Urbis Think Tank
Apartment development reaching the suburbs
Content provided by Matthew Cleary
Successful suburban apartment development is driven through an understanding of the key success drivers. Appropriate scale, access to retail amenity, and transport are critical when developing in these locations. The secret for developers to develop profitable projects is to understand the relationship between the market’s capacity to absorb the end product, the density of development and the relation to land value.
While policy can in part support higher density development outside of the central areas of the city, the market remains the driving force behind land use and development density. This map shows the relationship between size, scale and location of developments in relation to the CBD and activity centres.
Financial success of any apartment development depends on meeting the balance between the scope of the project and the underlying demand factors that may be approximated by the underlying land values, reflecting highest and best use. Fixed planning controls fail to recognise the evolution of localised markets, which can mature to support these types of developments in a relatively short time frame.
Successful middle and outer suburban case studies in Melbourne suburbs as varied as Springvale, Mitcham, Caulfield, Croydon and Doncaster show that there is an economic case for suburban apartment developments. This trend also applies in Brisbane and Sydney where successful apartment developments have been occurring around transport nodes and activity centres for some time.
However, correctly pricing development land for acquisition is dependent on understanding the depth and capacity of the local market and when markets will reach maturity to support higher density development.
Click here to download an Urbis case study illustrating the relationship of density to land value.