The property development market is most definitely on the rebound with major projects and many smaller projects all starting to gain traction again across many parts of Australia. The Gold Coast is a great barometer of the health of the Queensland market. Many property pundits suggest the number of cranes on the Gold Coast skyline is an indication as to the level of development activity and there seem to be many more starting to dot across the glamour strip.
But market conditions, bank’s enthusiasm to lend and general market positivity aside, the GFC has taught that those property developers with robust business practices will survive most circumstances while those not as diligent are at the will of the market or their own poor decisions.
Here are just a few hints and tips for those considering property development or for those successful developers who are vigilant and open to processes that will help their stability further.
- Conduct robust feasibility assessments on all their developments as well as their ongoing overall business.
- Manage their risk with risk assessments that are working documents and processes, constantly changing to consider all external factors.
- Maintain optimal LVR’s that can sustain market shifts, and hence keep the banks at bay.
- Understand market requirements and shifts, and are nimble enough to change their product offering to meet market expectations.
- Model their returns to secure the finance they require.
- Establish conservative estimates on returns.
- Carry out general ongoing due diligence on subdivision and building costs to ensure they have no surprise cost blow outs.
- Have a well thought out exit strategy.
- Stage projects and funding requirements to ensure they are not operating outside of their financial or physical capacity.
These are just a selection of the key fundamentals with many requiring tailoring to specific needs, but when applied will go a long way to ensuring a robust and limited risk property development business.
Our directors have extensive experience in the property development sector and can help with the development of robust strategies, assist with ongoing advice and reporting and also introduce sources of capital.
Call today for more information and to discuss your personal situation.
