Dec 19 2018Add to Favorites
Residential developer Legacy Property is set to commence a syndicated equity raise for its 7thand final stage of Caddens Hill, with minimum investment amounts starting at $250,000, targeting 17.5% investment return over the twelve month construction period.
Legacy Property has $3bn of projects completed and in progress consisting of c.3,600 dwellings . 14 projects have been completed with another 7 underway, gross completed project values range from $85m to $248million for each project.
Caddens Hill is a UDIA award-winning 588-lot residential community, located in Sydney’s west, in close proximity to the M4 motorway, the University of Western Sydney, Nepean Hospital, Penrith center and local train stations. In 2016 Legacy Property identified the Penrith market as supply constrained with strong amenity and transport connections and initially acquired the 28-hectare site before strategically acquiring 4 additional parcels to expand the holding to 35 hectares.
“The Caddens Hill project has received more than4000 buyer inquiries and sold 570 lots in less than two years and continue to see strong settlement rates, with the default rate around 1%,” says Matthew Hyder, CEO of Legacy Property.
Prices at Caddens Hill range from $301,000 to $678,000 and vary in size from 221m² to 749m² range with Stage 1 pricing commencing at an average of $1,065/m² and stage 6 pricing commencing at an average rate of $1,195/m². The steady price growth over each of the 6 stages has been driven by the quality of the design, local amenity, more than 13 acres of parks and playing fields and affordable price point catering to a wide demographic.
“There is no doubt the residential market has softened however the house and land and apartment markets tend to behave differently,” says Hyder.
New housing supply is constricted in NSW and Victoria as a result of difficult planning in both states. Ongoing demand from population growth will exacerbate the net housing shortage which is forecast to grow.
With Australian housing affordability becoming increasingly challenging for a population of 25 million, growing at c. 350,000 per annum, and nominal wage growth, homeowners are being pushed out of cities and into more affordable fringe areas. Infrastructure spend in NSW is set at c. $85 billion over the next four years to accommodate for the population expansion.
Economic analysis shows the Morrison government’s suggested new migration caps of 160,000 per annum down from 190,000 would have an immaterial impact on reducing the pressure on new housing supply. Despite the Morrison government’s suggestions, Capital Economics senior economist Marcel Thieliant suggests that net migration will only weaken slightly to around 190,000 over the next couple of years, equating to continued pressure on new housing supply.
“The apartment market has been heavily dominated by investors which are more significantly affected by the APRA lending restrictions,” says Hyder. “We are seeing a large number of migrant owner occupiers and a dominant Indian community drawn to the project in the form of first home buyers as well as buyers upgrading.”
Legacy Property is an investor-centric company focused on building long-term relationships and delivering strong results. “As our pipeline grows, we are able to accommodate new investors who are interested in investing with an experienced development and investment company. Our expertise is amalgamating property to enable delivery of high-quality apartment and house and land projects,” says Hyder.
Home loan approvals have fallen significantly off the back of the APRA and the Royal Commission initiatives together with new Responsible Lending Criteria. The ABS recently reported that home loan approvals have fallen by 13.6% year on year and within that, investment loans have come back by c.20%
Off the back of successfully settling a $48m syndicated first mortgage for a residential apartment development in Sans Souci just weeks ago, Sydney-based real estate investment manager Centennial Property Group (CPG) opened a new fund with a focus on the industrial and logistics market, Centennial Industrial and Logistics Fund II (CIL II). The fund, available only to wholesale and private high net worth investors, opened on 1 November and was seeking to raise c. $38 million. CPG closed the fund less than two weeks later, well before the official close date, due to oversubscription.
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