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Property development in the Suburbs

Planning for a Stretched time horizon...regardless of size

There are two distinct ways of property development - extensive and intensive. But it is the second one we are more interested in spreading and sharing ideas about.

The first option is aimed at developing and or controlling and selling a large quantity of properties.

But since we are not experts there, we cannot really vouch for it. However, we are passionate believers in the kind of successful development that is energy and resource conscious and is aimed at ownership that is for a longer term ... and not just causing in a quick sale.

The conventional property development mantra was and still is: land value goes up, building value goes down. And you may rightly ask:

- But is that all to it ... ?

At a time when more and more clients desire to own good income generating assets long term; and when more and more clients think of building generational houses on lands that have sky-rocketing values, it might jus be a valid question.

On the whole, buildings still depreciate. But the value of lasting content may actually have slowly started to go up. Our prediction? We could be wrong, but a growing part of the hard content of a building will appreciate - yes, appreciate, while the soft content will depreciate faster.

Hard content is everyting that lasts, including brick, concrete, treated timber, durable insulation, steel frame and the list goes on.

Soft content on the other hand increasingly includes the various home automation gears that depreciate with lightning speed. From wired to wire-less, from LCD screen to OLED and beyond, the speed is enourmous.

Q. Land value up, building value down - is that all to it ... ?
A. In short: the answer is yes ... and no. There are a number of factors already causing a market shift.

While most buildings still depreciate the value of building content is going up as everything that goes into that building gets pricier way beyond inflation. Petrol price increase will not likely to stop and we will get to 2-3 dollars a litre.

Already, energy and resources that go into buiding materials have increased their price substantially. Construction labor will also go up as the cost of transport will inevitably increase.

The environment and the diminishing of resources such as cheap oil and coal is beginning to have a drastic say in the conventional property development mantra. But I am getting ahead of myself.

Most gurus would tell you, all that matters is land increasing in value and building losing value. Nowadays, we don't take what they say without some grains of salt. In fact I am now inclined thinking of accounting for solid asset value increase on either a 12-year or extensible time horizon.

Design / development focus

Develop to sell ... ?

Design / development goal sets

for a Home
for a Mall

Why bother about tomorrow?
Good news: some extra effort early is all what needed - not more money.

Land Development Tips >>

True, - in the residential suburban context at least - the tenet property development gurus lived by have been more or less right. But the game is slowly changing.

It still holds also true that you carefully have to study land content. And when you plan on a larger or growing scale - both residential and commercial - there is certainly much more at stake than just land appreciation and building depreciation.

Smaller scale focus

So don't just concentrate on location and the right timing. This is the agent's game, not yours. Concentrate on your game: your set goal, and your ceiling price first.

Larger scale focus

If you pooled enough bank credit and / or have others who put money toward a goal that is shared with you - then you are ready for bigger and better things. Don't just concentrate on land and building content.

Concentrate just as much on the context content. I will elaborate on context content on the larger scale. Meanwhile here are our townhouse buildings / units projects. See how this rule can work for them.

That is, how over a long time your newly created facility will work with the changes in and around it. In other words, how it will INTEGRATE into the surrounding context - small or large.

In fact, this holds true for both
small AND large scale developments:

The more people you want to attract to spend money regularly in your planned facility, the larger the context should be in which to consider your facility.

What if you develop to sell ... ?

Of course if you plan to develop to sell, your game is the here and now, not the tomorrow. Still you should be mindful of the context content just the same. You just don't have to plan for long term integration.

The two basic types will be looking at are the two base "topological units" of suburbia: the Home and the Mall. (Or a small and a large system of enclosed places sitting more or less as an island on a plot of land.

For a Home

For these (apartment, duplex, beach house, town-house, a housing development) your new sets of goals would include:

Your development goals:

Obtain the property, after getting
- best possible context content
- best possible ceiling price
Develop the property with
- best possible environmental content

Under such scale and goal-set fall the following tips:

Townhouse Building Development
Beach House Design tips
Home Extension Design tips (plan for enough room when looking for land)
Land Development tips

For a Mall - or a somewhat larger shopping facility

Anything that requires SERVING a large number of people in one air conditioned shell with plenty of associated parking) you should add another group of goals:

best possible (sub) regional (part of the suburb plus major traffic routes and barriers) context content
understand that this latter is in constant change and most things you plan here today will be insufficient tomorrow, no matter what.

Why bother about tomorrow then?

Good question. My answer is that it makes sense if you don't plan to sell but instead want to extend, add or hold.

Because in that case all the above factors will start pulling larger weigh in the value increase than your initial outlay was, which is neither money, nor "location by itself" nor market timing. What it is then?

Nothing major, really. Just a little more time in planning and laying out goals and discarding those early that won't work.

You will see that a fair bit of imagination and growing expertise in those areas will pay off handsomely indeed :-)

And the good news for service providers in this field ... ?

Property design / development professional services is an area where human expertise - as opposed to easily retrievable and increasingly cheaper machine intelligence - will be needed for some time to come.