Developer warns that residential property market is attracting too many amateurs
AN increasing number of would-be property developers seeking ride the residential building wave are in danger of sinking
QLD Business
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AN increasing number of would-be property developers seeking ride the residential building wave are in danger of sinking.
Former Stockland and Lend Lease executive Marc Wilkinson, who now heads up boutique development company Penfold Property Group, said a growing number of “amateur” property developers had been spurred into action by the seemingly improved property market.
However, he warned some were also losing their life savings.
“We’re seeing an obvious gap between smaller land owners and investors who want to be developers but lack knowledge and experience,” Mr Wilkinson said.
“They’re being offered these opportunities by agents or other developers ... and they don’t see the hurdles when they buy. Even the large companies sometimes get caught out.
“These people are discovering that every project has its peculiarities and risks that can send you broke if not identified and managed.”
Low interest rates and an unprecedented inner city apartment construction boom in Brisbane has increased confidence in the residential sector.
Nationally house price prices have jumped more than 10 per cent over the year to June and in Brisbane they have increased 7 per cent with BIS Shrapnel tipping the Queensland capital to be the strongest performing property market in Australia over the next three years.
But Mr Wilkinson said the major banks were “still cleaning up” from the global financial crisis.
“Back then there were a lot of people who had money ... who thought they could buy a block of land and subdivide it or put some units on it,” he said.
“But actually it’s a lot more difficult and getting more difficult all the time to do that.
“As this market starts to bubble a bit, more people will want to get in on the supposed gold rush.
“It’s very easy to buy but once you buy ... there are always a lot of issues”
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