Construction of the project is planned to commence in early 2018, with completion slated for late 2020.
Originally Published: architectureau.com
Moreton Bay Regional Council makes decision on North Lakes commercial precinct
DEVELOPERS of the proposed Laguna North Lakes commercial precinct will have six years to begin the project after getting council approval today.
The council this morning adopted a Material Change of Use application for the development at its coordination committee meeting at Strathpine.
The application is for a catering premises, commercial services, convention centre, hotel, indoor recreation, licensed club, occasional market, office, restaurant and shop.
It was lodged by Wolter Consulting Group with the Council listed as the owner of the site, which covers land at 28-40 North Lakes Drive, 10 The Corso and 75 Lakefield Drive.
The application was initially lodged on May 19.
Council planners, in the report to council, said it would be a high-quality mixed-use development.
The proposed development, which would cover the 1.72ha site, would be constructed over four stages, the report stated.
“The proposal seeks to create a unique experience in the North Lakes area, establishing a boutique retail, dining and lifestyle precinct in the heart of North Lakes,” it stated.
“The proposal will contain a total gross floor area of 34,892sq m and consist of five new buildings ranging in height from two storeys up to six storeys.
“The tallest buildings include the hotel and function centre and the commercial office towers (six storeys) which front The Corso and North Lakes Drive respectively.
“The development will be supported by a multi-level basement carpark, which will be integrated with the existing basement carpark situated beneath the existing council library.
“A new laneway (Laguna Drive) is proposed to connect The Corso and Lakefield Drive, internal to the site, which will enhance accessibility for users by providing short-term parking options and passenger set-down.”
The report recommended councillors approve the development, subject to amendments and conditions.
One of the recommended amendments was for a taxi rank set-down area adjacent to the function centre lobby. This would be designed to include either a drop-off/pick-up zone or a dedicated parking bay capable of accommodating a taxi suitable for use by people with disabilities.
The $250 million project first made headlines in December last year when it was announced Pointcorp and the George Group would develop the land, that at the time was being used for car parking.
Mayor Allan Sutherland said at the time the eventual sale price of the land would be $7.7 million and the developers were to pay a $700,000 deposit on a four-year lease.
A leasing campaign to attract retail and commercial tenants was launched in May.
Originally Published: www.couriermail.com.au
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