High-end residential developer Illan Samuel will lodge plans this week for 70 townhouses on an amalgamated eight lots of land just a stone’s throw from the water on Victoria’s Mornington Peninsula.
Samuel Property is understood to have paid nearly $30 million for the almost 2ha in an off-market sale late last year.
Much of the property at 103-111 Point Nepean Road in Dromana houses the Kangeron Holiday park and its apartments and caravan parking. A Caltex service station, now permanently closed, is also part of the acquisition.
Dromana—60km south of the Melbourne CBD—is a burgeoning wine-growing region and a major seaside attraction for Victorian tourists.
“It’s really rare to be able to amalgamate eight titles in such a large parcel of land, particularly something in Dromana, or that sort of location,” managing director Illan Samuel told The Urban Developer.
“It’s a product or a type of development that the peninsula just hasn’t seen.”
The Melbourne-based developer expects a long settlement process on the property. Under the agreement the previous owner will remediate the on-site petrol station, while the lease on the holiday park still has some time to run.
Samuel has cost plans from two builders for the project, which will likely have an end-value of about $95 million.
“We’re always talking to multiple builders,” he said.
“It’s still early, but I think for projects like this you don’t want to get a permit for something you just don’t want to build.
“People would previously just get a permit and if it didn’t work, they’d sell it. But the market is too sophisticated now to try to sell permits that don’t work, you have to be prepared to develop or simply sit on it until the dynamics change. Sitting on something is expensive, so you need to be across all the ins and outs.”
Construction at a time of uncertain building costs, rising interest rates, inflation and a host of other factors threatening the industry is just one of the subjects Samuel will address during panel discussions at The Urban Developer Victoria Property and Economic Outlook event in Melbourne next week.
“Yes, I think it is difficult to find good builders at the moment,” Samuel said. “I speak to a lot of others in the industry and I think there is a lack of confidence or trust in certain sectors of the market, that builders will be able to deliver on what we’re trying to achieve.
“And there’s definitely a lack of projects, so if you do have a permit, and you’ve got sales, and you can fund the project, I think there’s a real appetite for builders to partner with developers.”
Samuel thinks prices have stabilised, although he still expects the lower end of the construction market to continue to struggle, mostly because of the shortage of skilled labour.
“A lot of builders rely on subcontractors with fixed prices that they simply won’t be able to hold long term.”
“You just have to have some honest conversations about pricing—to grow revenues—I think that’s a staple every developer needs to learn. The left hand has to be talking to the right hand. There are only so many levers you can push and pull.”
The Urban Developer presents its annual flagship in-person Australian Property and Economic Outlook series.
