Due Diligence the Key to Securing Sites for Successful Apartment Projects

Real Estate agents and financial planners often encourage purchasers to undertake ‘due diligence’ when purchasing a home or investment, but have you ever wondered what due diligence large-scale developers undertake when searching for potential new development sites?

With so many factors at play such as location, access to amenity and financial viability – then looking at how these factors affect the commercial success of each project – there are many due diligence tips that developers employ which can assist individual investors when assessing the potential of their property portfolio.
For us here at ICD Property, undertaking a rigorous due diligence process is vital to ensure we only purchase prime development sites that lead to commercially successful apartment projects which we know will perform well once launched to the public.

We have a strict list of attributes that we look for and if the site in question doesn’t tick all the boxes, we move on.

To give you an example our list includes things like:

  • proximity to trams, trains and buses
  • proximity to a grocery store and supermarket
  • proximity to restaurants and cafés
  • proximity to existing medical facilities and commercial precincts
  • proximity to at least one university
  • the ability to access major roads or freeways for the commercial commute.

As a case in point, our new project in Hawthorn sits within 10 metres of tram and bus facilities, 15 metres from a major supermarket, 10 metres from a local shopping strip, one kilometre from a university and 4.5 kilometres from the CBD.

Basically our sites must place residents within easy walking distance of each of these elements and if they don’t we simply don’t see the commercial viability in purchasing the site as there is no sense in delivering residents to areas where there isn’t sufficient amenity to support the growth of a suburb.

Adhering to our strict due diligence protocols ensures we can deliver residential developments that appeal to our demographic and deliver strong investment and lifestyle returns for purchasers.

While of course we are talking in commercial terms, these factors provide great insight into the psyche of the owner occupiers who purchase within our projects in terms of what they deem to be an acceptable level of ‘liveability’.

Now to apply this thinking to mum-and-dad investors…

For many first-time investors, choosing the right property in the right location and the right mix of amenity can be a daunting experience and there’s so much research on the market it can almost feel overwhelming.

It may be reassuring to these home-hunters knowing that developers go through a similar process when securing development sites for apartment projects and that these developers hand-pick their sites with the strictest protocols in mind.

Knowing that a particular apartment project has already been through the rigours of a developer’s due diligence can help put investors’ minds at ease knowing the apartment they purchase has been vetted by the developer.

It’s food for thought that could be developed into a sales strategy when selling off-the-plan projects to first-time investors as there is much to be learnt about the due diligence protocols of large-scale professional developers.

Michael Mai is the Managing Director of ICD Property. ICD Property is currently marketing YOU AND I in Collingwood and in 2014 it will launch two other new projects to the marketplace. For more information visit www.icdproperty.com.au.

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