Discovering Opportunities in Property - Case Study Example

Discovering Opportunities in Property Student’s Name Course Title: Date: Outline I Property Description A). Legal Description B). Location-Neighborhood C). Land Description D). Main Building Description E). Site Features F). Images of Property II Marketing Opportunity A). Appraisal of Subject Property B). Method of sale C). Marketing and Advertising a). Property b). Price- c). Place- d) Promotion III Investment / Development Opportunity A). Investment Analysis B). Summary References Appendix: Map Property Description Legal Description The property is situated in area that is not restricted by the authorities has it has no policy indicating nature of building expected to be put there. The details of the property are as follows; 20 West St Brompton 5007 Title Reference: CT6070/409 Plan Number: 26485 Zone Description: Residential Character Policy Area Description: n/a Policy Area: n/a Property Number 20 Registered Property Description (RPD) Lot 6 Precinct 67 Precinct Description: Brompton Park Approx Area m sq: 146 Value of property $400,000 The property can be accessed from West Street, off Chief Street and the map of the area is in the appendix 1. Location-Neighborhood Brompton is a suburb area near Brompton Hotel which is in Adelaide 5007 and is residential to an easygoing life style people. It is located close to both local parks and frequesnt the local cafes. It takes a few minutes from the city and from North Adelaide. There are many streets in area and most properties are not high-rise thus easing traffic during peak hour traffic, this makes the area have easygoing lifestyle. There is a direct access to the park and Brompton Hotel thus makes walking routines a lot more scenic. Most of the buildings have been have already been purchased with intent of dwelling or has been settled. This site is located in a residential area and both Sam Johnson sports ground and Ivan Franco Reserve being minutes away , which makes Brompton a prime location for a cool family residential area. The surrounding areas contain a park in front of the dwellings of both semi-detached and attached thus contributed to increased numbers of dwellings. The Immediate surrounding area features the beautiful Renown Park, which is only a stone’s throw away from the rear of the property (see images of the area). Land Description The property is situated in area where there are family units and it has approximated Area of 146 in metres square. 20 West St Brompton 5007 Precinct 67 Precinct Description: Brompton Park Approx Area m sq: 146 Main Building Description The building is a semi-detached that 3 bedrooms on upstairs, 2 bath rooms and 3 toilets that has fenced yard. The site is well landscaped. The bedrooms are of good size while the master bedroom has a balcony that overlooks the local park. All the bedrooms including the master bedrooms have been built using robes. The kitchen has ‘European Primera stainless steel appliances including electric under bench oven, gas cook top & dishwasher’ (Real Estate Australia, 2012). The house has a study room, laundry, air conditioner, a rain water tank and a garage that is remote controlled. There is clothesline; an alarm is installed in the house as well as it has a 6 star energy for heating and cooling. Site Features There is a fence and gate as you access the building form the park. The building is overlooking park and has a garden as well as Terrace/Balcony. There is a well defined road network serving the facility. The site has the following Amenities surrounding the site, these include Ivan Franko Reserve A walking distance Sam Johnson sports ground A walking distance Brompton Hotel A walking distance CBD 5 minutes drive Bowden Brompton Community School 85a Torrens Rd, Brompton, SA, 5007 Technology School of the Future Milner St, Hindmarsh, SA, 5007 Bapea Art School & Studios & Bapea Gallery Brompton, SA, 5007 Images of Property Marketing Opportunity Appraisal of Subject Property Given that most property markets in Brompton area had been affected by the 2009 financial crises, speculations emerged in the context of these markets remaining immune to the impacts of the credit crunch. However, in the year 2012 different story has emerged because eventually home prices began going up in the market. It is also true that in the Brompton also prices began to going up as a consequence of a good place for investment. The real estate sector in Brompton and some other regions in the South of Australia became a buyer’s market. The strengthening of the interest rates positively impacted the availability of finance and there is an increase in buyers seeking to buy property in the region. In 2009-2011, developers realized that buyers preferred bargains at the lower end of the markets and were willing to buy in cash while negotiating deals. Consequently, the mid and upper segments of the property markets appeared to be more stable as compared to other markets. The site and environs has luxury family units and is low density living. Sales done by Real Estate Australia shows that property in area goes between $ 400,000 to $ 525,000. The graph below shows the trend of property prices in a Recent sales data of the Brompton area has been compiled and analyzed within due diligence process regarding the property in question. The significant factor that is determining the houses prices in the area is the continuous change in consumer and business confidence. In June 2012 the sentiment index decreased by 1.6% bringing it to 92.1 index points. Many consumers are starting to get cautious as they expect the market to get even tighter for jobs in the next few months to come. The current interest rates are at their best since 2009 as a result of a mix of optimism and confidence in the economy. Optimism flows from the fear of rising employment rate and from the constant data of falling property values, to positive impact of home affordability. In the September 2012 quarter the National CPI fell 2.0%, compared to the previous year’s quarter, which was 3.5%. The government has managed to keep unemployment rate constant in year. The national unemployment rate Increased to 5.3% to adjust with the increase in participation rate by 0.2% to 59.3%. The reserve bank board decided to lower the official cash rate to 3.5 percent (RBA, 20012). Property investors fear the fact that unemployment is raising the cost of rent may be forced to depress. The market segmentation is a clear indicator, which shows a good market under $500,000. According to data received in the September quarter 70% of sales were in this price range (Onthehouse.com.au Pty Ltd, 2012). First homebuyers now represent around 30% of the total market, which are included in that percentage, following the Government incentive packages. The middle market is approximately $400,000 to $525,000 and is available to a limited number or buyers due to its affordability (Onthehouse.com.au Pty Ltd, 2012). However, to meet the market rate heavy discounting and very low interest rates have occurred to improve this marketing segment. The prestige market is currently suffering the most where discounts between 12% and 20% are appearing. Method of sale The property will sold through agents who will put adverts online. This is because there small market segment that will be able to purchase the property. The best agency that can sell these property high chances of success is Real Estate Australia. Marketing and Advertising It is necessary to understand and to implement the marketing mix of Price, Promotion, Place, and Product on the property under development. This way, we could better classify the four segmentation to sell properties to Property - The product that lies in 20 West Street, Brompton SA 5007 is a real property. Having a family unit building along West Street in Brompton SA 5007 is a necessity. The house have will have its own scenic park view with access to the site via a front gate leaving a stone’s throw walk to reach the Brompton and the shopping centre. It will have 3 bedrooms on upstairs, 2 bath rooms, 3 toilets, fenced yard, a study room, laundry, air conditioner, a rain water tank, a garage that is remote controlled. It a large open living room with plenty of space for a large dining table and two large balconies at the front and rear of the apartment. There will be full-length glass sliding doors leading out to the balconies. There is clothesline; an alarm is installed in the house as well as it has 6 star energy for heating and cooling. The kitchen will have ‘European Primera stainless steel appliances including electric under bench oven, gas cook top & dishwasher’ (Real Estate Australia, 2012).There will also be a car park to accommodate to 2 cars. Price- The price of the event should be affordable to the medium social class it will range between $ 455,000. Place- As mentioned before, the house will be on West Street, Brompton is a suburb area near Brompton Hotel which is in Adelaide 5007. Promotion The most important part of the marketing mix of all four would be the promotion, the strategy of pricing the house is the one that would makes the sale successful or unsuccessful. An advert will be put in magazines and online sites for real property marketing. The area being regarded as middle class area families with disposable income will be target. With the print ad, house will try to build a sense of emotional connection to the consumers by charging up the modern relevance of the house. Through the tagline that speaks about the house image, the brand will convey that it is dynamic and animated. It will try to reinstate house into its iconic image in the midst of growing market competition among houses. Such an image will brings a sense of passion and spirit to its target consumers by appealing that the brand can incite the dynamism and life about to come out from them. The effectiveness of the advertising program lies in the scheduling of the advertisements. Unless the advertisements are properly scheduled, it would be very difficult for the message to break through the clutter and gets hold of the customer’s attention. The advertising schedule is and budget is as follows; Date Media Budget ($) December Online and website 5,000 January, 2013 Magazines 2,500 January Local TV prime time ours 3,200 10,700 Investment / Development Opportunity Brompton is a suburb that is North Adelaide 5007, it a few minutes’ drive from CBD, it is known to be in the largest metropolitan and also the largest urban zone within the bounds of southern Australia. With those facts, Brompton has been good schools and other amenities. It is rated to be the among most secure place within southern Australia. With the vast development and continuous ardor for success in business and all other aspects, Brompton has been a point of influence for other neighboring estates. By focusing the development on the upper end of the market, there are many benefits such as, lower construction costs and quick sale or letting. By implementing this investment this will maximise return on investment and make it possible to best use the park front living to achieve the highest and best use out of the apartment using the ocean views and secure parking. Investment Analysis While developing the site some activities needs to be carried out. This includes clearing the ground then construction will follow which will take a period of 14 months. Like a normal construction, building budgeting and cost allocation for the construction will be done and this will involve various professionals. Various activities will drive the client to construct house and a park. Some of the drivers that motivated the client include profit from the investment in the land and the future economic value of the area. Most investment is made based on economic benefit that will accrue from the project. The project is said to have over 30 years live with a good return. The cost of the project is highlighted below plus their construction. A B C D E F G H I Period months Phase 1 Phase 2 Selling Total construction costs at present Inflation to mid-point of month Inflated costs Survey and search DESIGN 1 2 3 15,000 C O N T R A C T 4 5 6 7 8 8 9 10 11 12 13 14 10000 12000 10000 22,500 28,500 20,000 15,000 16,000 15,000 20,000 24,000 10,000 22,000 40,000 50,000 30,000 10,000 12,000 10,000 22,500 28,500 40,000 39,000 26,000 37,000 40,000 50,000 30,000 1.02 1.021 1.0202 1.0201 1.0192 1.020 1.022 1.022 1.021 1.023 1.0280 1.026 10,200 12,252 10,202 22,952 29,047 40,800 39,858 26,546 37,777 40,920 51,400 30,780 Agent 15 16 25,000 10,700 25,000 10,700 1.021 1.024 25,525 10,957 139,000 196,000 370,700 389,216 15,000 In the development there are two phases; phase 1 and Phase 2 costing totals $ 139,000 and $196,000 respectively. Summary From the analysis, the building will be profitable if sold at a value of more than $ 500,000. The factors not described in the numbers are the salvage land value as well as the buildings. It does not matter that the equipment will face substantial depreciation because they are going to be accounted for in the computation of the project. The figures used above do not include the salvage values and the costs included the additional in its computation to determine the total cost. Only flaw in this analysis would be the length of time used to determine the computation (Jones, 2001). The capital can then be easily recovered and a very small change in the situation just might turn the project profitable and not a total disaster. References Onthehouse.com.au Pty Ltd, 2012. Property Profile Report- Comprehensive profile on an individual property Available from: [Accessed 04 November 2012]. RateInflation, 2012. Australian Inflation Rate- Australia Inflation summary for September 2012. Available from: [Accessed 04 November 2012]. Real Estate Australia, 2012. 20 West Street Brompton SA 5007. Available from: [Accessed 04 November 2012]. The Reserve Bank of Australia, 2012. Interest rates and inflation Available from: [Accessed 04 November 2012]. Appendix : AREA Read More