11 factors to consider when looking for a development site

Finding a great investment property is not an easy task, but it can be even more difficult to find a site ripe for development – and analyse it to ensure it’s the best available, or close to.

It needs to be not only just suitable for development but suitable for the right type of development – that is, one that will result in a (hopefully significant) profit.

There can be a difference of tens of thousands of dollars in the end result for a developer between a good site and bad sites. Bad sites can cost more to develop,  yielding less and therefore leading to lower profit – or worse still, a loss.

It’s a no brainer then that you’ll need to conduct extensive due diligence on potential properties when sourcing and selecting a development site.

Here are some of the most important factors to take into consideration:

This is one of the most crucial things to get right. The site needs to be in an area that has the right zoning for profitable development, with the council being amenable to development. But it also needs to be in an area where there is demand from buyers and/or renters, so you have both bases covered, whether you want to sell or hold once the development is complete.

Ideally, the demand from buyers and renters in the area will be growing for property, so the homes you build will be worth more by the time you finish the project, and as time goes on, so you can capitalise on the growth and make a sizeable profit. An area is generally experiencing an increase in demand if it is close to new infrastructure, as more people are drawn to the area.

In Queensland, one such area is Moreton Bay – projects in this region include a new rail link and a new University of Sunshine Coast campus at Petrie, opening in 2020, which are bringing more people in. We have recently successfully purchased development sites for clients in this area, with zoning also being favourable.

Position within the location.

As well as being in a growing area, the development site should be close to amenities such as shops, cafes and restaurants, schools, services, public transport and employment. This means it will have a competitive edge over any other developments in the area, and indeed properties, when the time comes to sell or rent upon completion of the project.

Size and Shape.

This will determine the type of development you can do, and what the site will yield, directly impacting profits. Just a few square metres can significantly reduce or increase the number of properties a developer can build. When considering the size you’ll need to take the shape of the site and setbacks into account, as this can affect the total usable area of the block, as well as the frontage or width of the block.

Planning controls.

Factors such as zoning and overlays will determine what you can do with the land, but they differ between council areas. Check what the rules are in the location you’re looking to buy in to be sure of what a potential development might yield and hence how profitable it will be.

When considering zoning and what you can do with the site, you should also take into account the demographics of an area to determine whether there is demand for the type of home you are planning to develop. This is crucial to ensure you can sell or rent at the end of the day.

Orientation and aspect.

The direction the block faces will have an impact on the type of development you can undertake, and how attractive the resulting properties will be, particularly in terms of light, views, privacy and noise, including exposure to traffic.

Flat sites are better for developments as they’re easier to build on. Sloping blocks will require more work, particularly in terms of retaining walls, and therefore are more expensive to develop. Even a block that looks flat can have a slope and require some work, so get it checked out before you buy.

Make sure utilities such as sewer, water, stormwater and electricity are available for the block to connect to. You’ll need to know the location of the sewer line and related utilities (such as junctions and manholes), as some can’t be built over, which will impact any potential development.

The land.

Consider the soil on the block as it can impact the stability of a development, although this is something that will require testing. Also take into account what’s on the land, whether it is vacant or has a home or trees that needs to be demolished or removed, as this can also impact costs and hence, profitability.

Council.

You want the site ideally to be in an area where the council is relatively easy to work with and can approve applications in a timely manner, to avoid cost blowouts.

Flood and fire risk.

If the property is in an area that is subject to a natural disaster such as flood or fire, reconsider the purchase.  It will cost more to build on the site, the build will be harder to sell due to both the risk and higher insurance premiums, and growth will likely be restricted as a result. Many councils have maps so you can assess the risk of flood and fire for properties.

Seek help

A buyers’ agent can help in sourcing blocks and conducting due diligence to ensure the property ticks all the boxes. Our experience means we have tips and tricks to determine particulars about it, such as information about sewer lines, without going to extensive investigations.

We can also assist in securing development sites, which can be highly sought after and subject to a lot of buyer competition, and provide advice when it comes to actually undertake the development.

We can also refer you to other industry professionals such as Town Planners.

There is also new software available that does a lot of the hard work for you in identifying and analysing sites suitable for development.

ArchiStar has recently launched a platform for development site feasibility, giving would-be developers the ability to examine hundreds of sites in minutes. It uses property data from CoreLogic and Cordell to speed up the process of examining a site to determine what it will yield – ie. what the development potential is of any given block is. It can also help with assessing design factors such as sunlight and ventilation of potential development.

The software isn’t cheap, so for now, at least it is mainly being purchased by bigger players in real estate, but will likely become more mainstream in the future.

If you want independent advice on finding the right property in the right location, contact us for an obligation-free 30-minute strategy session. For guidance on where to start when it comes to property investing, subscribe to our six-part ‘Ready to Buy Checklist’.