Due to the current state of other investment classes, I remain of the view that there will be a continuing investor market for residential properties in Brisbane. It is all about delivering product that the market wants to purchase. This is largely what I term “formula” development. The end product must be able to achieve an annual rental of greater than 5%. GPS works closely with our stable of borrowers by using our experience from having approximately 24 active projects at any time. We keep statistics from large projects, monitor building costs, marketing and achieved sales prices etc. These all assist in getting the right “formula” and is the reason why so many developers consider GPS to be part of their team.
An example of the above is a recent application where a developer wanted to considerably up-spec their project to include a rooftop community area with a pool. This would have added approximately $45,000 to the cost of each unit. We could not see that this up-spec’ing would increase rentals by approximately $45 per week for that area. Appropriate counsel and proposed lending conditions were provided.