Subdividing land in order to erect multiple townhouses or other types of living units has provided a way for landowners, investors and developers to create a substantial amount of wealth. However, wealth is only created if the correct properties are purchased and the right decisions are made with regards to the building process. If everything goes according to plan though, a healthy profit will be made after all building and real estate costs have been paid.
Inner Suburbs in Melbourne
When considering subdividing land for investment purposes, there are some important points to consider. For example, in Melbourne, highly lucrative opportunities can sometimes become available in suburbs like Essendon and Williamstown, along with a few of the more well-known inner city locations.
Where is Subdivision Permitted?
Before going ahead with subdividing a property, it’s essential to check whether there are any other subdivided properties in the area. Although this practice is permitted in many older populated areas, it is crucial that you check the local council zonings before making any plans.
Areas classified under Zone 1 will allow for higher density units to be erected, while those classified under Zones 2 and 3 only make provision for lower density units, along with more council restrictions. There are still several highly affordable properties on the outskirts of Melbourne that can be considered for the purpose of subdivision.
The Right Location is Essential
When choosing a property to be subdivided, location is the most important factor of all to consider. The best and most effective location for any form of multi unit development would be one that is close to:
- Public transport routes
- Shopping districts or malls
- Sports facilities
- Other points of interest and amenities
It is important to ensure that the investment is going to be financially feasible before starting to compile plans or any form of development. You will also need to consider what the cost of building the new units is going to amount to upon completion.
Building Site Analysis
Before going ahead with subdivision plans, it is also essential to perform a thorough site analysis. This will enable you to determine how many units you will be able to erect on the property. Compiling a site analysis will involve physically measuring the size of the property and having an architect assist with a rough schematic drawing to see how many units are going to be able to fit on the proposed site. A good rule of thumb is to allow between 250 and 300 square metres per unit. A three or four bedroomed unit will usually require two parking bays and require a building height of 7.5 metres.
Once this has been done, you will need to look at services that are already available or have not been provided on site yet, including:
- Sewage and storm water systems
- Utility hook-ups such as electricity, gas and water
Should these not be in place yet, it will result in a drastic increase in building costs.
Unit Building Expenses
Costs associated with erecting properties on a subdivided portion of land will vary according to numerous factors. However, the average cost of building a townhouse in the Melbourne area can start from around $10,000 per square. It is important to remember that final pricing will depend on characteristics of the land, design efficiencies and also fixtures and finishes.
Regardless of whether townhouses or another type of multi unit development project is going to be built, space will need to be allocated for parking bays, outdoor spaces and private yard spaces – all while taking heritage overlays into consideration. As more people seek low maintenance properties, erecting units or townhouses has quickly become a popular choice.