Development Ideas to help you realise the best price you can
NEWS
Penrith Property
Issue 1, Spring 2014
Don’t Miss The Boat
BOOM TIMES Developers are paying huge dollars for land with development potential. How long will it last this time?
Right now the Penrith Local Government Area is in the middle of an unprecedented boom that makes any property with development potential extremely valuable Announced, or already underway, in this area is a total of 347 residential, commercial and industrial/infrastructure projects worth $8.9B. The bottom line for property owners is that they can capitalise with higher prices, provided that they get expert advice on the true worth and potential of their holdings. PRDnationwide Penrith Managing Director, Darren Latty, believes that too many vendors are simply missing out. “Whether your property can fit a granny flat, three villas or a warehouse, it could be worth more than you think,” he said. Darren said it was an unfortunate fact of life that too many agents only look at a property for what it is and value it accordingly rather than looking at its potential.
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Boom Times In Penrith 347 developments totalling $8.9 billion have set the scene for a period of prosperity in the Penrith region, a period from which astute property owners can benefit with the right advice. Residential Development Penrith continues to experience significant growth in what is known and recognised as the Penrith Economic Corridor that runs 8km from St Marys in the East to the Nepean River in the West and accommodates such strategic assets as the Penrith Health and Education Precinct and the Penrith Central Business District.
According to PRDnationwide Penrith, developers are keen to accommodate this shortfall but are desperate for sites.
PRDnationwide Director, Darren Latty, said that in the current climate he is increasingly finding that the land is worth more than the house on it, often regardless of the zoning.
Significant projects are also being undertaken to help accommodate the regional population catchment which is estimated to grow from two to four million people over the next 25 years.
State and local governments are placing a renewed emphasis on greater densities closer to cities, legislating to make it easier to put everything from a granny flat to a few townhouses or villas on an existing block.
According to the 2011 Census, Penrith has 184,681 residents with a median age of just 34 years, including 48,360 families with an average of 1.9 children. It has been projected that this population will grow to 218,090 by 2031 when the workforce will be 100,000. None of this is pie in the sky as the current development research charts on the right show. The dat a was compiled by PRDnationwide’s dedicated research division and indicates that unit and townhouse developments make up a combined 19% of current or planned residential development in the Penrith regional area. Given the short term need just to house construction workforces and the long term need to accommodate new residents, particularly those coming into the health and education precincts, it can be seen that there is a shortfall of units and townhouses.
Total Estimated Value
150
$1.2 billion
Accordingly there is a high demand for properties of all sizes with development potential and developers are willing to pay a premium to secure them.
The Corridor also spans from Penrith Lakes in the North to the Riverlink Panthers Penrith proposal to form a lifestyle and recreational precinct.
Identified as a Regional River City in the Sydney Metropolitan Strategy, Penrith will see the creation of 40,000 new jobs by 2036, with 10,000 additional jobs in Penrith’s CBD.
No of Developments
To this end government bodies are easing zoning restrictions, cutting planning red tape, fast tracking approval time frames and reducing minimum lot sizes and setbacks.
Commercial Development No of Developments
Total Estimated Value
53
$5.5 billion
Authorities are embracing infill development and not just high rise apartments in the CBD, but even small suburban developments. Darren said that too few real estate agents took these factors into account when valuing properties. ‘‘Mum and dad selling the property are happy, particularly in the current boom market, to get a value two or three times what they paid for their property when they first married and think no more about it,’’ Darren said. ‘‘But the reality could well be that they are underselling by as much as 50% of the real value of the land to a developer. ‘‘Perhaps that lone home may have no potential, but what if the developer has already secured the neighbouring property.’’ Darren said that in the current market every potential vendor in the Penrith area is doing himself a dis-service by not seeking expert advice before committing to sell.
Darren Latty, Managing Director PRDnationwide Penrith 0414 620 532
How to get rich in the Penrith market
PRD will give you the know how Continued from Page 1 > “PRD stands for Property, Research and Development. Our philosophy is to provide specialised Research data to enable our clients to make informed decisions on market conditions. “In today’s changing economic climate it is not enough for an agent to rely on chance when advising clients on the best step forward for one of their most valuable assets, hence the reason for this particular newsletter which will focus on development.” Darren warned that vendors waiting too long to capitalise on the current market risked losing out all together. He said comparisons between land values
in the 2003 boom and the 2005 downturn told the story. In 2003 developers were paying $100,000$130,000 per villa/townhouse site and by 2005 these prices had dropped back to the $70,000-$85,000 range. “Moving forward to 2014 we have huge demand from developers for small to medium sites, with developers now paying $110,000$135,000 for villa/townhouse sites. “But the cold hard facts are that vendors are daily missing out on millions of dollars by not cashing in on an amazingly strong development market.” Darren said that anyone with a decent sized block with good zoning could maximise their profits.
“The market for development sites now is the strongest it has been since the Global Financial Crisis. “There is a shortage of sites, an increase in developer confidence and, of course, the amazing recent increase in property values.” One of the biggest misconceptions is that a block needs to be large to realise an extraordinary value. Even blocks in the range of 600 to 900 sq.m. are under priced because the vendors do not realise their potential for such things as units or sub-division. Even unusual shaped blocks can house two to four townhouses once a clever architect starts to play with them. Darren has countless examples of mums and dads who have sold their properties for what they thought was a good price, only to see them onsold almost immediately for 2050% more and urges potential vendors to contact him for advice.
Units Are The New Black In A Fast Growing Market With rental property availability at an all time low there are opportunities for landlords to maximise their returns as never before. CBG’s six storey, 32 apartment project at 6-8 John Tipping Grove, Penrith is just such an opportunity. Designed by the Morson Group architects for respected developer CBG, the project is due for completion in 2016.
Buy Off The Plan And Save
It will comprise a selection of one and two bedroom apartments along with spectacular, three bedroom “sky homes”. CBG, a company celebrating its 25th anniversary this year, has been responsible for many major projects in the Western Suburbs, including the AMF centre in Penrith and the Pinnacle on the Parkway residential developments in Glenmore Park. Located in an area close to the Penrith CBD that was previously zoned for single storey developments, it will be one of the first buildings in the locality to adopt new zoning changes permitting a height limit enabling six storey residential development. These Sydney-wide zoning changes affecting the Penrith LGA call for increased densities closer to the CBD. PRDnationwide Penrith agent, Zain Allam, who is marketing the units along with the agency’s Managing Director, Darren Latty, said pre-sales represented a perfect opportunity for astute investors. Gone are the days when an investor values your home purely on the basis of its current rental return potential. The canny investors know how they can almost double that, and that makes your home more valuable than you realised when you set the price. The NSW Government’s relaxation of planning regulations means that council approval is not required for a two bedroom backyard granny flat. The paperwork can be through in as little as 10 days. In 2009, the NSW Government released the Affordable Housing State Environment Planning Policy (SEPP) which permits all residential home-owners with a property
“Buying off the plan has always had real benefits, but in a market where unit values have not kept pace with soaring house prices and are due to catch up, the value is extraordinary,” Zain said. According to the RP Data-Rismark Home Value Index combined capital city house values increased by 9.9% in 2013 compared to a 9.0% increase in unit values. This is a real anomaly as, historically, the two have kept pace – e.g. rates of growth over the past five
Small Blocks Can Hold Big Value larger then 450m2 (which also has a minimum 12m street frontage) to build a Granny Flat on their property. Under this policy a Granny Flat in NSW can be approved as a complying development in just 10 days subject to some minimum requirements. In the current market such a Granny Flat can be bought from around $70,000, completed and ready to occupy. The minimum site requirements for a Granny Flat approval as a complying development on a
years of 4.8% pa and 4.7% pa respectively. From an investor’s perspective, units typically enjoy stronger rental demand and superior gross rental yields to those afforded by houses. All of these benefits are in most cases afforded at much lower prices than houses within the same local area. To find out more about pre-sales of these attractive, architect designed, open-plan units, contact Darren on 0414 620 532 or Zain on 0410 329 298. block less than 900m2 include: • Property must be a minimum of 450m2 • Maintain a 3m setback from the rear and 0.9m from side boundaries • Maintain a distance of 3m from any existing trees that are over 4m in height • Maximum 60m2 internal area • Property must be zoned residential • Property must have a 12 metre width at the building line of the proposed detached granny flat. However, if your property does not meet these requirements you could apply for an attached granny flat.