07 Sep In the midst of chaos, there is opportunity.
There is a common adage in the property world that says: “Buy land, they are not making any more of it”.
Realestate.com.au this week published an article with the headline: “Landbankers set to make millions as supply tightens across SEQ”. You can read it here.
The article talks about demand in SE Qld outweighing supply for residential property. It mentions a few pretty sizable sales that have recently occurred where large parcels of land have been snapped up for land banking purposes. The article shows there is a shortage of quality land in SE Qld for new developments.
If you’ve been following along for a while now, you’ll know that land banking is one of our biggest segments. No, no, no, we don’t do those guru marketing lock you in a dingy conference room and convince you to sell your firstborn to get a guaranteed 300% return type scenarios. Dodgy AF. Not our thing at all.
What we do do, is assist property purchasers with commercial property funding for the purchase of land assets in areas that are expected to undergo growth as part of their investment mix or business holdings.
Right now, we are seeing more population growth than ever before, and all those people need somewhere to live. The realestate.com.au article outlines just how little land is available to developers, particularly in the SE QLD region.
It may sound crazy to be thinking of purchasing land (or property in general) at this time. With Victoria under lockdown, New South Wales identifying outbreak hot spots, and borders closed between states, it might seem completely unhinged to be thinking about property right now.
But it’s not. Uncertainty provides possibilities and opportunities.
And now is a pretty uncertain time.
So how do you buy land for land banking?
We’ve put together an article that outlines things to consider when looking for land to buy and hold. You can read it here.
If you want to understand the concept as a whole, this post will help you understand the ins and outs and should be a good starting off point to have a conversation with your professional advisors.
Where to begin?
After you’ve had a read of those articles, step one should always be to speak with your professional advisors. They will assess your level of risk and whether there is room for a land banking strategy within your portfolio mix.
Step two is to talk to people. Find out where the vacant land is in relation to where people want to live. Talk to friends, colleagues, real estate agents and councils. Find out what people want and need, find out what regions are slated for growth, find out where companies are looking to expand. Assess the areas for local amenity, public transport, jobs, schools and community to see if it’s where people would *want* to live and where people think they might make a home.
Look for the value in the land, where supply is low, but demand is high.
It’s important to remember that land banking is a long game. You are going to be in it for a while pending DA, or re-zoning, or just for that right moment when the market realises your suburb is the next big thing. But it’s a relatively hands-off asset. There are few costs for maintenance and upkeep and ongoing costs are often only rates and public liability insurance.
Land in areas where supply is an issue rarely loses value. And if those numbers in the article are correct, now could be a good time to find out what’s publicly for sale, and what’s off-market, in your chosen area. You never know who is sitting on what, and when they might be ready to sell up.
Once you’ve identified your block, talk to us about funding your settlement. Working with a traditional bank will chew up time you may not have to seal the deal. We work closely with developers and investors to get their land settled quickly while their bank is working through its processes for longer term funding.
Contact us now to get started.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.