Property development in Australia is recognised as a good way to create wealth. It can offer substantially higher profits than many other investments, as well as creating an additional stream of income through rent and diversifying an investment portfolio. There are tax benefits as well!
What is property development?
Property development simply means either the creation or enhancement of buildings (either residential or commercial) to increase their value and make a profit.
You can either develop commercial property, which means offices, warehouses, entertainment centres, day-cares, medical centres, mixed use developments and so on, or you can invest in residential developments, like houses and apartments.
What are the benefits of developing property?
The benefits of developing property are widespread. It’s an investment opportunity that can offer a number of financial benefits, as well as having a positive impact on the community.
Financial benefits
The financial benefits of developing property fall into two categories; the profit that you can make through sale or rental income, and the tax that you can offset.
Profit
Successful developments offer substantial profits, often outstripping profits from other traditional types of investment, like stocks and shares. In addition to the profit that you can make from selling a development once it’s completed, you can also generate income through rent, either on a commercial or residential development.
Lastly, an effective property development also nets you equity growth, because your completed development should be worth more than the land and construction costs.
Tax advantages
The tax advantages of property development vary depending on the nature of the development. It’s important to make sure you work with somebody who understands all the implications and liabilities involved in your project. There are a number of costs involved in property development that are tax-deductible as business expenses.
If you retain your property, you can also claim deductions for the decline in both the value of the building and its permanent fixtures over time. Make sure you seek professional advice from the ATO or a qualified tax advisor so that you can structure your projects safely and responsibly.
Flexibility
Property development offers an amount of flexibility that other investments don’t. You can choose which type of project you want to be involved in, as well as your scale of involvement. You can also choose which areas or markets you are interested in.
Market demand
Strong market demand is another advantage of property development. There’s a huge pool of both residential and commercial tenants, and supply in Western Australia remains limited. This gives property developers a great amount of choice, and an element of security, because demand currently outstrips supply.
Impact on community
The right property development can make a huge difference to the people around it. Whether it’s effective entertainment facilities for families, or developing homes where previously there were none, good property developments form the heart of the community.
What risks should you also consider?
When it comes to the pros and cons of property development, the list is heavily weighted towards the pros. There are some factors that potential property developers or property development investors should consider though.
Costs
While property development offers the potential for significant profit, it’s vital you manage your budget, which also means factoring in a contingency fund for unexpected costs or delays. It’s also crucial that you do your research so you have an understanding of the costs involved, and know how to mitigate market fluctuations and delays to ensure a decent return on investment.
Choosing the right developer
Choosing an experienced developer who has worked in the area you’re building and has a deep knowledge of your type of development is the way to make a development successful.
Novus Projects offers a unique business model. We leverage the experience, skills and best practices of one of Perth’s leading residential home builders with the precision and principles of a commercial construction builder.
This complementary combination sets us apart from other builders, ensuring our clients receive the unparalleled support that comes from our 30 years of experience.
How Novus Projects can help
Our long-established knowledge of the Western Australian market means we have a detailed understanding of local council regulations, potential approval hurdles, and the specific demands of the Perth landscape. We pride ourselves on our meticulous project management capabilities, ensuring seamless coordination across all phases of your development – from the initial concept and intricate approval processes right through to the final stages of construction and handover.
Our proactive approach aims to minimise delays and keep your project on track and within budget. Working with Novus Projects means you're gaining a partner committed to efficiency, risk mitigation and ultimately, maximising the success and profitability of your property development.
Get a quote from Novus
Would you like to discuss your proposed development, or for us to provide a quote for your plans? At Novus Projects, we're committed to supporting your development needs and would love to be your development partner. We can provide a detailed quote (or tender) on your own plans. Contact us today to discuss how we can help bring your vision to life.