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 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 as a general rule our checklist includes things like:

  • Site location within walking or short driving distance of at least one of the following public transport services: trams, trains and buses

  • Site location within walking or short driving distance of a grocery store and supermarket

  • Site location within short driving distance of restaurants and cafés

  • Site location within a short driving distance of existing medical facilities and commercial precincts

  • Site location within a short driving distance of at least one university

  • The ability to easily 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 provide accessibility to each of these elements and if they don’t we simply don’t see the commercial viability of 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.

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 and everyday buyers…

For many first-time investors or owner-occupiers, 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 for these home-hunters to know 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 thoroughly vetted and assessed by the developer.

It’s food for thought as there is much to be learnt about the due diligence protocols of large-scale professional developers.

Michael Mai is managing director of ICD PropertyICD Property is currently marketing YOU AND I in Collingwood and in 2014 it will launch two other new projects.

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