Amalgamation isn’t an easy exercise, but two Gold Coast commercial agents suggest that now might be the perfect moment to pounce for unit owners looking to attract developer interest.
A lack of available vacant land on the market in areas like the Gold Coast, where development interest is high, has made this a lucrative prospect for asset holders, particularly those with older units in Broadbeach, Mermaid Beach and Surfers Paradise.
Kollosche Commercial agents Adam and Tony Grbcic pointed to a number of successful amalgamations that recently paid off for property owners.
A 1,294-square metre parcel occupied by a vacant block and unit complex on Armrick Avenue in Broadbeach recently sold for $8.8 million to Morris Property Group, while five separate owners who sold their units on Surf Parade, Broadbeach, to a private investor netted $3 million.
Adam Grbcic has also recently listed the El Dorado building in Broadbeach – an amalgamation of six units on a 654-square metre block, alongside John and Nicole Mayer of Kollosche New Projects. Together they’re looking to attract both developers and investors seeking a large holding.
Mr Grbcic said that beachside boutique complexes built in the 1970s and 1980s were ideally suited to attract a higher price if the block’s owners are willing to sell together.
“The older these complexes become, the more maintenance spending is required, which can provide further motivation for owners to sell,” Mr Grbcic said.
He noted that there are a few steps needed to lay the groundwork for a successful amalgamation and sale.
“Firstly, owners need to ascertain if everyone is willing to sell and then establish a floor price that is higher than what each owner could sell for to non-developer buyers,” he said.
“Secondly, owners need to decide if they want to sell collectively on a price per entitlement or square metre basis or individually. If it’s the latter, then owners need to keep their negotiations with the developer confidential, otherwise they risk raising expectations among the group which could jeopardise the deal”.
Tony Grbcic also noted that sales to developers often come with very different terms than what many might be used to if they’ve only dealt in residential transactions before.
“The other factor owners need to be aware of is time. When developers enter a contract to buy a multi-title building, they are generally looking for a settlement between six and 18 months long,” he said.
“That is because this allows them to unlock the potential value of the land by obtaining development approval and being able to proceed with the project.
“So, they shouldn’t expect an instant windfall or hefty deposit, however the rewards can be significant if they are prepared to wait”.
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