The affordability of housing is a growing social issue for Australians. This issue is prevalent more so in inner and outer suburban Sydney due to the capital growth in median house prices over the past 5 years. The impact of that growth has seen “as-is” land values surpass residual land values on typical residential development sites. This increase in land values is inevitability passed on to the end buyer as the developer of the project seeks to remain profitable.
By working within current planning policies, Development Finance Partners are able to develop affordable housing projects that are commercially sustainable in Suburban infill sites. Today we have raised capital for 3 projects in the greater Sydney area with one completed development, one under construction and one due to commence in October 2019.
The DFP projects currently and in development or nearing completion provide 1 bedroom dwellings at a price point that is attractive to the essential services employees who require affordable housing in strategic locations where there is almost non-existent affordable housing available.
- The time frame for each project is relatively short at 20-24 months and
- The equity requirement is $1-3m per project
- The construction costs are predictable
These factors provide an adequate risk/reward profile for investors which enables a greater number of affordable dwellings to be available for the community. The number of projects achievable creates scale for the investors – enabling investors to realize returns within a short time frame on a project by project basis.