BROADACRE INVESTMENT OPPORTUNITIES

19th July 2006

Potentially-lucrative broadacre investment opportunities lie in regional areas south of Perth, according to Perth-based buyer's agent Liz Sterzel.

Sterzel, of Property Wizards Buyer's Agency, says investors searching for larger blocks with future subdivision potential should look to areas east of Mandurah and in inland areas between this growing hub and the regional port city of Bunbury.

But she cautions investing in these areas can be trickier than most, so buyers need to be on their toes.

"There are some great opportunities to be found in inland areas like Waroona and Coolup, but investors really need to know what they are looking for," she says.

"In these locations, block size, nearby demand, and council plans and restrictions are crucial factors to consider before buying.

"Investors also need to be careful to find land with the right price tag as most prices have been pushed up by recent hype about these types of opportunities, especially those closer to the coastline."

THE AREA

Mandurah is 74 kilometres south of Perth, while Bunbury lies 175 kilometres south of the city.

Sterzel says areas like Waroona and Coolup offer many positives for investors, with a reasonable amount of land up for grabs.

"There are still many blocks available ranging anywhere from 10 to 1000 acres, and they can often be snapped up at a lower price per acre than nearby land that is closer to the coast," she says.

"While these areas are further inland, they offer similar lifestyle benefits as those nearer the coastline and the main highway.

"They appeal to people who prefer not having neighbours on their doorsteps, and want to stay away from the hustle and bustle, but they remain attractive because they're often just a short drive to the ocean and town centre.

Ms Sterzel says there are some negatives involved in broadacre sites lying further inland.

"The fact there are fewer services in these areas can deter buyers, and with less demand for inland lots compared with those right on the coast, it can impact selling prices and growth."

Sterzel says the areas have future subdivision potential due to increasing demand for housing all the way from Perth to Bunbury.

"As pressure mounts and the coast fills up, councils will begin to feel the heat and are likely to opt for subdivision," she says.

"But you can't take anything for granted, so do your homework and check the planning schemes, being sure to ask local councils what has subdivision potential and what hasn't."

SUPPLY

Sterzel says there is a reasonable supply of land with future subdivision potential in these areas.

"There is a fair amount of quality land available and every bit of land has a price, but it is certainly not in abundance and it can be hard to find a good deal," she says.

"Land along the coast may be overpriced because the potential of these types of investments has received so much publicity, and it is common knowledge that the coming railway line to Mandurah and road to Bunbury are expected to push growth higher."

FUTURE PLANS & CAPITAL GROWTH

Sterzel says the outlook for capital growth in these areas is strong.

"Once the new highway to Bunbury is complete, travel time to Perth will be cut by about 20 minutes and the new Perth to Mandurah railway line will also slash commuting times," she says.

"This will push prices higher as more people see the option to live in the south while working in the city.

"Growth is also being fuelled by the ageing population as increased numbers of retirees seek alternative lifestyles and move out of the city into these areas."

WHAT TO BUY

Sterzel says in these areas anything from 100 to 1000 acres can prove profitable for investors.

"What people should buy is largely influenced by the depths of their pockets, as many different sized blocks can be lucrative when subdivided," she says.

"Each piece of land needs to be assessed individually as to its potential - that should include talking to agents and looking at similar land sales.

"Buyers need to be thorough in their assessments. Environmental issues can be easily overlooked by investors but they are critical to research as they can have a big impact on development potential.

"Issues that can put a stop to development plans include restrictions on clearing and risks to endangered species."

Sterzel says investors should always go to the local council and check out planning schemes as well as the subdivision plans.

WHAT TO PAY

Sterzel says the price of blocks in the area depends on their size, location and potential.

"Buying in bulk is often better value for money as the bigger the block, the less cost per acre," she says.

Prices in the area range from $10,000 per acre to $20,000 or $30,000 per acre and above.

"An example of a smaller broad acre lot is 25 acres in Deeble Road in Coolup. Located 14 kilometres from Mandurah and one kilometre from the proposed Bunbury bypass, the land is on market for $1.15 million and includes a house for renting out," says Sterzel.

SUBDIVISION POTENTIAL INVESTMENTS: PROS

Investments that offer an opportunity for future subdivision are potentially very profitable, says Sterzel.

"Done well, these investments are virtually indestructible," she says.

"Buying land at the right price in a growing area and holding onto it until subdivision becomes an option allows the property to grow in value, so by the time development starts, it's often going to be worth a whole lot more.

"There are also the obvious benefits for those buyers looking for a quieter lifestyle."

SUBDIVISION POTENTIAL INVESTMENTS: CONS

Sterzel cautions there are common pitfalls of buying properties with future subdivision potential.

"It's possible that subdivision may actually never eventuate - or that it takes a very long time before you're allowed to proceed," she says.

"It's important to do your research before you buy to avoid the mistake of waiting for subdivision rights and never receiving them, or stagnating when the land is left vacant, waiting for the right to divide."

Sterzel warns subdivision can also mean an increase in rates, which can lead to higher holding costs, catching some investors unprepared.

"Another problem may arise for owner-occupiers who find their rural lifestyle is compromised when zoning rights change and they get neighbours they didn't want," she says.

"And rising fuel prices can impact on the appeal of properties situated away from town centres and services as travel becomes more expensive."

AVOIDING PROBLEMS

Sterzel says checking local council plans can help avoid a costly wait for zoning changes allowing subdivision.

"For buyers wanting the lifestyle benefits of these properties, they may be happy to wait 20 years for subdivision rights to come through, but as an investor you want to be informed up front," she says.

"For example, you need to know if the council isn't planning a review for another 10 years and easements are also a big issue with rural land so be sure to look into those to avoid running into problems."

Sterzel says looking to nearby land can be a good indicator.

"If nearby land is already subdivided, the chances are better that subdivision will occur sooner rather than later," she says.

For more information, please contact
Mr Trevor Dunkley
Director
Property Wizards
trevor@propertywizards.com.au
Tel: (08) 9381 7450