With land costs currently at a premium, developers in the residential market are feeling the pressure to maintain profit margins while still offering quality products to buyers at competitive and affordable prices. This is forcing developers to explore different ways in which they can do business to adapt to the changing market.
Despite being relatively new to the New South Wales market, the home building arm of Metro Property Development,
Creation Homes, has had a strong start to 2016 using the wholesale building model. This year has seen the launch of its Eden house and land packages comprising 150 lots at Catherine Field in Sydney’s South-West, as well as 25 lots between its Withers Rise and Highlands estates at Kellyville, in Sydney’s North West.
Stage One of Eden at Catherine Field is now 75% sold out, with buyers warmly welcoming the option of homes under $500,000. It is expecting similar sales results at its two recently launched residential estates in the suburb of Kellyville, in Sydney’s North-West.
A point of difference for Creation Homes and other smaller building companies is that they cut out the middle-man, sourcing wholesale materials and delivering projects at wholesale building rates, whereas mainstream house and land developers set retail building rates.
Under the wholesale building model, costs are lowered by forgoing extras used by mainstream home builders including sales teams, big marketing campaigns and large display homes. Savvy investors are no longer interested in the “bells and whistles” and have become far more interested in getting great value for money. Not only does the wholesale building model cut costs for developers, it also boosts affordability for buyers.
A key factor to the success of the wholesale building model is being able to deliver brand new architecturally designed homes at affordable prices, without compromising on quality.
Stage One of Eden at Catherine Field is now 75% sold out.[/caption]“Both first home owners, families and downsizers find brand new homes with modern designs that come with a full turnkey offering seriously attractive and this has been reflected in our latest sales,” said David Mann of Creation Homes.
“By sourcing materials at wholesale prices, we’re able to build 6-star townhomes as well as detached house and land packages that are architecturally designed, at competitive and affordable prices. Landowners would not be able to enjoy the same level of luxury at these prices if they alternatively went through mainstream house and land developers.”
Developers can use the wholesale building model to the best of their advantage by choosing sites in areas where there are established or planned transport and infrastructure links, high levels of employment and where potential for rental growth is visible.
“We’ve seen an influx of perceptive investors snapping up properties in key growth areas that are well connected to the rest of Sydney like Catherine Field, for example, and also in the suburb of Kellyville, where connectivity is soon to be upgraded with the construction of the new North West Rail link.”