Is development stacking up in Corio / Norlane yet?

I have a property on 800+ sqm in Corio which the fourth tenant in three years has just done a runner and to be honest I'm totally over the area.

So I have two options, sell as is, or go through the process and develop (I suppose there are a couple of sub options here too - get planning permission and then sell or do the whole process including the build).

I originally bought it as a development block but the numbers never really stacked up, but lately with the increase in prices in the area I'm wondering if anyone has developed in the area recently and if the numbers are stacking up yet?

 

I don't think Corio has ever really stacked up for development. The end values just aren't high enough to make it feasible. Even with today's current prices, it really doesn't make sense to me.

However, the blocks are big, and every second house is sold with STCA to entice the newby developer.
If you want to sell, an 800sqm block will certainly generate a lot of interest and should fetch a good price. You'll be well ahead even if you only bought 3 years ago.
The only thing you need to decide is whether to get plans and permits done, or sell it with only the potential.

 

Doubt the numbers would work for a buy, develop and sell approach, but why not buy, develop and hold if you are lumped with the block? You will likely end up in a better position due to the good cashflow from the development.

Or if there is an existing dwelling on the block, then try selling it and using the cash to build brand new on the rest of the land.
A new build also in Corio should attract a better quality tenant.

 

Depends what zone you are in - RGZ or GRZ. but easy crunch of basic numbers say on 600sqm block you fit 6 X 2 bedders build for 1.45 mil. the end sale of townhouses would be less than the build, land etc etc cost. no diff to low socio-economic areas like logan etc.

 

The problem with developing in Corio/Norlane is the end values. The finished properties just aren't worth enough to make a development feasible.
There really is no reason to do a development where the cost vs end values are the same. It's not worth the time, effort or risk.
The reason to develop is to turn a profit/equity.
If this margin isn't there then a buyer may as well buy existing stock. It would cost them the same.

 

Land bank it. Too many folks developing for the sake of developing and not necessarily in a manner that turns a profit.