Bundling Land in Single Sale

Discussion in 'Investment Strategy' started by MattAHawk, 22nd Apr, 2020.

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  1. MattAHawk

    MattAHawk New Member

    22nd Apr, 2020
    Hi all,

    An opportunity will arise to purchase the blocks neighbouring our current block (1600sqm in total) with the view to sell them as a development opportunity.

    However, is there any real-world benefit in doing so (i.e there is a multiplier/premium), or could it possibly be detrimental (ie. Reduces the pool of potential buyers)?

    This wouldn't occur for a couple of years, so hopefully we are well post Covid timelines.

    Appreciate any insight.
  2. Scott No Mates

    Scott No Mates Well-Known Member

    18th Jun, 2015
    Sydney or NSW or Australia
    The bonus is that the two purchases, though separate transactions through different vendors, may be treated as a single transaction and you'd pay stamp duty at the combined purchase price not at the lower rate of two cheaper lots.
  3. ParalysisAnalyst

    ParalysisAnalyst Member

    2nd Feb, 2019
    It will depend on what the demand for a larger block in that area is.

    Your rate per sqm obviously erodes as the block gets bigger due to economies of scale, but can definitely go the other way if such a block had the right ingredients: zoning, location, demand etc

    Selling 2 800sqm blocks in-one-line vs individually in dandenong will obviously have a different effect on price than say 2 800 sqm blocks (very rare) sold in-one-line vs individually in richmond.

    From a development point of view: A lot of it will come down to what land use is permissible. If density is encouraged, then a developer will obviously be able to extract more from a project on said block, making it feasible to pay more after undertaking their residual land analysis.

    If they can't really development much more than can what be achieved with 2 invidiual blocks, then little to no premium will be paid.