Infrastructure - How it can boost your Investment Property’s potential

By Jo Chivers

When I first decided to develop property, I was overwhelmed with where to start.  I’d purchased four properties in Sydney and realised that I couldn’t keep buying negatively geared property, coming up with the short fall required certainly puts the pressure on.  By this stage, the major cities in Australia had become too expensive, so I began doing the figures on areas within a 200 kilometre radius of Sydney.... Wallah... the Hunter Region came up trumps!

I found that I could buy large residential lots of around 1000sqm and develop them a lot more cost effectively than if I was to develop in Sydney. Everything was cheaper from the land purchase through to consultant fees and building costs.  I also found the people there fabulous to work with.  Most importantly, I found that there was a lot of infrastructure investment being made in the area.

History shows us, that when a government or private sector announces a new infrastructure project, there is a boost to the local community. It stimulates the local economy by creating lots of employment and attracts more people to the area.  Infrastructure projects yield indirect benefits through the supply chain, employment, business and retail growth, consumer spending, social benefits of community development related directly to the project and my favourite, property values increase.

I’ve seen this first hand with the announcement of the Hunter Expressway a $1.7 billion road project that will provide a dual carriageway linking the F3 to the New England Highway. The project was announced in the 2009 Federal Budget but had been originally proposed back in 1988. It has been a long time coming.  What I saw after the announcement was a distinct demand in areas impacted by the project, particularly around the interchange areas and where the highway would finish.

A development project we completed for one of our clients in one of these towns, is testament to the impact the Hunter Expressway has had.  The development site was a three bedroom house on a large block. The development strategy was to renovate the house, build two three bedroom villas and subdivide.

Something amazing happened and the equity creation in this project was phenomenal. The land benefited from capital growth at the same time we were developing it.  So the normal equity we create through the development process was almost doubled due to the capital growth during the development period.  To add to that, the house was rented and still is, at a record high rent by construction workers employed in the project.

Whilst we love infrastructure spend, other things to look for when researching location include:

  • Proximity to major city
  • Affordability
  • Strong rental demand and low vacancy rates
  • Undersupply of new housing
  • Strong population growth
  • Diverse economy – eg;  the mining industry supports the area, the wine, hospitality, tourism and retail industries are also providing many jobs.

Developing property is challenging and getting it right takes a lot of time and research.  But we are lucky to have a plethora of information and statistics provided to us by qualified researchers, companies and the media. So it’s up to you to sift through it all and work out what may be a viable location for your property development.  Good luck! 

“I was bitten by the property bug, there was no turning back.”

Jo Chivers proves that women can indeed have it all- a career that you are passionate about and a family.  While all of this sounds great, it does require hard work, dedication, perseverance and a bit of risk-taking.

Jo’s love of property development inspired her to leave her corporate career and pursue her true passion. After educating herself in property investing, she started building up her own property portfolio. After purchasing a few blue chip properties in Sydney, she soon realised how negatively geared they were and began researching outside of Sydney. She discovered a more affordable, large region of NSW where she completed her first property development.  Soon her friends were asking her to find them sites and manage their developments. 

She realised there was a need for an all encompassing project management service and her business Property Bloom™ was born.  Ten years down the track, she has developed over 60 properties for clients, creating literally hundreds of thousands of dollars in equity and high end yields.