Join Australia's most dynamic and respected property investment community

Connolly R40 Development

Discussion in 'Development' started by iDex, 13th Jan, 2016.

  1. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    Hi everyone,

    I thought I'll share a project I recently started managing on behalf of some overseas investors. It would be great to hear people's opinions and feedback cause I have still so much to learn!

    Here are some information:
    Where: Connolly WA, in one of its more prestigious streets surrounded by the golf course.
    What: 3190sqm zoned R40
    When: Purchased in October 2015, settled December 2015
    How much: ~$2.392m for the land
    Plan: Currently we are toying between 2 concepts, a townhouse focused (Option 1) or apartment focused (Option 2) design.

    Option 1:
    11 townhouses and 6 apartment units
    [​IMG]
    Option 2: 22 apartment units and 8 townhouses
    [​IMG]

    Please keep in mind that these concepts are very basic and will obviously will go through changes once the concept is selected.

    The main challenges now are:
    1. How much resistance will the neighbours pose.
    2. With the present property market, which design will sell better/faster.
     
    hobo likes this.
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,959
    Location:
    Perth
    My gut says option 1 due to it's location will have less resistance but it really depends on how close the neighbours are and roads. If there is a road around this then there will be less resistance than if it's hard up against someone's fence.

    Another option is to throw in 5 x over 55s or some Single Bedroom Dwellings
     
  3. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    3 sides of the block is surrounded by the road, however all the surrounding houses are facing towards my block.

    Over 55's option did come to mind however, from my calculations the numbers did't full stack up? What is the average size of the over 55's dwelling?
     
  4. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,959
    Location:
    Perth
    I've spotted where it is :) Fantastic location. How did you get the job of project managing it?

    R40 Over55s and SBDs only require 120sqm of dedicated land each (two thirds of the min sized block) + any common property.

    I like the first idea but I just feel that the giant Y shaped access takes up too much space and creates too much common property

    If it was mine I'd consider running the access road as a straight line through the middle lengthways and creating rear loaded terrace houses. Something like this

    Bloom Terraces Wembley, 49 Flynn Street, Wembley, WA 6014 - realestate.com.au

    Out of the 2 options, what makes the most money?
     
  5. soggy

    soggy Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    68
    Location:
    Perth
    I like Option 1. It's good how you have maximised the number of street front townhouses. I don't mind the Y, it looks like having another exclusive community within a community.

    However, because you have good 3 road frontage, I'd be tempted to have more lots with direct access from main road, and minimise common area even more.

    Have you considered the strata aspect? Do the townhouses need to be part of the strata? Or could you surrender the road to council.
     
  6. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,959
    Location:
    Perth
    Hi @soggy I was thinking the same thing about the road frontages until I looked closer at the plan and there is retaining walls at the rear sides so those lots need that access from the Y. Just seems like a lot of access for 4 houses and the apartments.
     
    soggy likes this.
  7. Aconis

    Aconis Well-Known Member

    Joined:
    14th Oct, 2015
    Posts:
    104
    Location:
    Perth
    Well spotted @Westminster. The existing retaining walls sort of forces the Y access.
    @iDex given the location and quality of neighbouring houses I like option 1. Is there any option of just 100% townhouses?
     
  8. mrdobalina

    mrdobalina Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    990
    Location:
    On the ski slopes
    What do the returns look like for each option?
    How will it be financed?
    What's the exit strategy and are pre sales required?
     
  9. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    I've been blessed to have a father who is part of the group of investors to give me the opportunity to try managing it. It will be my first large-ish development so I am being careful and trying to make the right moves.

    As for the single through access from the sides, it can be done which was also another concept. However, it just doesn't have as grand of appeal compared to the Y shape. Indeed, as @soggy has mentioned we are trying to aim for an exclusive feel.

    We have advised the architect to bring down the common area more and currently waiting to see the revised design. Honestly, I have not yet considered the strata aspect, I am assuming the townhouses and the road would have to be strata? Or am I wrong?
     
  10. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    The mixture of townhouses/apartments brings in a higher yield compared to an all townhouses design if you replace the apartment block with 2 townhouses. If its a single through road concept that WM mentioned then I'll need to find out what is the number of townhouses the block can yield in total.
     
  11. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    The returns for both designs are roughly similar, about ~4% ROI difference for extra $2m (not worth it in my opinion). The figures that I've used are somewhat conservative, $450k for a 2x2 and $750k for 3x2 townhouses. Our plan is to have above average specs using quality appliances/materials.

    Our plan is to release in 2 stages, and if that is the case I think the investors has stated they might not require any financing. However, in my initial feasibility I did factor in a 50% loan, which I would assume we would then have to sell half of each stage. All the better return if we don't take up a loan.

    Exit strategy would be to hold the release of the 2nd stage until market in Perth picks up again and rent out the remaining townhouses that hasn't been sold.
     
  12. mrdobalina

    mrdobalina Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    990
    Location:
    On the ski slopes
    I would be interested to know what the return figures you came up with for the different options.

    What type of product are buyers looking for? Have you spoken to agents in the area? I had a quick glance at what's for sale in Connolly, and pretty much everything is 4x2 houses. Do you think 3x2 townhouses on small strata blocks will do well in the area?
     
  13. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    Long Island Pass and Spyglass Pass (and closer areas near the resort) have a similar zoning with majority of the dwellings being 3x2. They are all about 20 years old this year.

    I have spoken to a few agents, there is a demand to live in the street I am developing on. There is also a downsizers market from their 700+sqm blocks in Connolly to something smaller and newer. Apartments are untested cause there are no comparables in the suburb. I think as long the price point is right, it shouldn't be too hard to sell (that's what the agents have told me anyway)
     
  14. Aconis

    Aconis Well-Known Member

    Joined:
    14th Oct, 2015
    Posts:
    104
    Location:
    Perth
    Long Island Pass is horribly hilly if I remember right and parking on Spyglass is at times terrible.
    There is also those smaller units behind IGA and on Fairway circle but I know some are only 3x1.
    You have a great spot and I believe there will be strong demand either way you go.
     
  15. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    Thanks Aconis, we are also putting a strong emphasis on functionality as well by providing 2 bays for every dwelling if possible even with the apartments. While a lot of the existing townhouses has only 1 car bay hence the horrible parking.
     
  16. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,959
    Location:
    Perth
    @iDex for that exclusive feel you could gate the Y and put the garages to the street front houses off the Y but still have all the front door facing the streets.

    It will probably make the designs more functional and give more courtyard space and you could fence off the front if desired.

    With no crossovers on the actual street there is plenty of street parking for visitors.
     
  17. soggy

    soggy Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    68
    Location:
    Perth
    Some buyers prefer if they're not part of strata, or at least a strata with no fees.

    I think any townhouse that uses the road for rear access has to be included in the strata plan.
     
    iDex likes this.
  18. iDex

    iDex Active Member

    Joined:
    25th Jun, 2015
    Posts:
    38
    Location:
    Perth
    We are definitely thinking of gating and fencing the development as well as increasing courtyard space if possible. There are two arguments at the moment:
    1) Would people prefer to drive straight into their garages from the main street, therefore having more of a stand alone feel of the house? Putting a garage of the Y might mean it might be on a lower level which means stairs.. those downsizers and their fear of stairs...
    OR
    2) Would people prefer a more functional/exclusive look to the development and not mind slight inconveniences to drive through the gates or go up some stairs?

    It is so hard to decided which argument is better... What do people PCers think?
     
  19. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,959
    Location:
    Perth
    I agree @iDex that is the dilemma.

    Street front presence and no strata make it feel like its own house.
    Gated community feel may lead to better design but everyone is in on strata then.
     
    iDex likes this.
  20. Aaron Sice

    Aaron Sice Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    898
    Location:
    Ocean Reef, WA
    Did you get this site off Ross Juntras-Minnett? It's the one in the middle of a few lots in the old golf course estate, a few lots amalgamated.

    I would do 2x2s here, with a study nook / recess. Two car bays though...!