Old apartments getting bought for redevelopment

How often do old apartments get bought by developers for a knock-down and redevelopment? I have not seen or heard of this happening much in Sydney so my assumption is it's extremely rare.

I ask this cause my family relative A wants to purchase an apartment in Strathfield off my family relative B at market value as they are looking to up-size. Relative-A believes that it's a waste sell the properly which I agree with, but I don't agree with buying the apartment at market value. Relative-A believes that with Strathfield expected to have the shopping centre redeveloped, it'll have flow on effects on neighbouring apartments and trigger knock-downs and redevelopment of near-by apartments.

I have doubts that it would happen as I haven't seen many blocks of apartments being knocked down for redevelopment. I'd imagine it'd be extremely expensive and only worth-while if the zoning was to change.

 

If it is a small block with some house blocks next to it, or other similar small old blocks, at some later stage it is possible, I would not be banking on it now though......I think th elarge unit builds will be grinding to a halt, especially where lot were sales to Chinese investors.

 

There are lots of 70s and 80s blocks in Sydney that are close to the end of their life. In the past, there has been a requirement that all owners need to agree to sell and there will always be a few who won't want to or will hold out for kooky prices and the deal will fall over. There was a change proposed late last year in NSW where only 75% of owners need to agree for a building to be redeveloped. I'm not sure if that has gone through yet. Boy, there will be some tears. Imagine being an oldie and having lived in your flat for the last 40 years and finding out that it's going to be sold whether you like it or not.

 

Sometimes the builders/developers offer apartment deals instead of money, so the old owner would just have a (or 2 if lucky) new and bigger apartment in the same place. Very common overseas.

 

Yes. Still hard for oldies to relocate for two years while a new block is built. In one of the older blocks where I own a flat, there are four (our of 24 I think) flats lived in by people have lived there since the 70s. They tend the gardens and keep the place looking great. It would kill them to be told they have to move.

 

The emotional connection is a concern, but usually the deal includes paid tenancy till the new apartments are ready.

 

Yes, it's tricky. The NSW State Govt are keen to see old and inefficient buildings replaced by ones that will accommodate many more people. Older blocks near railway stations - and there are hundreds and hundreds of them - will be targeted. Local councils are helping to make deals stack up by raising height restrictions so the old three storey walk-ups can be replaced by buildings twice the height and more.

 

349-351 Beamish St Campsie is getting redeveloped into a 6 storey building.
Previously a 3 storey flat; tired/early-mid 1900's

 

Oh man, that looks crap!

 

Wow looks like the legislation passed through: There's a huge change coming for the two million people living in apartments in New South Wales
I'm not able to find the legislation on the fair trading website though.

Does anyone know how much extra a developer would potentially pay for an apartment? Say market rate is $700k, would developers pay up to $1m for it?

 

It depends on how much they want it. Buying out a bunch of apartment owners makes for an expensive site - much more than the cost of buying a couple of homes and amalgamating the land. Consider a block of 20 flats. At $500K each, that's $10m. The block size might only be the equivalent of a couple of big house blocks that would cost much less than that.

 

It would also depend on the density permitted. It would be more lucrative, if the planning allows 25 storeys as compared to say 6.

 

Some of this is happening around the Macquarie Park NSW area. Own a unit on Herring Rd and have been approached by several developers. At the moment all the owners have banded together and just waiting on the right price. The price tag being talked about is around 2-3X of market value.

Early days, but let's see what happens.

cheers,
Michael

 

Wow 2-3x market value is pretty good!

Thanks guys. Answers have given me food for thought.

 

yes, much easier with houses... but it might not be a bad idea to be buying old apartments in areas where development and renewal will occur....

 

lol....you must have done too many depreciation reports me thinks and have written them off already

1970/80s buildings is exactly all I have bought or would buy, even houses this age are usually built well and will be around a long time after we are gone most likely. More likely the ones with no parking or garages, shared laundry, timber frame windows etc with low unit numbers (4/6 or so) may go, I do not see any of the 12/18 unit blocks in great serviceable condition with al windows, face brick etc, very well built etc etc going anywhere for some time.

 

Yep, I have old flats, too. I like them for the reasons you noted. But many will go if developers can make enough money out of the site - height is the key. In my area, Marrickville, there is a cap on height so developers need to amalgamate house sites. If they could go higher, they would target blocks of 70s/80s flats.

 

I reckon we'll see more and more of those blocks being scooped up. The Bankstown corridor renewal project has flagged up to 8 storeys within 400m of Marrickville station.

And up to 7 storeys within 400m of the Dulwich Hill train station where my 3 apartments are (in total they're sharing ~3800sqm of land with 48 other apartments). Given that they're on adjoining battle-axe lots behind the street-facing houses with stacks of under utilised land, I reckon developers could make the numbers work if council are accommodating re: height.

Would be a shame. Lots of owners in those blocks have been there longer than I've been alive.

 

Steven, that big site where your flats are is one where developers could make it work. They would need to buy those houses on Ewart Street. Those owners will do particularly well.

 

So there has not been a lot of new unit development in the Marrickville area ?

I have driven past there a few months back and most of the inner areas there and where I went to in Stanmore all seems mainly older existing places, but I was not near the train line.

Would also prob depend on if it is mainly LL or owners, getting 75% in a 4 or 6 unit block will be easier probably than larger ones, is hard to even get 25% to turn up at a meeting, as you prob know.