Developing in Perths flat market...

Thanks! sounds like a plan,
I do like coffee to! so I might take you up on that, will message in a week or 2 perhaps, if it is convenient for you?

 

Thanks blacky,
I guess I was following Jerry Seinfelds advice when he said "why is patient a virtue... why cant hurry up be a virtue"

 

It's not all doom and gloom out there, though.

If you're looking North of River, have you looked into the Joondalup HOA's? There's some returns here - am doing two now.

 

Hi Aaron, what exactly does HOA stand for. Thanks

 

Thanks for sharing, great and so young, good on you.

I agree with others not a good deal and in a declining market makes it a tad more risky, no point taking on stress who needs it.

If you are interested in looking at numbers for villas, here is the link o my Spearwood project. may be of help?
Perth - 3 unit/villa development

I would probably be avoiding Balga even though a low base entry level just way way too much stock, and even if it stacks up I don't like buyers having too much choice, makes me very uncomfortable even 12 months ago.

I am not playing in the Perth market at the moment.
I think you have plenty of time, network with those that are currently doing it and making it work. Be conservative with your numbers in current market as we may still see the end values fall.

Even with my latest Mellb development project, I am working on $40,000 less on each townhouse as I know we are close to peak.

MTR

 

Sorry - Housing Opportunity Area.

A lot of areas rezoned R20/30, R20/40 and R20/60.

http://www.joondalup.wa.gov.au/Develop/BuildingPlanningHealth/Planning/LocalHousingStrategy.aspx

See the big PDFs on the right for the areas.

 

Thank you Aaron. However, my personal thoughts on many if not most of these properties that are on the market in the rezoned areas is that the ability to redevelop has already been factored into the price unless someone is desperate to sell.

As there is an oversupply of property in Perth in certain segments/ areas (e.g. Balga, Westminster etc) with building costs increasing and not falling I personally think it will be difficult to make decent profits unless one is tapping a niche type of buyer e.g.: 1 bedders etc.

 

Balman

I know one developer who is going to make at least 25-30% returns on his development in Perth, and these are conservative numbers.

Basically its because he was able to source the land at the right price and able to build a product that is in demand, townhouses and in an excellent area where there is little competition. I think he really has an almost bullet proof project, I am jealous.

I also think we talk about the numbers stacking up but we dont talk about how important in this climate to build the right product for the specific area. Its much harder to offload today than it was 3 years ago.

Just because we can fit xx on the block if you can not sell them then what are we really achieving. I guess I'll keep quiet if people intend to hold everything and I have got it totally wrong


MTR

 

You assume everyone selling knows what to do with their lots. I train the people selling these things - I would hand-on-heart say most people give up trying to understand once they leave the room and revert back to the 'good old ways' of simply testing the market.

MTR brings up a great point and this is exactly how you turn a profit - by revisiting definitions of product from a design point of view and seeing the market holes at the purchasers' end - then combining the two.

So.....why aren't you tapping the niche? Why is your mindset stuck in the idea that if no one else making a profit then you can't too?

This is what sanj was saying. You can't just get a building company to design something up, go on a prestart to pick colours and turn 20%.

So "unless" nothing. If there is a niche (and there are many) then tap it.

 

Sometimes it just takes a while to find a good deal. I have just settled on a property in Cloverdale that has taken 14 months to find. My last deal in Cloverdale was 2011 and took 18 months to find. I enjoy looking at different deals and running the numbers but I still get impatient when nothing stacks up for a year.

Hang in there and refine your feaso skills and I'm sure something will become available that has a higher return.

 

Maybe i am / was stuck in that mindset but need to start the change of thought process and look deeper into all this.

 

Not at all, you are spot on IMO. I'm building in Cloverdale and have capacity to build 1x1 and 2x2 apartments. I would be crazy to do that because there is a massive oversupply of that product. Instead, I have talked to real estate agents and property managers and asked them what people are looking for but can't find. The reality is that this is a family area and families are looking for 4x2 accomodation but there is very little on the market (for rent or sale) because developers can 'maximise their profits' on apartments.

In this case I am happy to go against the flow and build what no on else is building because it is an in demand product with low supply.

 

Cool you're doing your own development - that's great news!

 

JV, but close enough.

 

Can you share more?...

Also, do you know if there is a market in Perth for selling a DA, approved plans and permits in Perth??
Just curious, somehow I don't think so, or perhaps its much higher end values, larger apartments?

 

Not yet, sorry. Slow burn.

 

Shhhh......

 

@Perthguy Do you mainly look at the Perth market or across Australia?

 

I have invested in Melbourne before but my last 2 projects were Perth for specific reasons. Who knows for the next one. I will have to look at the Capital City markets before I choose. Next project will be in Perth, Brisbane, Melbourne or Sydney most likely.

 

@Matt Ad

Sorry for late reply!

I haven't gone thru entire thread but can see other forum members have given some valuable feedback.

If plans is to build and sell or even hold, Perth market isnt best IMHO.

Build and sell (numbers won't stack up)
Build and hold - rental market is depressed across the board in Perth.

It's easy to say for investors that I ll take up small project for learning as long as I don't end up losing money. Opportunity cost is lot higher - developing in flat Perth market.