Australian Residential Property Development for Investors. Forlee Ron

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      Ron Forlee

      Australian Residential Property Development for Investors

      AUSTRALIAN RESIDENTIAL PROPERTY DEVELOPMENT FOR INVESTORS

      RON FORLEE

      First published in 2015 by Wrightbooks, an imprint of John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064

      Office also in Melbourne

      Typeset in 11.3/14 pt ITC Berkeley Oldstyle Std

      © Sandale Pty Ltd 2015

      The moral rights of the author have been asserted

      National Library of Australia Cataloguing-in-Publication data:

      All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

      Cover design by Wiley

      Cover Image: © psynovec/Shutterstock.com

      Disclaimer

      The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

To my father, Gordon Forlee, who passed away this year, 2014 – your strong cultural beliefs and honesty are embedded in my memory forever

      About the author

      Ron Forlee is an architect, developer and author. He is also the Managing Director of AYR International Pty Ltd, an international development management company and Archiplan Pty Ltd, an Australian-based architectural practice.

      Over the past 37 years Ron has been involved in a range of property developments, from housing estates, to hotels, to shopping centres, which he has managed and financed. As an architect he has master-planned large-scale communities and infrastructure projects and designed commercial buildings such as shopping centres, office blocks and tourism developments in Australia, South Africa and China.

      By undertaking his own personal property developments, Ron has hands-on experience in property and infrastructure development. Being an expert in the field of property, infrastructure, master planning and architecture, Ron has written and published two books on property development and one other on building construction, and has delivered a number of papers at seminars on property development. This book is his latest and a culmination of the experience and knowledge he has gained over the last three decades of his career.

      Acknowledgements

      This book would not have been possible without the support and encouragement of certain people who have contributed to my life in so many ways. I express my special gratitude to:

      • my mother, Mabel, for her unwavering support, for encouraging me to live my dreams, and for teaching me to become an ethical and honest person who contributes to society

      • my wife, Cindy, who has loved and supported me through good and bad times, and has always given me the space and freedom to further my career and to write my books

      • my children, Taryn, Jared and Charisse, who have loved and supported me in every possible way

      • my family and close friends who have always believed in me as I have pursued my career endeavours and personal aspirations.

      Preface

      It has been more than eleven years since the publication of my first book, The Intelligent Guide to Property Development in Australia, which was followed two years later by Australian Residential Property Development. Since these publications I have gained much additional knowledge and experience, which I have now documented in this new book. Over this period I travelled and worked on three continents, Australia, Asia and Africa, on a wide variety of projects, from housing estates to large-scale infrastructure developments for private and listed companies and government Institutions.

      During my travels, many clients and business associates asked if I would consider writing a book on property specifically for their country. I

      would explain that, although similar underlying processes and principles of property development apply in most countries, there will often be local nuances that influence the viability of a development. It is therefore important to undertake thorough research before applying a development strategy for implementation. This book seeks to provide an understanding of these principles that when applied will lead to better decision making during the development process.

      Although most of my work in property development over the past decade has been in the commercial and infrastructure sector, numerous emails I have received over the years demonstrate that there is still a strong interest in the residential sector in Australia. It is for this reason that I decided to write another book on residential development that draws on the new information and new concepts I have encountered. While my previous book, Australian Residential Property Development, provides a good basic understanding of developing in the residential sector, this current book is significantly more advanced. Additional chapters include ‘Utilising modern technology', which sheds new light on how modern digital technology can facilitate the development process, and ‘Development economics' (a vital subject for any property developer), which demonstrates the important role played by economics in the development process.

      The book describes the principles and processes of residential property development in Australia. It analyses specific asset types, from residential land developments to apartment developments. Examining these asset types individually shows that while the development principles are similar, each type has its own peculiarities. It does not discuss additions and alterations or single home speculation, subjects that are well covered by other authors.

      Whether you decide to work in the industry on a part- or full-time basis, I hope the advanced information in this book will help you further your career in property development.

      Ron Forlee B.Arch

      [email protected]

      September 2014

      CHAPTER 1

      An overview of property development

      As the global population continues to increase, so does the demand for food and shelter. Our survival depends directly on how we use and manage our land and resources. As humans have evolved, so have our uses of land – for agriculture and shelter, but also for recreation, shopping, education, transport, business activities and entertainment. In our homes we live, eat and sleep; commercial buildings provide space for social and business interaction, and retail centres for selling of goods and services. As our communities expand, the demand for all these facilities increase, and this is where property developers are needed. The population of Australia, currently around 23 million, is projected to rise to 40 million by 2060; much more housing and facilities will have to be provided to accommodate this growth.

      In simple terms, property development can be described as providing solutions to the demands for real estate in our society by designing, financing and constructing facilities that satisfy this demand. It is a profession that requires meticulous and thorough research together with a firm understanding of the property industry, and current and future market conditions. Some consider property development a skill, but in reality it is the analytical process of aligning the current and projected market with the associated risks and financial