Are you someone who gets a planning approval and then sells a development site with an approval in place. This can be very lucrative activity, there is a whole market segment dedicated to this.

As you probably know developers are quite happy to buy sites that already have planning approval, it reduces their risk, it reduces their holding time and it removes a process that they have to get through. As a general rule developers will pay a premium to buy a site that has approvals in place….however this is not always the case.

I have to say “however” because if you don't get this process correct when you come to sell the site you may not find any buyers, let alone any premiums.

If your focus is to simply get an approval and sell it with an approval you are setting yourself up for problems. I see this all too often, the landowner thinks that if he can get approval for the maximum number of apartments on the site then he will be able to get the highest price for the land. This is not always the case.

Your objective should be to get an approval to build an apartment that buyers want to buy. Your focus should be the design of the end product and not the approved development site.

If you get this right you will find a lot developers who want to buy your site, and this is what leads to the premiums I was referring to.

Get this wrong and you will have trouble selling your site, you will have to reduce the sale price until you find some developer who is willing to take on this development. And if the design is unworkable the developer will likely have to go back to the  drawing board, and in this instance they will not be willing to pay a large amount of money for the site and consequently you have wasted your time and more importantly your money.

The reason why I'm focusing on this is because a developer who comes to buy your site is thinking through the feasibility of developing the building that you have designed, its a basic numbers game. They need to be able to sell it to end users at a certain price that covers the cost of construction and the purchase of the land (from you). If it's not something that and buyers are interested in purchasing, the developer will have problems, if the construction cost is far too high the developer will have problems.

So how do you avoid being the guy who has a development site that he can't sell. The simple answer to this is to do more research, do your homework, if you're unsure engage a consultant. The consultant is somebody who works in the area and knows what they're doing and for a fee will make sure you do not make the rookie mistakes.

It may seem like a lot of money to engage a consultant to assist you with the design however in my experiences consultants can quite quickly pick up common mistakes that new developers make, and if they pick out one mistake they can quite often save hundreds of thousands of dollars.

They can give you new ideas to go in a different directions, which may in the long run mean making more money than the design you are coming up with.

Remember your end game is not to get and approval and selling the site, it may seem that this is the case but in reality you will have far better outcomes and a higher chance of success if you work to deliver a development site with approvals that is viable and workable for the Developer.

Author
Rod Gilbody 
Director
Jumar Property Group

www.jumar.com.au