Many people think of stocks, bonds, and other traditional options for investing. However, a new type of investment is growing in popularity – urban developments.
Urban development is a project that revitalises or creates an urban area, such as a downtown or abandoned factory district. This article will discuss what urban developments are and how you can find the right one to invest in. If you are thinking about investing in urban development, there are a few things you need to know.
What are Urban Developments?
Urban developments are projects that convert barren areas into thriving cities. These areas can be downtowns, industrial districts, commercial centres, and other neighbourhoods. To qualify as an urban development project in Australia, specific criteria must be met.
1) The Area Must Be Declared
For an area to be developed, it must first be declared by the state or local government. It means that the area must have been designated for future development and not used for farmland or other purposes.
2) The Area Must Have a Certain Level of Urbanisation
The area must be at least 50 percent urbanised to qualify as urban development. It means that there must be a mix of residential, commercial, and industrial land uses. The area can be wholly undeveloped, or it may have existing structures.
3) The Area Must Have a Minimum Size
The area must be at least five hectares in size. It is equivalent to about 12 acres.
How to Find the Right Urban Development?
There are 10.5 million dwellings in Australia with a total value of $7.1 trillion. It means that the demand for housing is high, especially as more people migrate to major cities.
There are many urban development projects in Australia, so how do you know which one is right? Here are some factors to consider when choosing an urban development project:
1) Financial Risk and Return on Investment
Financial risk involves the possibility of losing money, while return on investment (ROI) is the amount you get back. You want to find a project with little financial risk and a high ROI.
It can be challenging to do, as many factors such as the economy and interest rates affect financial risk and ROI. However, if you do your research and consider these factors, you can find a low-risk financial project and have a high ROI.
The location of the project is essential. You want to find an area close to transportation, schools, hospitals, and other amenities. The area should also have a good mix of residential, commercial, and industrial land uses.
It is also essential to consider the zoning of the area. The zoning will determine what type of development can occur in the area. For example, if the area is zoned industrial, you cannot develop residential properties.
Zoning is based on many factors:
a) population density of the area;
b) whether the area has commercial or industrial uses already in place;
c) if there is a need for the type of zoning;
d) the size and shape of the area.
It is important to remember that zoning can change. The local or state government can change the zoning for an area. So, it is crucial to check the zoning before investing in a project.
3) Development Approvals
Before development can commence, it must obtain development approvals. The approval process is rigorous and can take time. It is vital to ensure that the developer has obtained all of its approvals, affecting the project’s timeline.
The development approval process includes:
a) Environmental Impact Assessment
It is required by law for all development projects that may have an environmental impact. The assessment evaluates the potential impacts of the project and how they can be mitigated.
b) Town Planning Scheme
Every local government has a town planning scheme that dictates the type of development allowed in an area. The development must comply with the town planning scheme.
c) Development Plan
The developer must submit a detailed plan that includes implementing the project. The plan entails how the project will be completed, including its timeline.
d) Building Permit
If there is a building on the site, it must obtain a building permit before construction can begin. The permit ensures that the building will be constructed according to code. It will help to avoid delays during construction.
The developer is critical to the success of a project. They will be responsible for managing it and ensuring that the project complies with all approvals.
The developer should have a good track record and finance the project. They should also have experience in developing similar projects.
Urban development projects can result in high ROI, but you must find the right one. Evaluating several factors before investing your money in these properties is crucial.