Home' API Magazine : November 2014 Contents 88 n APIMAGAZINE.COM.AU n NOVEMBER 2014
homes in the newly zoned NRZ blue-chip
suburbs, and “will want to be looking for
homes close to employment infrastructure
and transport links to attract those renters”.
Plan Melbourne will make it much
harder for small developers, predicts Tony
Kelly, managing director of Herron Todd
The valuation expert identifies northern
suburbs including St Albans and Glenroy
and western suburb Sunshine as being
“(The most impacted will be) areas where
people have been buying houses on substantial
housing blocks and putting two or three
dwellings on site because NRZ will be more
sensitive to what’s already existing in place.
They don’t want you coming in and putting up
some cheap duplexes, basically,” Kelly says.
A positive, he says, is commercial zoning
could be more relaxed under the new
planning scheme with further scope for
offices on industrial warehouse-zoned land.
What is certain is NRZ will make it difficult
to knockdown older dwellings to erect two or
three townhouses, he says.
“I know there’s been a bit of a rush on small
developments pushing planning approvals
through to build multi-unit development,”
Kelly says. “With any zoning changes there
are going to be winners and losers.”
WBP Property Group CEO Greville Pabst
believes existing property owners won’t see
any major impacts on values or rental returns
in the short-term. Until such time as the new
zonings bed down Pabst suggests “it’s simply
important to be aware that this is happening
and that some zonings are changing and that
over time this will have an impact on the
“Where you fit within that (suburban)
framework will decide potentially what
can be built beside you or behind you,
and impact what you can do to your own
property,” he says.
“For example, you may now require a
planning permit to simply put an extension
on your own property if it falls into a NRZ.
In the past you only needed a building
permit, which means now your plans
can potentially be impacted by your
neighbours’ objections so it’s not as simple
as it used to be.”
Pabst agrees developers “are essentially
driven out of these suburbs now”.
“It’s going to be very difficult to get a permit
and you’ll only be able to build up to two
dwellings per site. Developers are no longer
able to build multi-density dwellings in this
zone (NRZ) and that constrains supply, and
because people still want to live in these
neighbourhood suburbs. Over time that can
only drive up prices.”
Asked how the new zoning scheme will
affect investments in RGZ and GRZ, Pabst
predicts over the next 20 years “the whole
character of some of these areas is going
In Melbourne’s southeast bay-side suburban
area he identities Highett’s Wickham Road
and Hampton’s Hampton Street – both about
18 kilometres from the CBD – as prime for
medium density development of apartments
over existing village strips of shops and
restaurants, and near train stations.
“You’ll see smaller, darker and denser living
in these areas because developers are being
pushed out of the inner city areas,” he says.
“You may decide to stay but just be aware
that a four-storey residential development
may go up across the road, and another one
next door, if your property falls in the new
RGZ, which could almost certainly drive
price growth down. It’s so important people
do their research and make good selections
in property and location.”
Developers contacted by API report a
Rocking property returns
Buy, develop and
Gerard Adamsons was still a teenager when
he bought his first property.
He paid $234,000 for the two-bedroom
1960s brown brick apartment in the inner
Melbourne suburb of St Kilda.
Now 30, he’s just made $1.4 million from
his latest real estate investment.
“I bought my first property as soon as I left
school, when I was 19, with some help from
my parents and have been investing in real
estate ever since. I got the bug,” Gerard says.
That bug has put him on a steady
trajectory of buying, adding value via
renovation and development, and selling his
properties for the past decade.
He ended up selling that first property,
which he’d renovated while living in it,
Next he “progressed a bit further out” and
reinvested in the southern bay-side suburb
of Frankston, about 40 kilometres from
the CBD, buying a waterfront apartment
for $170,000, renovating and selling 18
months later for $220,000.
Concurrently he bought an original
condition house on a block just big enough
to subdivide, which he sold with plans
and permits “in the low $200,000s”. He
came away with about $15,000 from that
“Marginal profits again, but the main thing
about that one was doing the research and
finding out how to sub-divide and what to
look for,” he says. “I knew there was a natural
progression and for me the progression led
to getting into apartments (development)...
and, rightly or wrongly, rather than two
apartments to start with I went for eight!”
In 2011, Gerard bought a 948-square-
metre block in the upmarket bay-side suburb
of Black Rock. It had a four-bedroom brick
house on it. He negotiated a 12-month
settlement directly with the vendor and paid
“It was a bit over (the market value) but
given I didn’t have any holding interest, I was
prepared to do that to secure the deal.”
Gerard says it took
longer than initially
planned to get the
but fortunately the
was happy to extend
settlement by six
months and in June
2013 construction of
Completed in August
this year, Gerard has
decided to bank two of
the eight in his personal portfolio.
Within four weeks of completion he’d sold
all his newly-built nest eggs to owner-
occupiers downsizing from nearby family-
size houses. They have each paid from
$700,000 to $799,000.
Gerard says the gross value of the project
was about $6 million and gross costs were
about $4.6 million.
Profitable by a seven-figure sum, Gerard
agrees in hindsight the timing of his maiden
development was fortuitous.
“With approval for an eight-unit
development my figures stood up.
Today, that site is as good as a two-unit
development because of the new zoning
scheme so it could’ve been a real problem if
I’d waited another 18 months to develop.
“I can understand how devastating it
could be if you bought based on future
development plans and now find yourself
unable to do it.”
Gerard is now looking for his next small
development prospect, keen to buy in the
Glen Eira municipality; perhaps Bentleigh,
Carnegie or neighbouring suburbs. He says,
“It’s good that there’s clarity” due to Plan
Melbourne’s simpler residential zonings.
“We needed it. But there are currently
quite inflated views of values held by some
landowners, fed by agents, actually cooling
some investor interest.”
THE STATES n Victoria
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