If you are a first-time developer you might find it difficult to pursue construction in the CBD area or even the remote locations of the capital cities. Why do I say this? Don’t you think the building costs and expenses incurred on professional services will inundate you? So the natural course to follow is to develop in relatively far-flung areas.
However, you will have to do a phenomenal amount of research to prefigure various aspects associated with such development. Having been in this business for as long as I am, I have been closely associated with many developers (budding and settled). Here then are a few things to consider (almost from the horse’s mouth…well almost!).
Close your dreaming eyes and visualise
This one looks good on paper but believe me it is even better in practice. When you choose a development site, take a good hard look at it. Close your dreaming eyes and begin to visualise. It is a blank canvas. Imagine how best you can fill it? Such imagination will be rendered usefulness if you think along these lines:
- What is the average household income of the area? How much are people willing to spend?
- What kind of infrastructure are they looking for in their dwellings?
- Are people obsessed with the great “I want my personal home” dream or are they willing tenants?
- Is the local economy blessed with momentum and are there diverse factors of growth in the area? ( I will talk more on this one)
Gentrification
These are a few things you should cast more than a cursory glance on. If you are new with the development game and you cannot possibly kill competition in the CBD zone, you will do well to research on areas which are gentrifying. Such fast-urbanising areas are only expected to be on the move.
Historical growth
If your research tells you that the area under your scrutiny is running close to the median housing average and has historical growth on its side, go for it by all means; nothing better if private enterprises have already exhibited their penchant for expansion there.
Diverse factors of growth (can’t really be overestimated)
You may ask me why I harped on the “diverse factors for growth” mantra. I have inferred- and I am not alone in this inference- that those areas which registered a mining boom and a subsequent mining bust suffered most from the economic reversal. This is because such areas where not supported by multiple-industries.
In the wake of fizzling mining sector, such areas became economically misbalanced. Naturally, the ebb hit property market hard and developers even harder. So my advice to the developers is to look for the much-touted (and funnily oft debated) “diverse factors of growth” criterion.
Proximity to schools and transport routes
In this beautiful hypothetical journey where we are co-travellers; let us further suppose that you have chosen your area for development. Now, what do you do to make sure that you have got the best piece of land for development?
It is needless to say that your search must rely on proximity to schools, transport routes and consumer hubs.
I know it will be difficult to find a relatively low-sticker development site near the highly-sought after “cafe culture” areas but closeness to schools, hospitals and transport routes are a must I fear.
Rental yield
While choosing the land, go for specifically those neighbourhoods which have displayed higher rental yields. Unless you do so, you will miss out on attracting the investors and owner-occupiers who always want to know the rental yield (after all, it determines what kind of rent they may fetch on their property).
Neighbourhood vacancy rate and market-time
You will also be well served by finding out the vacancy rate for the neighbourhood and its average market-time (time usually needed to sell off a property after you have listed it). I have also found that neighbourhoods which have the encouragement of Local Councils perform better.
The Due Diligence I have talked about in the last few paragraphs will narrow down your search a great deal and now will come a point when you have to scrutinise the merit of the plot itself. You may think if this is such a big deal but trust me it is- may be even bigger than you would like to suppose.
Aspect
First, you have to offer a vantage point view on the Aspect of the property. This includes figuring out the direction the land faces. Any dwelling you plan to build on the plot needs fresh air and ample sunlight in its living areas.
This is one reason why lands with north-facing living areas are preferred in the big…..big plot of God called the Southern Hemisphere.
Slope
Next but equally important consideration is the Slope of the Land. You will require thorough professionals with their sharp-as-wit Inclinometers to judge and report the incline of the land. You may assume that flat lands are a developer’s dream for the unit development sites. This however is far from true.
While no developer loves a steep slope, a little bit of it helps in pre-empting the impact of heavy rain and storm. After all, you want easy exit for storm water. Sloping lands minimise drainage fuss.
Frontage
I have also found developers contemplating quite a lot on the Frontage of the land. Let us say you are planning a medium density dwelling (so much more in demand to arrest the population issue).
Now, you will obviously need to cater space for driveways in order to make life easier for the rear-dwelling owners. Budgeting for such driveway space is only possible if you have a wider frontage.
“Top” and “Bottom”
Of course, you have got to find out from the council what’s lying below the plot you dream to build on. Mining excesses may hamper the structural integrity of your development. Similarly, bough of mature trees or asbestos sheds on the top of the land might be tough to clear out without forking a princely sum.
If you are a developer, I hope you will know how to tread and what to look for if you have a development project in mind. By the way, here is a piece of good news for developers.
“Strata by laws” changes effective from July 2014 imply that the developers will find it easier to use vintage plots or plots with old unit apartments for re-development. This however is bad news for such unit owners- the bipolar world of agony and ecstasy I fear.
Which feature of land is highest on your priority list as a developer?
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