"Shell" apartments

Discussion in 'Innovative Techniques' started by cimbom, 8th Apr, 2015.

  1. cimbom

    cimbom Member

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    Hello,

    I'm not sure if there are any legal or other restrictions against this type of development but I was wondering why there aren't any developers building empty shell apartments? By that, I mean you purchase an apartment and it doesn't have anything except the walls. The buyer can then customise it with their choice of flooring and kitchen and bathroom (and other) fittings. This would have the benefit of appealing to the widest range of buyers while also limiting the cost base for the developer. Of course, the benefits of this would only be for the original buyer and not subsequent purchasers but I think it could work well. Just a random idea.

    Thoughts? :)
     
  2. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    what bank would settle on that?

    what minimum health standard does that comply with?
     
  3. thatbum

    thatbum law talking guy

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    Apparently that's the done thing in China - but obviously not the culture here.
     
  4. cimbom

    cimbom Member

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    Good point :p
     
  5. pinkboy

    pinkboy SS Lookerafterer

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    How many lenders *love* Owner/Builder?

    BC issues.

    pinkboy
     
  6. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Before you can lodge the strata subdivision isn't the certificate of occupancy required?

    No kitchen, bathroom, gas/electricity, running water etc pretty much precludes it from being habitable.
     
  7. belvoir

    belvoir Member

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    From a developers point of view, those fitouts/european appliances is where all the cream is made.

    You would maybe get a discount of $20k on a standard 50m2 1 bed apartment.

    No developer would do this.

    Out of the 18 month build only three months is probably dedicated to fitting out the shell.
     
  8. cimbom

    cimbom Member

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    Valid points. How about if it was done similar to a H&L package arrangement where everything is on the contract but is still customisable?

    I have zero development experience btw :p
     
  9. eKwatee

    eKwatee You Snooze, You Lose

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    From my experience, even so called experienced builders aren't very good at building apartments, imagine leaving it to the owners to finish them off for themselves.
     
  10. boeman

    boeman Member

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    Because paperwork.

    Why let 100 people customise their apartment, where you need to change some services and cabinets etc, when you can copy and paste and just order 100 of the same appliances/basins/taps etc.

    It is the same principle for why it is cheap to build a project home over a boutique/luxury one. Project builders charge you a premium to make changes as it costs them time (=money). The house is cheap based on a standard spec where you just choose colours.

    You already pay a premium for a bespoke builder, so change things until your heart is content.
     
  11. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    Some high end apartments are sold that way. I have had three clients with these...Typically a whole / large floor in an inner city new build tower penthouse. Costs = Millions for a concrete floor, ceiling and suspending pipes with glass windows and exterior cladding. One bought hers for $7.5m then spend $3m doing full interior fitout. Worth $20M probably with almost 360o views of Sydney.

    Basically its a contract for a shell then a contract for fitout, design, build and furnish interiors with an architect who adds 20%. Its for those with boutique tastes and champagne budgets. If you need to ask for a cheaper quote you cant afford it.

    This is how commercial property is sold. Inner city towers with penthouse floors are typically commercial sites...Checkout Eureka Tower.

    http://www.e82.com.au/#sixthPage
     
  12. Tools

    Tools Member

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    I have built a number of them over the years and they would always sell like hot cakes. There might be 10 or 20 in the building and we would fit out 2 or 3 for marketing purposes. All services would be provided to the shells and it was up to the purchaser to take it from there. Here is one I did about 15 years ago. Even the roof space of the building was sold and someone eventually built an apartment up there.

    http://www.realestate.com.au/property-apartment-vic-melbourne-119490671

    Tools
     
  13. neK

    neK Member

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    I think that's how they do it in Singapore. My sister lives over there and when they got their apartment, they had to install their own kitchen, bathroom, flooring etc. It was literally walls, concrete flooring, plumbing taps and drain pipes.

    This is government housing though... or something similar. I think my sister explained to me you put your name down (similar to a lottery), and you wait several years until you get picked. Then you get to select your property in a newly built estate at a fraction of what it cost if you bought it in a normal market.
     
  14. cimbom

    cimbom Member

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    So it wasn't such a silly idea after all :p
     
  15. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    Its something a large developer like Mirvac, Dildam etc may do but unless they make more $ and keep time down why would they ? The old adage in construction is you only get paid when you hand over the keys. Due to the bespoke nature of the fitouts its really not for those on normal budgets. Not at all for DIY due to the need to comply with all codes. So its inevitable it will cost much more than a basic unit fitout by a developer (Mirvac) who has a contract with a single builder (ie John Holland) where all units have same locks, carpets, lighting, doors etc..Imagine a developer trying to get 100 different buyers to co-ordinate 800 different tradies to all comply to code ??

    Once cars were bought like this. You bought the car body and then a carriage builder crafted the bits on top. Buses are still made this way. Henry Ford founded a empire on making a simple single version that was cost effective and quickly supplied to the customer.
     
  16. cimbom

    cimbom Member

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    I understand that. I was thinking more of small, boutique type developments (say 3 storeys or so) rather than a gigantic 20 floor tower with 100s of apartments.
     
  17. neK

    neK Member

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    I can't see something like this happening. People will expect to pay 50% of the market value as a result them having to add this kind of stuff in themselves.

    Builders don't make a profit as a result and therefore probably won't do it. People like shiny new things and will pay more for it overall. No different than "dressing up" a property before it goes to sale/auction.

    As i said earlier, the place my sister bought was some kind of government housing scheme. Until she told me the cost of the unit was around 50% of market, i couldn't understand why she would want to do this.
     
    Last edited: 16th Apr, 2015
  18. Biz

    Biz $17 DOLLAS YO!

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    Builders live and die by the structure. The fit out isn't where the money is. I think it is because of what is mentioned above - finance. banks dont like lending on unfinished product Otherwise doing this would be very attractive to a builder.
     
  19. nomadic

    nomadic Member

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    I've bought a few of these before in Thailand OTP and made good money fitting them out and then selling to other farangs. The best part is it's tax free (from Oz) but you must have a good team and supervise them closely because Thais are generally lazy and will take short cuts whenever they can.
     
  20. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    You could dupe a bunch or people to fit it out for free labour. Film it and call it something like The Block. The build quality would be very high end with bad painting, tiling and general rushed effort throughout that wont be shown on air. Then auction it off to a bunch of suckers
     
    neK likes this.