Choosing an awesome development site

Jo ChiversJune 22, 2011

What exactly is a property developer?   I quite like this description found on Wikipedia:

“Developers buy land, finance real estate deals, build or have builders build projects, create, imagine, control and orchestrate the process of development from the beginning to end.”

I especially like the words ‘create, imagine and orchestrate’ as this is exactly what I do. When I find a development site, I stand on it and spend some time visualising what can work on the land, then I dissect this by considering several factors including:

The local market demand – what do people want to buy or rent in this area?

Local economics – what is the income of the people living in this area, where do they work, what can they afford? What infrastructure spend is going on right now or planned for the area?

Population growth – what is the growth right now and what is it forecast to grow to?

Budget – how much have we got to spend on the development process?

Market growth rates – what historically has this suburb been growing at and what are you expecting it to grow at?

End values – what are similar dwellings selling or renting for now?

Choosing the right area in which to develop is crucial. It requires research, research and more research. Most first-time developers can’t afford to develop property in areas such as capital cities where everything – including land, building costs and professional services – is more expensive. Instead, I suggest you cut your teeth on an affordable area within a three-hour radius of a capital city.

Look for areas that:

- Offer promise, perhaps going through a gentrification phase;
- Going through a growth phase, where median prices historically perform well;
- Where the population is expanding; 
- Where diverse industries support employment; 
- Where private enterprises, such as large retailers or mines, have announced expansion plans.

All these factors result in strong rental and sales demand. Once you’ve settle on a location, search the area for land in close proximity to schools, shops and public transport, which will attract buyers or renters.

Below are tools to aid your research in finding the perfect location for your development. They include:

Newspapers and property magazines: subscribe to a local paper or magazine to keep up to date with community and industry news;

Property data sources: where you can purchase specific reports;

Websites: realestate.com.au, domain.com.au and Property Observer to name but a few;

Budget reports: look at federal and local government budgets and spending reports as this will show you where money is being spent on infrastructure. You will find areas that are pinpointed for future growth.

Planning information: from your state planning body and local council’s website.

Once you have chosen an area to develop, it then comes down to good site selection. To assess a site, you will need to:

- Narrow down the area or suburb you want to develop;
- Complete extensive due diligence on the economic and social factors of the area;
- Know whether the suburb has a high rental demand;
- Know what the vacancy rate is and what the median sales price is;
- Understand the relevant council’s Local Environment Plan (LEP) and Development Control Plans (DCPs) so you know what the council will and won’t allow in your area.

You need all this information to determine if the land you are assessing has good development potential. The next step is to find the right property within your chosen suburb. This is called site selection.

Site selection criteria is based on factors including:

-          Location

-          Aspect

-          Slope

-          Frontage

-          Depth

-          What’s on top of the land

-          What’s underneath the land


The location of your development site is obviously important. We all know being close to community amenities is a top priority whether you are planning to keep your new dwellings or sell them. Being close to schools and universities, shops, transport and medical facilities is very important. You should check out the neighbours on all sides of the land to make sure there are no dog breeding kennels, chicken coops, car workshops or noisy businesses that may make the location undesirable for tenants. Ask the locals about crime rates and go for a drive around the streets to get a feel for the area. Trust your gut feel or intuition: we will often get an instant negative feeling if something is not quite right.

Jo Chivers is director of Property Bloom, which manages property development.

Jo Chivers

Jo Chivers is director of Property Bloom, which manages property development.

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