Should I buy R4 zoned property already for future investment?

Discussion in 'What to buy' started by Kishore, 19th Sep, 2021.

Join Australia's most dynamic and respected property investment community
  1. Kishore

    Kishore Member

    Joined:
    13th Jul, 2019
    Posts:
    10
    Location:
    Sydney
    There is R4 property that's coming onto the market in Hornsby Area.

    If we can get this under 2ml and build and wait for 5-10 years... would this be a good investment?

    The property is around 540 square yards and it might be be available around 1.5m - 2.0m.

    There are few houses around it now.. I was thinking may be some developer would come in buy it off us in 10 years to build another set of apartments.
     
  2. Anthony416

    Anthony416 Well-Known Member

    Joined:
    14th Dec, 2015
    Posts:
    538
    Location:
    Sydney
    No sure about a good investment or not but 540 sqm seems a small lot and may need to be amalgamated with another lot to make it viable to take full advantage of the R4 zoning options.
     
  3. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

    Joined:
    25th May, 2018
    Posts:
    2,407
    Location:
    Sydney
    R4 land will always have a premium, on the way in and on the way out. That is positive.

    Given the land size, it would not be by itself develop-able, and so you would need to sell with neighbours. And herein lies the complexity. It only takes one seller to stymie a deal and if that happens, the zoning doesn't matter if you can't achieve cooperative agreement.

    So if you go in knowing that there are many uncertainties with this strategy, and it is by no means bullet proof, buying R4 land is still a good way to buy premium land with more potential than the average block.
     
  4. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    Hmm for long term value creation - sure, not bad, you generally have to pay a premium for it on the way in. I think the market might be attractive for R4 in some areas (trading at discounts relative to other zonings) given apartment developer demand is fairly weak. This will likely change and move once population growth starts firing again and the apartment build market roars back to life post pandemic phase.

    Right now apartment market sites aren't trading so well in SWS. R4 in Liverpool area, for many lot shapes, trade at material discounts vs R3 code ready sites. Moorebank for example is being/has been downzoned given feasibilities for R4 don't work and R3 often do.
     
    Last edited: 20th Sep, 2021
    John_BridgeToBricks likes this.
  5. Ithilien

    Ithilien Active Member

    Joined:
    2nd Jul, 2017
    Posts:
    31
    Location:
    NSW
    Hmm what's the reason for this? Seems very strange and I can' understand why.

    You can still build townhouses on R4 sites in the Liverpool LGA.
    R4 sites still typically have more FSR and building height compared to R3 sites.

    So even if you're just building townhouses, the ones on R4 sites can still achieve greater GFA and have more internal spaces, which will sell for a higher price than a standard townhouse built on R3 sites.

    I can see apartment demand is not strong at the moment, but for R4 sites to sell even cheaper than R3 is just extremely weird in my opinion
     
  6. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    This would be true in most areas - where the difference between an apartments value and cost is quite large. In south west and outer west areas, the cheaper areas of Sydney, where apartment values are quite low (and build costs are high), current feaso's aren't great for R4 sites, and decent for R3 sites.
     

PFI provide our clients with the opportunity to purchase an investment property, together with performing equity investments from a wide range of ASX listed securities some providing monthly income. This is the value of advice.