unit development and property values

From: Gidget .


Hi everyone,

My husband and I have an investment property in Chelsea Heights (an area which has seen great growth over the last 2 years). Our investment property is on around 1200sq m and we could fit 1 or 2 more units on the block STCA. That isn't really an option for us at the moment though. We've just found out that the vacant land behind the block (currently used as a horse paddock) and one property next door to ours have been sold for unit development. There is a vacant block on the other side as well which is likely to be put up for sale soon and may also be sold for unit development. Does anyone know whether it will adversely affect the value of our property if units are built around us?

I'd appreciate any advice.

Gidget.
 
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Reply: 1
From: Michael Croft


Gidget you may have been presented with an excellent opportunity.

Contact the developers ASAP and you may find that your block will make their development a whole lot more attractive. Does it provide them with dual street frontage? Is this a plus? Will they and you get more units on with the land combined?

It maybe that your block is worth 3 units to them or that they maybe interested in a joint venture where all you have to do is put up the land and share in the profits.

Anyway get your skating shoes on and do some investigating, this may be a windfall opportunity. You'll never know if you don't ask.

The downside is you won't beat them so you may as well join them, as the proposed units will change the character and values in the area. Your property value will ultimately reflect the potential for unit development reduced to a land component.

Michael Croft

The usual disclaimers apply; seek independent qualified advice and so on.
 
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Reply: 1.1
From: Gidget .


Thanks Michael. That sounds like good advice. The complicating factor is that we've only recently purchased the property - and bought it from my husband's family (it was his father's house but he passed away 12 months ago). We bought it for a fair market value (had a valuation done) but I'm sure the family will get their knickers in a knot if we on-sell quickly at a huge profit. I guess that's more of a moral dilemma.
 
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Reply: 1.1.1
From: Michael Croft


Gidget, I suggest you do the leg work anyway as these developments can take many months and sometimes years to get approved and built. It could be time enough for the family to be less affected by your decision. Either way, I don't envy the moral dilemma you face.

Michael Croft
 
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Reply: 1.1.1.1
From: Gidget .


We'll definitely put our investigator's hats on and see what we can dig up.

Thanks for your help Michael.

Gidget.
 
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Reply: 1.1.1.1.1
From: Michael Yardney


Gidget
I know the area in question well as we are doing five unit developments in the Chelsea to Seaford area.
You are right that the area has risen considerably in value over the years. What has encouraged the development in the area is the availability of large blocks of land that will take units, a council that is responsive to new developments and the fact that the end sale prices of units has still remained reasonable - in the $200K to $250K range.
While more units in the street make your property less attractive to owner occupiers of single houses, having a block large enough for development makes your land worth more to a developer, especially if you have a planning permit for more units on it.
If you want the name of a good agent we use in the area to give you an idea of values please email me and I will pass on his name.
Michael Yardney
Metropole Properties
 
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Reply: 1.1.1.1.1.1
From: Michael G


Hi,

Just a thought, and it might not be a practical one, but if you wanted to stay in your home but wanted to boost the value of the land (so you could draw down on the equity), would it be practical to get a DA/BA done on your land. Thus boosting it to a developers price range? (ie $$ per block in the development approval).

I've never done this myself, just bouncing ideas around in this thread.

Just thought it would be an interesting way to renovate a block. ie spend $$ on development approval, instead of on house.

Michael G.
 
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Reply: 1.1.1.1.1.1.1
From: Michael Yardney


Michael
You are correct. Getting a town planning permit as it is called in Victoria, rather than a DA, for another 2 units would cost considerably less than $10,000, but would add say $50 - $60,000 to the value of the property as developers would fall over each other racing to you to buy the property with a permit.
Michael Yardney
Metropole Properties
 
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Reply: 1.1.1.1.1.1.1.1
From: Gidget .


Thanks for the tips guys. We'll bear all this in mind. We had a valuation done only a couple of weeks ago and the value came in at $290K (land size around 1200 sqm). The block next door (which is just over 6000 sqm) just sold this week for $1.3 million.

Gidget.
 
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