What to look for in a property developer…

There are many reasons why people purchase property off-the-plan, whether it is the desire to have something that is NEW and MODERN, or simply meet LOCATION and PERSONAL requirements.

Here are a few key things that can be considered when working through your own due diligence process:

1 – Changes in lifestyle/demographics and housing affordability in Australia is making people re-think the TYPE and SIZE of dwelling they are prepared to live in.  Make sure sqm rates and floor plans are aligned with current trends and provide value for money.

2 – Many investors are sold “investor grade” product that is typically unsuited to the local market demands. If you are selling to investors only i.e. “investor grade product”, when you are looking to dispose of the asset in for example 10 years’ time, then you will be marketing to a very limited market, being investors only, and that purchase price will only be determined by the yield that the investor is willing to accept.

3 – Primarily look for a developer that has strong appeal to the owner occupier market within close proximity to both eat streets, shopping, education and public transport and with very low propensity for oversupply.

4 – Look at the developers track record, consistency of delivery and how they sell their product.

5 – Try not to purchase a commoditised type of property.  Developers that are driven by ‘design based outcomes’ deliver product that is more desirable to the local market and consequently has better resale / price growth appeal and far better rental outcomes.

6 – Land and construction prices have both risen considerably over the past 5 years AND market demand and appetite has been at all-time highs across the Eastern Seaboard, as a result watch out for any degradation in quality of product and delivery shortcuts.

7 – Not all property markets are homogeneous which means that there are markets within markets and not all property should be put in the one basket.

8 – Understand delivery risk, i.e. what is both the capacity and track record of the developer both now and in the future.  There has been significant pressure on builder’s margins as competition for work books and scale heightened during the recent construction boom.  We are now seeing at the back end of this significant risks with developer’s capacity to deliver considering that in Brisbane alone, in the past 12-month period we have seen 8 large scale failures from builders leaving projects in limbo with a further 14 larger builders currently on watch lists.

Mosaic has a variety of residential projects around South East Queensland. From apartments & town houses on body corporate schemes; to freehold terrace homes and house & land packages, there is something to suit every investor or owner occupier.

For more information contact our sales team on 07 3171 2211 or sales@mosaicproperty.com.au. Or to simply stay in the loop, subscribe to our blog below.