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Location the most important consideration in a new residential development

Location the most important consideration in a new residential development
Location the most important consideration in a new residential development

In the project marketing environment location is a complex question that deserves considerable attention. Location will impact every aspect of marketing, from the practical issues of how will people find the project to selling the as-yet unrealised lifestyle offer.

I think that location is both an easily understood and yet at the same time a very complex issue. Long before a site is sold, developed and the first buyers move in there are many issues to address.

Over the next two weeks and with help from one of my associates, Shane Dargue from our residential development sites team, I will to take a detailed look at this topic. In particular what is driving demand in key pockets of demand and how sites are best taken to market. However, by way of an introduction I would like to publish some general thinking to kick off this topic.

Location

The location of an individual property is universally the most important factor influencing its market appeal; after all they even names a TV show after this real estate bellwether. However, in today’s world location can be influenced by external factors that are not directly tied up in the location itself, like transport and technology.

The appeal of a location relative to services and employment has always been important, but when it comes to high-density development it even more so. Also when you are marketing to a new community of buyers they will have different priorities depending upon their personal needs and circumstances.

On a very large scale the arrival and planning of a major development will itself have an impact will change how desirable a location is. As major cities including Sydney, Melbourne and Brisbane move to accommodate bigger populations, this is now a fairly common factor. Once unfashionable or even undesirable industrial locations can be transformed by the development and we will look at some examples.

As we will see location within the context of any major city is a factor that will have an overriding impact for any project that will be fundamental to its success.

How location is leveraged will always impact the sales results of any project. Success will be measured in the demand for the end product and the amount of time the development will take to sell, however carefully considering demand and the role of planning laws are also key factors.

To explore this topic of location further it is first necessary to look at each market (product type) to establish the big-picture and there are many aspects that will be common but also there are important variations which characteristic those same markets.

Conventionally the closer to the centre of cities the more demand there is for accommodation. However, infrastructure such as transport links and affordability have to be taken into account.

The result is that major new projects in any big metropolitan area share some common aspects of location, but as Shane highlights they are also influenced by other unique factors.

 


 

The pool of potential buyers

The pool of potential buyers is perhaps one of the most important elements in the project marketing mix; the pool of buyers clearly has an impact on the value of a development site, as the depth of the market is an essential element that will impact every level of activity and planning.

While the individual make-up of potential buyers for a location might in some cases overlap, there are always important and subtle differences. Buyers looking at inner-city apartments or well-located in-fill projects will have different motivations, as will owner-occupiers and investors.

Greenfield developments will generally tend to have much more wide-ranging appeal and offer more product choice and could be expected to attract a higher number of first-time buyers.

While it is necessary to draw this distinction the rules are not hard and fast, and detailed target audience analysis will always be required as the pool of potential buyers does shift and this in turn impacts how attractive potential development sites are.

In the-post GFC age the impact of tighter economic circumstances has also caused a shift in where developers are active in the housing market, and as might be expected the banks are also having a key influence.

Peter Chittenden is managing director for residential of Colliers International.

Peter Chittenden

Peter Chittenden

Peter Chittenden is managing director for residential of Colliers International.

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