Upfront or later?


COVID19 and the Australian financial assistance packages – in particular JobKeeper and HomeBuilder – have sparked quite a bit of commentary about better planned local communities and what ingredients make better new suburban subdivisions.

I like to think we are a bit ahead of the curve and over recent years my firm has undertaken various investigations into the benefits of advanced community infrastructure rollouts in new housing estates.

Below is a precis of our general findings.


Most experienced land developers will sell to as many markets as possible – i.e. spec-builders, owner residents and investors – and will also try and keep their marketing programmes as local as possible.

The better land developers also limit the amount of investment selling in their estates.

Often the investment limit is between 20% and 30%.

Local sales are much cheaper than sales made further away.

Sales to owner residents are also much cheaper than investment selling.

The marketing and sales costs for a local owner resident sale is often pegged at 3% to 5% of the land price, whilst interstate/overseas marketing and sale costs can exceed 10%.

These costs are passed onto the end buyer, reducing housing affordability.

Owner residents are also more cautious buyers, wanting to see at least some of the estate, before they purchase, whilst in many cases investors – and especially those living some distance from the estate itself – elect to be ‘early adaptors’, buying in the initial land releases in anticipation of land prices rising as the estate progresses.

Early community infrastructure is often recreational spaces, although some developers  provide amenities such as cafes for local residents, at an early stage of the estate’s development.

However, recreational spaces generally need to be more than just a park; equipment should be provided to encourage sporting pursuits and local community engagement, via children play equipment, BBQs and shaded seating arrangements, street art and signage pointing out local things of interest and as focal point for new residents in the estate.

Importantly, the provision of a ‘standard’ park – largely being just grass – isn’t enough to qualify as community infrastructure.  The community infrastructure needs to allow for a range of activities including cultural, educational, recreational and sporting pursuits.

Such estates have a high local amenity.

Some key findings

More local sales

In brief, such early facilities help a developer demonstrate the quality of the estate which then has higher appeal to owner residents and local buyers, including investors.

A recent review of nine major land estates across south east Queensland found that those estates which don’tprovide early community infrastructure rely heavily on interstate marketing and sold close to half (45% on average) their stock to investors.

We also found that investor interest in estates with high local amenity is still there, but at a much more sustainable level, averaging 24% across the relevant land estates investigated.

Fewer rental moves and resale turnover

There is a strong trend towards higher rental and resale turnover in land estates without upfront community infrastructure.

On average some 38% of rental households across the Brisbane region change residence each year.

Also, a detached house resells, again on average, every nine years.  The sales turnover is less for owner-residential abodes, averaging close to 15 years, whilst for typical housing investment housing stock, the average time between resales is seven years.

When it comes to renters the rate of annual tenant turnover exceeds 70% in those new land estates with none or very limited community infrastructure.

Our work also found that a third of the new homes in such estates with limited local amenity where resold or on the market for resale within three years of the original developer or builder sale.

End note

Whilst the provision of such facilities costs the developer, this cost is often less than paying higher marketing and sales commissions to secure non-local sales and investment transactions.

However, despite such evidence, some developers have an ‘investment’ sales model and rely heavily on investment selling.

The provision of early facilities or any facilities at all, in their minds, is a waste of money and hence they are reluctant to provide such in their estates.

Copy link
Powered by Social Snap