Wednesday, 24th February 2016
How Owner Occupiers Can Take Advantage of this Strong Development Market
We are currently in a market where developers are paying historically high prices for development sites. This includes not only development sites for this cycle, but developers are also land banking for the next cycle. In most cases developers are paying prices well above the market value of the properties in their current state.
Developers and agents are making direct approaches to vendors and offering these strong prices. As a result these owners are faced with the prospect of making a considerable profit, but they also have to then find a new property for their business or for investment. The prospect of finding a new property is challenging as there is a shortage of available properties for sale due to the current demand from developers and investors.
This appears to be a common dilemma for many owner occupiers and vendors.
How do you take advantage of this strong development cycle and overcome the dilemma of finding a suitable replacement property?
Recently Prosper Group assisted one of their clients, the Country Women’s Association (CWA), with taking advantage of the strong development market to sell their business premises and purchase a new premise.
The CWA’s long time premises was located on a prime development site in Potts Point. The improvements on the property were aged and deteriorating and major works were required to bring the buildings up to current standards. Due to the properties outstanding development potential they were being approached by developers and agents to sell their property. Wanting to take advantage of the current development cycle, the CWA were concerned about the process of obtaining the highest possible value for their property and also being able to purchase a suitable new property without having to occupy temporary accommodation.
How did Prosper Group assist the CWA;
- Prosper Group worked closing with the CWA throughout the entire sales and relocation process.
- Prosper Group facilitated the assessment of their existing premises to determine the total capital expenditure requirements.
- Prosper Group worked closely with key CWA staff members to assess that the CWA were better off selling their property and purchasing a new premises rather than remaining in their current property and upgrading the buildings.
- Prosper Group conducted a tender process to select the best agents to sell the property.
- Prosper Group managed the entire sales process to make sure that the CWA were obtaining the highest possible value in price and terms.
- Prosper Group negotiated terms with the purchaser of their property which allowed the CWA sufficient time to purchase and move into their new premises.
- Prosper Group conducted a thorough search of the CWA’s preferred locations in Sydney for a new premises.
- Prosper Group identified an off market opportunity that provided enough space for the CWA to relocate to in their required time frame, and it also provided additional income for investment.
- Prosper Group used their experience and knowledge of the market to negotiate a $300,000 saving off the asking price, which was more than the cost of Prosper Group’s fee.
- Prosper Group identified during their thorough due diligence analysis various issues with the building that potentially were going to cost their client capital expenditure in the short to medium term. This information was presented to the vendor and Prosper Group negotiated a further reduction in the purchase price of $100,000.
- Prosper Group conducted a fit out tender and assisted in the selection of the preferred fit out contractor.
- Prosper Group managed the entire transaction through to settlement and occupation by the CWA.
- Prosper Group provide ongoing asset management services to assist the CWA with maintaining an improving the value of this property.
The end result was that the CWA profited significantly from the sale of their property and purchased a more improved new premises which also provides investment cash flow.