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to help improve the desirability of the
area, he believes.
“ T his will make it more people-friendly
and give landowners the confidence
to progress their own development
plans and to encourage new business
“ T he government investment will
attract about $180 million to be spent on
infrastructure in the area.”
Scarborough’s public open spaces are
already a big part of the suburb’s appeal,
Collins notes, with plenty of government-
supported activities such as a summer
beach concert series, pop-up markets,
and events like the Australian Surf Life
He points out that the Real Estate
Institute of Western Australia’s data
last year highlighted Scarborough’s
unit market as one of the state’s top
performers in the December 2013 quarter
with 8.7 per cent growth.
Meanwhile an even bigger 16.3 per cent
growth was indicated for the year.
So if growth is already under way, or
has already happened, as a result of the
redevelopment, is it too late to capitalise?
Collins thinks not.
¿ HOW SHOULD AN INVESTOR
CAPITALISE ON ZONING CHANGES?
Targeting the older houses on large blocks
for redevelopment provides some of the
best opportunities, Collins says.
“ T hey’re scarce, but even better is
to buy houses within the proposed
redevelopment area. ”
He suggests that investor-developers
seek some property consultant advice
on their potential to undertake a
development on a specific block, because
the City of Stirling is proposing a planning
change to ban all multiple dwellings or
apartments in low-rise developments in
areas zoned less than R60.
Hegney says hunting for house sites to
knockdown and redevelop can be a good
idea, but a more affordable alternative for
those on a tighter budget is to find a unit
in a block that’s “worth more dead than
alive” . In a nutshell, buying a unit where
the underlying land value is more than
what you pay for the unit.
The preferred place to hunt down these
opportunities would be in the more
sought after southern end of the suburb,
and still within the redevelopment zone.
In this case it would then be a matter
of convincing the other unit holders to
sell the entire block to a developer for a
premium. And there’s your profit.
Hegney says that within the next five
to seven years, with little capital growth
expected, investors need to have a good
reason to buy.
“ Otherwise perhaps you should be
standing on the sidelines. But if you have
a reason and good strategy to buy, then
you have my attention.”
He says that one of the above mentioned
strategies would get his attention. So
would buying an older home unit to
refurb then put back on the market as an
apartment, meanwhile raising its price.
Hegney has been noticing a lot of young
couples buying into Scarborough and
doing just that.
The older-style home units are where he
sees the opportunity for those wanting to
spend a maximum of $500,000 .
“ T here are usually four to six of them
downstairs and the same upstairs.
We’re seeing investors and homeowners
changing the kitchen and undertaking
other cosmetic changes, then later selling
it for the price of an apartment not a home
unit,” he says.
“ And if you can influence the body
corporate to spend some money on
the complex itself – to lift the external
appearance and find room to create
separate courtyards – then you have the
For an opportunity such as this, Hegney
suggests it could be as affordable as using
a credit card for the upgrades, and to
look on the outskirts of the zone two or
“ I saw one of these the other day. It was
one or two streets back from the beach.
It was a two-bedder for around $450,000.
The one-bedders are priced around
$350,000 to $400,000 . They’re very sellable
dwellings, with eight to 12 units in a
block, often with a 20 per cent return after
a simple refurb. ”
He says to avoid buying these home
units in the more affordable and most
undesirable end in Scarborough north,
around Pearl Parade. Partly because many
years ago a caravan park with a stigma
existed there, but that’s now long gone.
Also because this area, specifically
around Stanley and Hastings streets, has
a number of home units, which tends to
water down the scarcity factor.
“ Because of this abundant supply the
blocks in this area will probably never be
redeveloped. The best chance of buying
a unit in a block to be redeveloped is to
look in the southern or more central part
Buying his first investment property in
Scarborough was a no-brainer for builder
He’d already lived in the suburb for nine
years – initially attracted to the area for the
surf – and watched how the home he’d built
there had grown significantly in equity.
In 2005 Adam bought his first block of
land for $340,000 with a house. Three years
ago, after knocking down the existing house
and building a new house, it’s now valued at
around $1 million.
He’s a licensed builder so admittedly Adam
can build at trade price, but the selection of
property and project can still be the make or
break in any market.
More recently Adam bought his first
investment property in Scarborough and
quickly followed it with an investment block
in South Australia.
His purchase in Scarborough was
a 1000-square-metre block with an
established house. He soon intends to
knockdown and build two three-level
houses on this block, which he estimates
will be valued at $1.5 million each once
Once they’re built he’ll sell his current
home and one of the new houses to help
Name: Adam Thistlethwaite
Lives: Scarborough, WA
Invests: Port Lincoln, SA;
Strategy: Buy/develop and hold or sell
pay off some debt, and move into the
“The way I see it is that the market is
flooded with properties priced around
the $800,000 to $900,000 mark...
generally they’re four-bedroom two-storey
houses... so to gain a competitive edge I’ll
build two three-storey houses with five
bedrooms, three bathrooms and a study,”
“There are less buyers in that higher end
market, but the demand still appears to
be good. It’s in the upper end location of
Scarborough and it has ocean views so I’m
confident I can achieve the price I’m after.”
Adam is accustomed to building premium
quality homes; it’s what he does every day.
“There are so many developers in
Scarborough right now subdividing to the
max. That’s particularly why I wanted to
build some decent-sized houses. In future
the demand for more space will be at an
even higher premium than what it is today.”
THE STATES // WA
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