You’ve chosen your development strategy and now you’re working hard to become an area expert. As a property developer, part of this process is understanding the type of dwellings your target audience wants to buy, because you want to build a product that will spur buyers into action.
Zonings are obviously a big part of the equation, but it isn’t always best-case scenario to build the maximum number of dwellings allowed – just because it can be done, doesn’t mean it should be done.
So while you may be allowed to build 12 attached dwellings on your property development site, what you need to figure out is what buyers want. Perhaps they’re prepared to pay much more for a freestanding home. Or perhaps your site won’t be profitable unless you can squeeze in the maximum number of dwellings permissible.
What if it feels like an even bet either way? How do you lock in a winning decision?
First let’s take a quick look at the most common freestanding and attached low or medium-density dwelling types:
Freestanding houses
As the name implies, this is a stand-alone property where the buyer has Torrens Title, meaning they own the land and any built forms within its boundaries.
You can get tiny blocks of land, often in the inner city, larger blocks in the middle ring suburbs and massive blocks of five acres or more on a city’s fringes.
Freestanding houses are popular with families, as they typically offer some kind of yard for children to let loose in, but they also tend to be the most expensive option as the land component will continue to increase in value regardless of the age and quality of the house.
You’ll find most lenders are comfortable financing a freestanding house, especially given this type of dwelling has a history of appreciating more quickly than medium and high-density dwellings.
Duplexes/Semi-detached
While the semis of the 1900s generally came with a Torrens Title, today’s duplexes are a mixed bag. They can be on a single title, which means a buyer has to purchase a “pair” of dwellings, or two titles, which means each dwelling can be individually owned and sold.
Either way, a semi or duplex is best defined as two dwellings under one roof with one common wall. Duplexes are a popular choice with investors because you can get two rental incomes for the price of one block of land. And they’re popular with buyers because you can get house-like privacy at a lower price point than what you’ll pay for a freestanding home.
Terraces
When we talk about terraces people typically picture the Victorian style of terrace built in the late 1800s and early 1900s, but there are lots of new terraces going up, especially in master-planned communities.
These dwellings vary in height from one to four storeys, share party walls and usually come with a back garden or courtyard. Some terraces come with a Torrens Title, while those in larger projects with access to communal facilities may be strata titled.
Townhouses
This is where we step into “missing middle” territory, the bread and butter of our network. Those of us building three or more properties on a single lot are most often tackling a townhouse development and helping to meet demand from buyers who don’t want a house or an apartment.
A townhouse can be attached or freestanding, and the buyer usually owns the dwelling but shares ownership of the land and common property with other owners in the complex.
There will usually be some kind of alfresco zone plus a garage or carport.
Townhouses are typically strata titled, which means buyers have to pay annual levies to a body corporate that takes care of common property maintenance, insurance and compliance matters.
Villas
The term villa is a confusing one because it means different things in different states. In Queensland, townhouse and villa are interchangeable but in Victoria and NSW, a villa usually means a detached, single-level, strata-titled home within a small complex of similar dwellings.
Villa can also be used to describe holiday lodgings built on a private property.
Freestanding: pros and cons
The appearance of a detached home gives it the physical presence of “it’s mine”. There’s a real emotional attachment that comes with that which typically translates into a premium price.
Yep, in most instances having Torrens or Freehold title will attract the best price for a property.
On the downside, there’s a good chance you won’t get as many dwellings on your piece of land if they are freestanding. But there’s an upside here as well because doing less product usually means less hassle getting council approval.
If you can justify it on your feasibility, it’s often more profitable to go freestanding.
Attached: pros and cons
There are plenty of buyers looking for low maintenance living who don’t want an apartment. These buyers gravitate towards attached townhouses because there’s often no lawn or garden to maintain and, in smaller complexes, minimal strata fees.
Attached homes will typically sell for less than detached homes, which means your buyer pool will be bigger.
But the closer you bring dwellings together, the more your neighbours come into play.
There’s a theory with attached dwellings that you’ll save money on building outside walls. But as you’ll need to do a fire-rated party wall, and be creative with privacy and landscaping to create the most saleable product, I think in the end you’ll end up paying a similar build price.
Let the demographic decide
The easiest way to make a decision is to go back to basics.
What is your demographic? What are their price points? What do they want in their new home, what do they need?
Spend time looking at the sales data for your chosen suburb. What are freestanding and attached properties selling for and how long does it take them to sell? This will give you an insight into the level of demand for different product.
If a particular dwelling type consistently sells very quickly there could be an undersupply, which means there’s a gap you can fill. Maybe freestanding townhouses get snapped up as soon as they hit the market, with noticeable increases in value every time. Maybe there’s a price sweet spot that attracts more buyers and therefore more competition.
Do your figures and work out your project timeline on various scenarios.
This will help you figure out the million-dollar question of every deal: What is the highest and best use?
That is, what will get you the most amount of money, for the least amount of hassle in the least amount of time?
So many of a developer’s decisions boil down to answering this one question.
Trust the process and you’ll soon know whether to build freestanding or attached dwellings on your site.
Zonings are obviously a big part of the equation, but it isn’t always best-case scenario to build the maximum number of dwellings allowed – just because it can be done, doesn’t mean it should be done.
So while you may be allowed to build 12 attached dwellings on your property development site, what you need to figure out is what buyers want. Perhaps they’re prepared to pay much more for a freestanding home. Or perhaps your site won’t be profitable unless you can squeeze in the maximum number of dwellings permissible.
What if it feels like an even bet either way? How do you lock in a winning decision?
First let’s take a quick look at the most common freestanding and attached low or medium-density dwelling types:
Freestanding houses
As the name implies, this is a stand-alone property where the buyer has Torrens Title, meaning they own the land and any built forms within its boundaries.
You can get tiny blocks of land, often in the inner city, larger blocks in the middle ring suburbs and massive blocks of five acres or more on a city’s fringes.
Freestanding houses are popular with families, as they typically offer some kind of yard for children to let loose in, but they also tend to be the most expensive option as the land component will continue to increase in value regardless of the age and quality of the house.
You’ll find most lenders are comfortable financing a freestanding house, especially given this type of dwelling has a history of appreciating more quickly than medium and high-density dwellings.
Duplexes/Semi-detached
While the semis of the 1900s generally came with a Torrens Title, today’s duplexes are a mixed bag. They can be on a single title, which means a buyer has to purchase a “pair” of dwellings, or two titles, which means each dwelling can be individually owned and sold.
Either way, a semi or duplex is best defined as two dwellings under one roof with one common wall. Duplexes are a popular choice with investors because you can get two rental incomes for the price of one block of land. And they’re popular with buyers because you can get house-like privacy at a lower price point than what you’ll pay for a freestanding home.
Terraces
When we talk about terraces people typically picture the Victorian style of terrace built in the late 1800s and early 1900s, but there are lots of new terraces going up, especially in master-planned communities.
These dwellings vary in height from one to four storeys, share party walls and usually come with a back garden or courtyard. Some terraces come with a Torrens Title, while those in larger projects with access to communal facilities may be strata titled.
Townhouses
This is where we step into “missing middle” territory, the bread and butter of our network. Those of us building three or more properties on a single lot are most often tackling a townhouse development and helping to meet demand from buyers who don’t want a house or an apartment.
A townhouse can be attached or freestanding, and the buyer usually owns the dwelling but shares ownership of the land and common property with other owners in the complex.
There will usually be some kind of alfresco zone plus a garage or carport.
Townhouses are typically strata titled, which means buyers have to pay annual levies to a body corporate that takes care of common property maintenance, insurance and compliance matters.
Villas
The term villa is a confusing one because it means different things in different states. In Queensland, townhouse and villa are interchangeable but in Victoria and NSW, a villa usually means a detached, single-level, strata-titled home within a small complex of similar dwellings.
Villa can also be used to describe holiday lodgings built on a private property.
Freestanding: pros and cons
The appearance of a detached home gives it the physical presence of “it’s mine”. There’s a real emotional attachment that comes with that which typically translates into a premium price.
Yep, in most instances having Torrens or Freehold title will attract the best price for a property.
On the downside, there’s a good chance you won’t get as many dwellings on your piece of land if they are freestanding. But there’s an upside here as well because doing less product usually means less hassle getting council approval.
If you can justify it on your feasibility, it’s often more profitable to go freestanding.
Attached: pros and cons
There are plenty of buyers looking for low maintenance living who don’t want an apartment. These buyers gravitate towards attached townhouses because there’s often no lawn or garden to maintain and, in smaller complexes, minimal strata fees.
Attached homes will typically sell for less than detached homes, which means your buyer pool will be bigger.
But the closer you bring dwellings together, the more your neighbours come into play.
There’s a theory with attached dwellings that you’ll save money on building outside walls. But as you’ll need to do a fire-rated party wall, and be creative with privacy and landscaping to create the most saleable product, I think in the end you’ll end up paying a similar build price.
Let the demographic decide
The easiest way to make a decision is to go back to basics.
What is your demographic? What are their price points? What do they want in their new home, what do they need?
Spend time looking at the sales data for your chosen suburb. What are freestanding and attached properties selling for and how long does it take them to sell? This will give you an insight into the level of demand for different product.
If a particular dwelling type consistently sells very quickly there could be an undersupply, which means there’s a gap you can fill. Maybe freestanding townhouses get snapped up as soon as they hit the market, with noticeable increases in value every time. Maybe there’s a price sweet spot that attracts more buyers and therefore more competition.
Do your figures and work out your project timeline on various scenarios.
This will help you figure out the million-dollar question of every deal: What is the highest and best use?
That is, what will get you the most amount of money, for the least amount of hassle in the least amount of time?
So many of a developer’s decisions boil down to answering this one question.
Trust the process and you’ll soon know whether to build freestanding or attached dwellings on your site.
