week 2 - land for development

Question 1

explain identification of site

Answer 1

Factors to consider:
Risk profile of the developer (risk take or risk averse)
Knowledge about the location (relationship with local professionals)
Market forecast
Risk management by diversification (type, location)
Availability of financing vehicle (or equity provider, partnership)
Supply and demand in the specific market

What are the parameters?
Aims
Nature of development
Geographical area

Question 2

Depending on the type of the development, the parameters to consider would vary.

Answer 2

Residential
Office
Retail
Industrial
Special purpose

Question 3

land development for Residential property types vary depending on

Answer 3

Residential property types vary depending on
Climate
Crime rate
Local government authority
Availability of land
Construction material (procurement)

Location, Location, Location!
Type of expansion
Vertical expansion: High-rise buildings (urban density issues)
Horizontal expansion: Urban sprawl, satellite cities

Question 4

issues of congestion (office developments)

Answer 4

Issues of urban congestion
If CBDs are overpopulated, traffic congestion can cause social cost.
Toll road system (road pricing) is one of the effective ways. (London, Singapore)
Air pollution  Negative impact on sustainability and living/working environment, makes CBDs less desirable location for working

Question 5

office developments should consider

Answer 5

Proximity to other related professionals (knowledge spill-over effect)
Transportation
Labour supply
Quality of accommodation
Parking
Commuting cost
Local amenities

Question 6

factors to consider in retail development

Answer 6

travel time 
demographic information within the catchment area
Age
Income level
Spending patterns
Ethnicity, Religion

Question 7

explain factors of industrial development and types of industrial land use

Answer 7

ocation of industrial properties is strictly regulated by zoning regulation.
Non-compatible uses need to be avoided by local authorities.

Types of industrial land use
General industrial
Light industrial
Service industry 
Warehouse/distribution centres

Question 8

explain types of industrial land use

Answer 8

General industrial: larger land parcels with good ingress/egress for trucking

Light industrial: manufacturing goods with minimal or no environmental issues

Service industry: Waste management, gas, electricity, etc.

Warehouse/distribution centres: large industrial units occupied by retailers, manufacturers, and distribution centres with easy access to the highways
Loading dock. Large scale warehouses with long-term lease. Sometimes developed with built-to-suit request.

Built-to-suit: Tailor-made development. Developers build to tenants’ specification

Question 9

example of special purpose development

Answer 9

Hospital
School
Medical complex
Data centre
Theatre

Question 10

difference between browfieled and green field

Answer 10

Brown field vs. Green field: contaminated land, clean land
It is more likely that sites close to the CBD are contaminated.
In the past, manufacturing facilities were located near CBD area.
Clean-up program

Question 11

explain initiation

Answer 11

Any party in the major stakeholders can start the land acquisition process.

Initiation by the developer
Initiation by the real estate agent
Initiation by the landowner
Initiation by the local authority

Question 12

explain initiation by developer

Answer 12

Initiation by the developer is the most common case.

Small developers may contact sales agents or land owner.
Large developers may contact sales agents or land owner. But big developers maintain in-house acquisition team.
Large developers have specialised team for acquisition, procurement, design, disposition, etc.
Developers may hire planning consultants or realtors directly.
Planning consultants undertake strategic study on the targe area.
Off-market deals: one way to avoid competition in the open market
Buyer’s market vs. Seller’s market

Question 13

explain initiation by agent

Answer 13

Real estate agents may approach potential buyers (developers).

The land is already on the market for sale.
The land is about to be listed on the market.
Blind match-maker
Agent’s agents
Who bears the cost? Buyer’s fee or seller’s fee?
Agents should provide comprehensive information on the site.
Site plan, asking price, conditions of sale, etc

Question 14

explain initiation by landowner

Answer 14

Landowners who are willing to sell the developable site can initiate the development.

Landowners can make a contract with real estate agent.
Agents prefer to have exclusive right to market the site.
Land developers are specialised in ready-to-develop sales.

Types of sales:
Informal tenders and invitations to offer: Inviting interested parties within a fixed schedule. Preferred by developers.
Formal tenders: a binding contract for both parties. Invitation contains terms and conditions. Not preferred by developers (less flexibility)
Open listing: listing properties for sale on the open market. Normally via agents.
Competition: Mainly used by local authorities seeking to choose developers. Applicable when financial profit is not the final goal. Development brief should provide guidelines for competition.
Auction: a sale method of last resort and often for unusual sites. Starts from the reserve price.
Off market

Question 15

explain type of sales

Answer 15

Informal tenders and invitations to offer: Inviting interested parties within a fixed schedule. Preferred by developers.

Formal tenders: a binding contract for both parties. Invitation contains terms and conditions. Not preferred by developers (less flexibility)

Open listing: listing properties for sale on the open market. Normally via agents.

Competition: Mainly used by local authorities seeking to choose developers. Applicable when financial profit is not the final goal. Development brief should provide guidelines for competition.

Auction: a sale method of last resort and often for unusual sites. Starts from the reserve price.

Off market

Question 16

initiation by local authority explain

Answer 16

Local authority or government can initiate development.

Different level of government authorities have varied level of legal power, funding sources, etc. (Central vs. Local)
Degree of involvement differs from case to case.

A)Planning allocation
The local government can alter or allocate a specific land use in the development plan.
Allocation itself cannot initiate development.
Agreement from landowner and developer needed.

B) Land assembly and economic development
Local authority can make pieces of lands assembled through Eminent Domain.
Compulsory purchase power to acquire land. However, strict regulation applies to this process. (legal procedure, price, etc. )

In underdeveloped area, (local) governments can deploy their fund to encourage development in order to boost the local economy.

C) Infrastructure provided/built by government can initiate private development.
(road, water & sewer, park, schools, etc. )

Holden plant site sold to local authority

Question 17

explain site access and infrastructure

Answer 17

On-site Improvement
Landscaping, site grading, access driveways, drainage improvements, support facilities, etc.

Off-site Improvement
Utility lines, access to roads, water, drainage & sewer systems, etc.

If necessary improvement does not exist, the cost to add proper infrastructure should be included in the cost analysis and valuation of the land.

Question 18

explain public private partnership

Answer 18

What if the local authority or central government wants to initiate the development without losing its ownership on the land?

Examples of Crown land in NSW
Crown land

Crown land comprises approximately half of all land in New South Wales. Some of this land is allocated to public uses such as national parks, state forests, schools, hospitals, sporting, camping and recreation areas, as well as lands which are managed and protected for their environmental importance.
This leavesother significant portions of Crown land that can be used in a number of ways, including leasing for commercial or agricultural purposes, through to land development and sale.

TENURED LAND
Tenured land is Crown land that is directly leased, licensed or allowed to be used under an enclosure permit by the State for a wide range of public, private and community uses, including commercial or agricultural purposes.

Question 19

site investigation includes

Answer 19

Site survey
Ground investigation
Contamination
Services
Legal title
Finance

Question 20

explain a site survey

Answer 20

A site survey should be done by qualified land surveyors.
The location of buildings, fencing, boundary of the site, etc.
If any discrepancy of site location is found in the future, it will incur tremendous damage to the project and trouble to the developer.
More attention needs to be paid when developers assemble lots.

Encumbrances on the site must be studied.
Easement:A section of land registered on your property title, which gives someone the right to use the land for a specific purpose even though they are not the land owner. Ex) right of way, sewerage, gas pipe, etc.

Right of way

Question 21

purpose of a ground investigation (site inspection)

Answer 21

Ground investigation is necessary to assess the suitability of the land to support the proposed development plan.

What if developer is planning to contain 3 stories of 
basement?
Bedrock of granite?
Water table?
Sand?
Brown field?
Relic?

Question 22

explain contamination (site inspection)

Answer 22

Depending on the previous use of the land, it is likely that the site is contaminated with harmful contaminants.

Brownfield development:
Brownfield describes land previously used for industrial or commercial purposes. Such land may have been contaminated with hazardous waste or pollution.
Docklands, Federation Square in Melbourne
Darling Harbour and Barangaroo in Sydney
Newport Quays in Port Adelaide
Southbank in Brisbane.

Greenfield development:
In Australia,greyfields have been definedas ‘ageing but occupied tracts of inner and middle ring suburbia that are physically, technologically and environmentally failing and which represent under-capitalised real estate assets’.

Unlike brownfields, greyfields typically do not require remediation of pollution.

Question 23

What are the parameters?

Answer 23

Aims
Nature of development
Geographical area