How much extra could an owner expect from a developer?

Discussion in 'Development' started by wylie, 11th Jan, 2022.

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  1. wylie

    wylie Moderator Staff Member

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    A friend owns one unit in a six pack old walk up style block of units right on the beach at the Gold Coast.

    She's had an email from a developer (I think) asking if she and the other owners are interested in selling their units and the block would be redeveloped.

    If the automated valuation apps are saying her unit value is $1m, how much extra could be on the table from a developer? It would seem sensible that the new build would be one unit per level, giving full ocean views from every level, rather than currently where only two face the ocean and the other four have sideways views.
     
    wylie, 11th Jan, 2022
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  2. Propin

    Propin Well-Known Member

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    If you are the last to agree you get paid a premium.
     
    Propin, 11th Jan, 2022
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Price reflects the development upside - if it's a KDR and the developer can build several extra units/floors with basement parking & 2 units/floor all with views there will be a better outcome than if there was a minimal increase in density.
     
    Scott No Mates, 11th Jan, 2022
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  4. Marg4000

    Marg4000 Well-Known Member

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    I would expect developers to work backwards.
    Figure out how many units allowed, plus build costs.
    Allow for expected profit then see how much available for purchase.
     
    Marg4000, 11th Jan, 2022
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  5. Lindsay_W

    Lindsay_W Well-Known Member

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    I thought in QLD if 75% vote to develop then it can force the remaining owner to sell?
    I know it was tabled in QLD back in 2017 to stop one owner holding up a whole development, not sure if it passed?
    If it did, you wouldn't want to be the one forced to sell.
    Worth checking that out

    I recall a situation in Nobby's Beach where one owner was holding out on an offer of ~$40M for the whole complex from a Developer and the sale fell through, sold years later for a much discounted price
     
    Lindsay_W, 11th Jan, 2022
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  6. Propin

    Propin Well-Known Member

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    Oh I didn’t know they could vote on it! Very different to houses! My granny lived opposite New Farm park. She had no intentions to ever sell. A developer wanted it badly as it was the last house he wanted for an apartment complex. The offer increased substantially and she gave in.
     
    Propin, 11th Jan, 2022
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  7. HarrisonThomas

    HarrisonThomas New Member

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    Depends on a few factors. Where is the 6 pack? Height limitations vary up and down the coast. eg Unlimited in Broadbeach, 15m in Mermaid, 25+ down Tugun way etc, etc. So a developer would work out the yield based on setbacks, site cover and building height to determine the site value.

    I typically target a 20% return on development in the feasos I do for these types of properties.

    I even have a client i'm working with that is offering an apartment swap for 3 of the 4 current owners in a block he's knocking over.... so that may be something to consider too.
     
    HarrisonThomas, 12th Jan, 2022
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  8. Redom

    Redom Mortgage Broker Business Plus Member

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    Yep a back end fees is probably best done if at all possible (not easy for those not in it).

    We have sold sites 40-80% above value with DA's on them recently, so it can vary greatly.

    For a developer the question is 'what is it worth to me'. If this developer owns all the others and there's one left, it'll be worth a lot more to them.
     
    Redom, 12th Jan, 2022
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