The Top 5 Factors Other Than Zoning That Affect Development Potential

18/01/2013 3:57 am


Most investors and real estate professionals understand the importance of zoning when it comes to determining the development potential of a property. Government authorities allocate zones that set out the various purposes for which a property may be used or developed. However, often investors and their advisors overlook crucial factors that affect the development potential of a property. Blockbrief spoke with one of the state’s leading town planning consultants Rob Player, Managing Director of Don Fox Planning, to create a list of the key factors to consider when determining a properties highest use.


1. Development Controls

Besides zoning a wide range of planning and development controls apply to a property to regulate how it can be developed. In NSW Local Environmental Plans (LEP) contain statutory provisions that allow councils and other consent authorities to manage the ways in which land is used. Key controls in LEPs that are used by councils to regulate density, include minimum allotment sizes, which provide a minimum size for any lot resulting from a subdivision. Other controls include height limits and floor space ratios. Typically, there is limited or no scope to vary these statutory controls.

Development Control Plans provide more comprehensive designs controls for specific types of developments including setbacks, building envelopes, ESD guidelines, landscaped area controls, parking and accessibility requirements. DCP controls provide more flexibility for variations.


2. Site Constraints

One of the first steps a developer, designer, architect or builder should take before putting pencil to paper to create a development concept is to establish what constraints affect a property.

The land size of a property is the most fundamental site constraint in determining if a property is eligible for a type of development. Other key site constraints that must be identified and reviewed include:

  • Location of the site
  • Surrounding development
  • Site boundaries
  • Topography
  • Drainage
  • Easement, covenants and rights of carriageway
  • Infrastructure access 

These key site constraints and many others can affect the developable area of a site and therefore its development potential.


3. Environmental Constraints

Environmental constraints are one of the most significant site constraints that can affect the developable area of a property. As well as being a great advantage, location can also be the Achilles heel of a site. Many landowners with beachfront properties have learnt this the hard way in recent years, after new climate change adaptation controls have been enacted sterilising many coastal properties. Other key environmental constraints include:

  • Flooding
  • Built Environmental Constraints & Heritage
  • Bushfire
  • Coastal
  • Contamination
  • Flora and Fauna
  • Geotechnical
  • Archaeological

Many of these constraints will require developers to gain approval from other government agencies, as well as the approval from the principal planning authority. Investors and real estate professionals must take the time to check if a property has been identified as being affected by an environmental constraint when undertaking their due diligence.


4. Development Levies and Taxes

Development levies and other taxes in recent years have been the difference between a development concept being profitable or unprofitable and as result, development in many areas has come to a standstill, particularly in the Sydney Growth Centres. Governments apply levies and charges to developers to cover the physical and social infrastructure demands created by the development. Investors and real estate professionals when weighing up a development concept must consider if they will be hit with development levies and determine if they can make the contribution and still achieve a reasonable profit from the project.


5. Government Authority & Community

A key factor often overlooked by developers is the council and the local communities attitude towards development. Council and community opposition can lead to lengthy delays, amendments to a proposal and in some cases costly legal battles. On the other hand when a Government wants to encourage investment in their locality it can be very effective to work with the community and the council to achieve an outstanding development outcome, including increased development potential!


Rob Player believes it is a case of ‘buyer beware’ and that investors should be getting their critical investigations done prior to purchase to avoid costly investment decisions. “Often developers buy a site and do their homework later, only to be told by Council at DA time that there is a major flaw in their proposal,” Player commented.