Rezoning neighbouring block from resi to mixed use

Hi all,

My parents own a 3,300 sqm block zoned B4 Mixed Use with an old building on it. Still getting good rent from it but at some point in the future we imagine the best use will be to sell as a development site rather than a going concern.

We've got the opportunity to purchase a house that adjoins our block (and it is zoned R2 Low Density Resi). They haven't put it on the market yet and have approached us first, so we need to decide whether we want it and how much we're prepared to pay. This was out of the blue so we were caught off guard a bit. Not really in touch with what the value to us would be, and trying to figure out what our steps should be in the next few days. I'm hoping to get some wisdom from the forum to point us in the right direction.

I've tried to show the rough layout of the blocks in paint. Yellow is us, pink is the one for sale, blue are other properties not currently for sale (not to scale).
If we acquire it, it could improve our rear lane access which is quite tight at the moment, and make the block a more uniform shape so it seems like a good idea.



What we're wondering about is how easy/expensive would it be to get the residential block rezoned so it can be part of the mixed use development (Lake Macquarie Council btw)?
Is there a simple way to estimate what the value would increase by if it does get rezoned? I think the vendor is expecting us to offer a big premium compared to it's residential value.

The block won't be developed for at least 5 years (after the current lease ends) so in the meantime it would just be held as a standard negatively geared resi investment. If I was actually looking for another resi investment, I wouldn't normally touch this one based on the rental yield, but the future potential is what we're really buying in this case.

Thanks for reading, any insight is welcome

Kirsty

 

@Kirsti327 - at present the block has a highest and best use of residential R2 as noted. Your block has a HBU of B4 Mixed use (which would also have a greater floor space ratio). You are able to develop with or without this block but as is, it adds little value (once you achieve a rezoning it will add considerable value eg if it is 10% of the total block).

At present it would be worth little more than any other residential site on the same block/in close proximity eg across the road etc. However, it has some special value to yourselves as it has the potential to add substantially to any redevelopment on your block (or to another developer in the future).

With regards to rezoning, have a chat to @AndrewTDP who is Newcastle based, and also a valuer (if you want to establish a figure for both R2 & B4 if the number the neighbour gives you isn't palatable).

 

@Kirsti327

Please post your findings.
I am currently in similar situation and would like to hear your outcomes thanks.