Thinking of making an investment in city property development but not sure where to start? We’ve prepared a quick guide to get you started.
Is Melbourne a good place to
invest and develop?
is safer than most.
interest rates enjoying record lows and the national urban population facing a
steady increase given an unprecedented period of global uncertainty, it’s no
wonder real estate has garnered some extra attention as of late. Prices in the Melbourne
metropolis are on the rise and building projects seem to be going nowhere but
up. Tim Lawless, head of research for CoreLogic’s Asia/Pacific branch, even noted
a recent unparalleled “boom” in Australian high-rise construction. In addition,
Real Estate Institute of Victoria President Geoff White announced he fully
expects Melbourne property prices to “remain solid” through 2017.
these positive forecasts come in the shadow of the 2008 economic crisis, and
the RBA counsels caution for all would-be property owners. Similarly, in the
“what-goes-up-must-come-down” world of economics, some experts are predicting an
inevitable decline in the housing industry.
Melbourne is still Melbourne. Whatever the shifts in the market, the city
remains an international draw. Domain Real Estate reports an upward trend in
Melbourne’s baseline prices, and suburbs like Point Cook continue to attract buyers
thanks to Melbourne’s high standards of living and its enticing options for
shoppers and diners. Even if Australian real estate experiences a downturn in
the next few years, it’s highly possible Melbourne’s market will endure.
as with any business venture, be sure to do your homework. Research your prospective
location as thoroughly as you can and consult with a few trusted Melbourne real
estate agents for added information on citywide demographics and real estate
niches that may need filling. Choose a select group of Melbourne suburbs and
focus your energies on a detailed investigation into these communities and
their surroundings. Ask yourself: Are these locations primed for growth? Are
they sustainable over time? The more work you put in now and the more questions
you ask, the more likely it is you’ll see a return on your investment.
Is now a good time?
Interest rates may be on the rise sooner than you think. Using 2008 as a
warning, the RBA has promised to take steps to curb real estate loans in the
near future. In a recent address, RBA Assistant Governor Michele Bullock
signaled a possible plan to strengthen lending regulations in an effort to
fortify the real estate market. Translation? Financing a real estate purchase
is about to get more expensive for Australians investing in property outside
their own residence. If you’re at all interested in creating a real estate
portfolio, the time to buy is now.
Why be a developer if I can
simply be a landlord?
that are permit-approved for development are in higher demand than units that
have already been built. If you’re looking to invest in Melbourne property,
land may be the smarter choice. Property
Mavens founder Miriam Sandkuhler cited an uptick in “poorly-designed”
inner-city units—an influx that could drive prices down for duplex apartments,
townhouses or subdivisions. But in a sprawling urban climate, undeveloped land
will always be scarce and therefore has a better chance of maintaining its
value. Plus, should housing prove to slow in continued growth in the coming
years, you can always divert funds toward a different, more lucrative
I already have a job that I love.
Can I be a part-time developer?
can, but you’ll need an excellent team. Be aware that development even at a
small scale is a multi-layered undertaking that requires practical, proactive
care. As a developer, you’ll be responsible for all manner of planning,
construction and marketing should you decide to build. You may need to hire a part
time project staff of managers to get your project off the ground, so to speak,
particularly if you want to keep your day job.
How do I get started?
you’ve decided on an ideal location, take the time to carefully consider your
desired listing as a whole. Some questions to consider include:
· What’s the square footage of the property?
· Is it situated near a waterfront with easy access to an adjoining street?
· What direction does it face (i.e., will there be adequate sunlight if you choose to build)?
After all the papers have been signed, continue to stay on top of the market. Acquaint yourself with your new Melbourne community and keep your finger on the pulse of its highs and lows. The best option for your undeveloped property site may not be the best option in six months. Always think before you begin construction, especially as resale might occasionally be a more profitable alternative.
We wish you the best of luck in your property development career.
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