Maximising Your Sydney Property Value: Strategic Development Partnerships
Releasing more value from your land in Sydney's real estate market involves more than just recognising its underlying value. It's about strategically accessing the development profit to significantly boost your returns while minimising your exposure to additional risks. To navigate the complexities and optimise returns, a strategic partnership with an experienced Sydney property development advisor, with your position protected by expert advice and support and using a risk controlled structure, can help you achieve success.
Why consider development?
This graph shows the main financial components of a typical Sydney property development project. Notably the development profit can be nearly equal to the land value itself. This means, depending on your risk tolerance, there’s the potential to double your returns compared to simply selling the land. This example is for a residential apartment development, however the relationships between the components are similar across different types of development.
Maximising Benefits, Minimising Risks
A landowner wanting to receive the full development profit will have to accept the full range of development risks. In that case your role as landowner would be like a developer and profitable delivery of the project would be your responsibility. Many landowners, especially those with no previous development experience, are uncomfortable with that position.
Development structures have come a long way in recent years and there are now structures available that enable a landowner to share in the development margin but to have an experienced developer managing the project for the landowner. These arrangements can align the parties’ interests and deliver benefits to both the landowner and the developer, while boosting the return of the landowner.
Partnership Benefits for Landowners
Reduced Risk: A development partnership offers greater commercial and legal protection, significantly reducing your exposure to development risks.
Guaranteed Returns: Your increased return is established upfront and guaranteed by the developer, regardless of project performance.
Expert Guidance: Partnering with a reputable development company ensures you benefit from their expertise and experience throughout the process.
A development partnership is a structure designed to offer greater commercial and legal protection to the landowner, significantly reducing their exposure to development risks. In this approach, the improved return to the landowner is established at the beginning and guaranteed by the developer, independent of the project's performance. This structure presents advantages for the developer, so it is still an appealing option for their participation.
Recent advancements in mitigating landowner risks and enhancing landowner profit have opened up opportunities for Sydney landowners to optimise the value and profit from their land through sensible participation in property development. Although accessing the entirety of the development profit carries inherent risks, forming a partnership with a carefully chosen, expert development firm can access a significant share of the development profit and significantly mitigate these risks.
Conclusion
By employing a risk-controlled structure, safeguarding your interests with professional advice, and partnering with an experienced developer, you can overcome potential challenges and unlock the full value hidden within your Sydney property.