By Tim Graham, Investorist.
With the thousands of new apartments due to be delivered in 2017 in Melbourne, Sydney and Brisbane, competition will undoubtedly be fierce for buyers. The need for developments to be saleable will be more intense than ever. The cream of apartments will always rise to the top; the trick is to make sure your development is amongst them.
Here are some points to consider while making sure your developments is a saleable development.
Point of difference
Every developer will tell you that that their development has a real point of difference.
Unfortunately each ‘point of difference’ tends to be very similar to the next one. To ensure a successful outcome is achieved, each project must have features that stand out to both the end purchasers and the selling agents who will find and close those buyers.
In designing and building for 2017 and beyond, the true points of difference that will be noticeable to selling agents include:
They are increasingly educated and expect more features in an apartment now than ever before. Understanding these marketplace trends will ensure your project is correctly positioned to sell.
In a hyper competitive apartment marketplace concentrated in one area, such as St Kilda Road in Melbourne where there are in excess of 1,400 apartments currently under construction, the key selling features or ‘points of difference’ are related to luxury. Large common areas such as fully equipped rooftop-dining spaces, cinemas and pools are fast becoming a bare minimum requirement.
Other popular features include libraries, temperature controlled cellars, communal cool rooms and freezers for home shopping deliveries.
Sydney’s most competitive area for apartments currently is Parramatta, where more than 3000 apartments are under construction. A new 90-storey tower which is part of the Parramatta Square redevelopment in the CBD, will become NSW’s tallest residential tower.
Almost 12,000 new apartments in 68 projects are under construction in Brisbane overall. Brisbane’s most competitive area is the Inner North-East (from the CBD and Fortitude Valley up to Newstead) and the West End-South Bank Peninsula of the Brisbane River.
These two precincts will undergo extensive development over the next few years. In fact, 72% of all Inner Brisbane’s new apartment stock will be contained in these regions.
With a little more research it could have been established that the market really wanted larger two bedroom or a few three-bedroom units for affluent downsizers. Compared to the cost of building one bedders, the cost of building two and three bedders can often be reduced due to the overall savings on kitchens and bathrooms.
On some projects, where the dominant number of studios and one bedders has not been the right mix for that suburb, we have observed that at the end of the project’s life cycle, sales slow considerably, drawing out the completion date for the developer.
Price vs Design
How much of a selling point is price? A bargain will always be a bargain but when referring to an off-the-plan apartment, what constitutes a ‘bargain’ is often hard to define and even harder to communicate, because it’s not yet a realised asset.
The standard method for identifying the value of an apartment is by dividing the purchase price by the internal dimensions. This provides a price per square metre comparison. An educated property investor will start with this, but then look at useable internal space and external living space - and this is where real value is determined.
For instance, two 70 square metre apartments priced identically can represent quite different value for money because of ‘useable living space’. Design elements like staircases, entry areas and long hallways can drastically cut into perceived value for money. Once you factor this in, good design becomes far more important than price alone.
Tim Graham is the Sales Director – Asia Pacific for Investorist. Investorist is a B2B trading platform offering software solutions for the off plan property industry. With offices in Australia, China, SE Asia, UK and US, Investorist promotes and distributes investment properties to buyers around the globe through real estate agents, financial planners, accountants and advisors.