The change in strata legislation has triggered a rise in collective sales, often dubbed mega-lot deals, with the number recorded now reaching 17.8 per cent share of total disclosed sales in 2016-17.
According to Knight Frank’s research, collective site sales, suitable for low, medium and high-density development, have increased six-fold over the past five years, with foreign buyers purchasing 62 per cent of the sales.
The research showed that the share of NSW vertical collective site sales suitable for higher density grew to $228.3 million, up 8.1 per cent in 2016-17, when compared against the total volume of disclosed higher density residential sites sold. This followed the reformed legislation coming into operation on November 30, 2016, after representing 2.3 per cent a year earlier.
Collective sales are where more than one vendor comes together to form a group in order to sell their property in one line to a purchaser. In NSW the legislation has changed and if there are 75 per cent of residents in agreeance, then the sale can proceed.
The “horizontal” deals include the sale of multiple single dwellings grouping together to form an amalgamated residential super-lot and an entire industrial complex with multiple owners of individual strata units across one level. Vertical sales include the sale of an entire residential, office, hotel or serviced apartment complex with two or more levels.
Mega lots have attracted the attention of residents where the apartment block may need repair or a street is being rezoned and home owners team up and sell to a developer. Deals have reaped significant rewards for vendors.
There are many legal hurdles to clear and much discussion needed among the residents and not everyone has been on board. But agents say they are getting more requests about how to undertake a collective sale.
Knight Frank’s latest report, Collective Sales for Residential Development – Market Insight: September 2017, found that the practice has been both horizontally, with multiple homeowners grouping together to form residential super-lots, and vertically, with owners of individual apartments and office suites within a building leveraging recent legislation changes and rezoned growth corridors.
According to Knight Frank’s head of residential research, Australia Michelle Ciesielski, when splitting buyer nationalities across Australia, in 2012-13 foreign buyers represented only 21 per cent of collective sales. However by 2016-17, these buyers had purchased 62 per cent of these sales.
“Within these collective sales purchased by foreign buyers in the last year, 53.6 per cent were for horizontal sites and 8.4 per cent for vertical sales,” Ms Ciesielski said.
“Vertical site sales have been more prevalent in NSW since new legislation for strata properties came into operation. At this stage, despite lengthy consideration, no other state or territory governments have introduced this change.”
Some of the biggest deals have been at Macquarie Park, where Savills Australia sold a site at 15-21 Cottonwood Crescent, which saw the 55 homeowners became instant millionaires, with a private developer paying a record price understood to be more than $80 million. The site is to be developed into a mixed-use property.
This has prompted the owners of 12-14 Lachlan Avenue and 13 Cottonwood Crescent to follow suit, with 33 of the 36 units on the site looking to the residential site sales team at Savills Australia, of Neil Cooke, Stuart Cox and Johnathon Broome, to generate a similar deal.
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