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Don’t buy development sites at the bottom of the cycle

December 7, 2018

Aqualand sketch of proposed building at 59-99 Belmont Street, Alexandria. The developer will build 25 three-bedroom premium apartments and terraces, with plans to start construction in about 18 months, regardless of housing market…

Waiting until the bottom of the housing downturn to buy good sites will not guarantee a good deal, according to residential developer Aqualand chief executive John Carfi.

“If you go back over previous cycles, you tend to find that people intuitively think that if they wait till the bottom of the cycle everyone would be desperate and they would get a bargain,” he said.

“But the reality is good-quality sites don’t trade at the bottom of the cycle because if it is a good site, people will find a way to hold on to them.”

“The slide in the cycle is the best time to get a good site and a good price.”

Aqualand carried out the strategy and snapped up a new 1500 square metre site in the inner-south Sydney suburb of Alexandria for $12 million. It is currently a commercial and industrial property.

The attractiveness of the site at 59-99 Belmont Street, Alexandria, lies in its proximity to amenities such as the new Green Square township, and the new Waterloo metro fast-train station.

The developer will build 25 three-bedroom premium apartments and terraces, with plans to start construction in about 18 months, regardless of housing market conditions.

The group may even speculatively develop but will make the decision down the track.

“You got to take a longer-term view, if people have a short-term view of 18 months to two years or even three years, you are not going to do anything,” Mr Carfi said.

“You are always going to be buying in a boom and selling in a downturn.”

The project, while smaller than Aqualand’s usual multi-density apartment projects such as Blue at Lavender Bay in Milsons Point in Sydney’s north shore, will offer the same elegance and quality, Aqualand head of new business Alex Adams said.

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