Join Australia's most dynamic and respected property investment community

Bibra Lake 'future development potential' sites

Discussion in 'Development' started by Beachsnow, 12th Sep, 2016.

  1. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    Hi guys,
    just wondering if anyone has any advice for me. I'm looking at a corner site in Bibra Lake that has future rezoning potential for R40. I'm wondering if the prices have inflated for these 'future potential' sites in anticipation.

    I thought might be a good buy around $600/m2 in the current market. (whether they sell for that is another story) My guess is Perth has a further 2-4% to fall by the end of 2016 so will try to factor that in.

    Land or villa sales evidence in the area is little to none so stealing sales figures from neighbouring suburbs (risky?!) price /sqm i'm assuming at $800/m2
    Villas, not sure any suggestions, comments?

    @MTR I know you've done some work in the Spearwood area? Any thoughts?

    Thanks :)
     
  2. Big Daddy

    Big Daddy Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    473
    Location:
    Perth
    Steal numbers using a 500m radius going back a few years and adjust for annual price changes . This is one method a valuer would use.
     
    Perthguy likes this.
  3. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    Thanks for the reply. Only problem is its all R20 at the moment so no sales evidence to go buy as no one has really subdivided yet.
     
  4. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    907
    Location:
    Perth, WA
    That's part of the risks with doing those feasos - all you can do is try and extrapolate from similar products in neighbouring areas, and adjust for superior/inferior location.

    I have to say though, I wouldn't be using per sqm comparisions - I would just be comparing like for like.
     
    Colin Rice likes this.
  5. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,497
    Location:
    Perth, Melbourne, USA
    I developed in Spearwood, if you are looking at buying a site to develop in this area they wont make sense today. If you are looking to maximise block, apartments don't make sense either because we have an oversupply, who is going to buy?

    I am the wrong person to comment on Perth because I am not bullish whatsoever and I think anyone buying now is making a mistake and its speculative, as property prices are still falling and rents have already fallen back and if you read various posts it is harder to rent today due to oversupply.
    I don't believe in holding property in the hope it will rise, if I am buying today I am buying because the market is strong, unfortunately our economy is weak and no signs of improving in the immediate future.

    MTR:)
     
    Colin Rice, Phase2 and Perthguy like this.
  6. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    Thanks guys:)
    When you say the site won't make sense today do you mean the final product won't work ie. Single level villas?

    I agree Perth is a not ideal today and further falls are probably likely.
    I'm having trouble picking a place to develop in. Brisbane is getting tough to find sites in a tight market. Melbourne the same and i'm a little unsure how much further the golden run has left over there.

    I'm thinking of going with a buyers agent to find a site in Brissy, which I believe may have small but steady growth over the next year or two.
     
  7. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    What type of site are you looking for in Brissy?
     
  8. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    Anything that stacks up I guess. Up to $1.1m TDC. Borrowing capacity is my problem these days since i've thrown in the towel with my engineering career.

    Likely a splitter block, or duplex, whatever can make money. Any tips?;)
    I'm also considering Toowoomba with the low development costs. Keeping in mind this is not a develop and hold - just in and out to raise capital for future developments. My strategy has changed since my borrowing capacity has decreased.
     
  9. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
    There was a splitter site in Brisbane middle ring with a similar TDC (didn't do any DD) offered to me a few weeks ago off market by an agent friend of mine and I turned it down as I wanted a larger project. I don't know if its still available but I'll PM you the agent to contact.
     
  10. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    That'd be great! Thanks for that :)
     
    Leo2413 likes this.
  11. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,497
    Location:
    Perth, Melbourne, USA
    luuvvvvvvvvv that avatar:)
     
    Leo2413 likes this.
  12. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,497
    Location:
    Perth, Melbourne, USA
    I just posted a site in Melb??? search my posts.



    the other option is to develop and hold, not sell, but this makes little sense because you may be waiting for years for growth, and why would you build, takes 12 months, pots of money, just go out and buy new units would be much easier proposition and you can not buy back time.
     
  13. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    Thanks! I took this shot in Bingin, Bali. I used to live there!
     
    MTR likes this.
  14. Beachsnow

    Beachsnow Member

    Joined:
    5th Sep, 2016
    Posts:
    12
    Location:
    Perth
    Agreed. I think develop and hold is a great strategy for some, not for me at the moment though.

    The Melbourne site you mentioned that you posted, I can't find it. I'm new to this forum so a little unfamiliar with it sorry o_O
     
  15. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,497
    Location:
    Perth, Melbourne, USA
    Not recommending you buy as I have not looked at the nitty gritty, but certainly something like this is what I would be trying to source if I was new to the deve game, one simple strategy

    8 Carlyle Street Croydon Vic 3136 - House for Sale #123559038 - realestate.com.au
     
    Colin Rice likes this.
  16. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,842
    Location:
    Sydney
  17. Aaron Sice

    Aaron Sice Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    900
    Location:
    Ocean Reef, WA
    Plenty stacking up in Perth at conservative (current minus 5%) values at the minute.

    Just stay out of traditional development suburbs.

    Trouble is, you'll probably need that 5% grace at the moment.....

    At a glance on my lunch break I found ....

    Vic Park has two.
    Butler has (another) one.
    Clarkson has one.
    Coogee has one.

    Spend a bit longer and find a few more already.
     
    Perthguy, Leo2413 and Colin Rice like this.
  18. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

    Joined:
    9th Jul, 2015
    Posts:
    1,083
    Location:
    Perth
    That makes sense and perhaps overly techniclal :p

    Valuers typically rely on neighbouring suburbs if lack of comparables are evident.
     
  19. Matt Ad

    Matt Ad Well-Known Member

    Joined:
    7th Mar, 2016
    Posts:
    88
    Location:
    Perth
    There seems to be a lot of people just chopping up and selling their blocks in Perth at the moment, (thinking like Mullaloo etc) to find a site which doesn't have that inflation due to rezoning seems to have become harder, but I certainly agree, there are winners out there.
     
  20. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,158
    Location:
    Perth
    Sounds like youre wanting to develop, then focis on the one simple and clear bit in the minefield that is developments - profit profit profit.

    Throw hope and prayers in the bin, theyre not only irrelevant theyrr dangerous.
    Until and unless you find a site that, conservatively and with contingencies, looks like it will make whatever margin you are looking for, simply do not buy.

    There is no rush, no prizes for passing go first and a lot more to lose than to gain by buying an unprofitable site in exasperation after being frustrated by other unprofitable sites.

    A problem isnt solved by buying a property with exactly the same issue (insufficient profit) that caused the problem in the first place