SMH Domain: HOME & AWAY Investment opportunities

08/11/2013 8:10 pm

Development Prospects Depend On Zoning

You’ve seen the headlines: Development site! Endless potential! Once in a lifetime opportunity!

These descriptors tend to head up real estate ads for single dwellings on a block zoned for medium or high density development. But investors new to small-scale development should proceed with caution. Start by confirming the agent has their facts straight on the property zoning. Zoning controls and maps are public information that must be made available for the public to view, says Matthew Player, founder and CEO of blockbrief.com, a website offering a database of properties defined by their development potential.

‘‘But zoning isn’t the only determinant of planning potential and permissibility,’’ says Player. ‘‘Other planning considerations include density controls, design controls and environmental restrictions. Many properties advertised with development potential do not take all these considerations into account.’’ Player says investors must do their due diligence when considering properties for development.

‘‘Investors need to do their market research and talk to agents in the market to find out if there is demand for their project,’’ he says. ‘‘Just because a use is permissible, it doesn’t mean it is the best use of a property.’’ Investors also need to be aware that financing a development project is a very different ball game to the typical home loan. ‘‘Interest is higher and terms and conditions are very different to a mortgage loan,’’ says Player.

Credit: KATE FARRELLY

Read more: http://smh.domain.com.au/