Hi everyone,
I’m trying to work out how much planning permits for 10 x 2 bed apartments would be in added value to 2x420sqm side by side blocks with a current value of $1.4m. Average house prices in the area are $640K.
Basically, the next door neighbours house has come up for sale and we want to make sure that if we purchase it and develop plans there’s a profit to be made. Initial conversations with an architect indicate that since the properties are in a high density area, surrounded by a main road, side street and a lane way and the neighbouring properties are commercial built right up to the boundary there should be minimal problems getting such a large building approved.
I’ve seen some data indicating that plans for townhouses adds about 30K per unit to the sale price, but I can’t find anything about apartments.
Any help would be appreciated. Thanks.
Hi Eleanora,
Not much of a response so far!
The question is a little hard to get around, but I'll give it a go:Firstly, if the blocks are worth $700,000 each, why is a house worth $640,00? I would have to assume that land is reasonably scarce and that the average is affected by smaller land types like units and apartments.
Planning for 10 x 2 bedroom apartments – up to the point that you have a DA or TPP would be in the order of $50,000. If the apartments had an end value of say $500,000 each then a developer would be looking at a land purchase of somewhere around $170,00 per planned dwelling, or in this case $1.7m. This assumes a rule of 3/3 is applied whereby land costs $1.7m, development costs of roughly the same ($170,000 each) and a margin of 1/3. Before costs and taxes.
It's my opinion that the first layer of risk and reward is in the issuing of the DA/TPP and that the second (greater) layer is in the delivery of the project. Preparing land for someone else to develop does not entail as much risk.
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