Redevelopment: A Sensible Path to Avoid Costly Repairs and Achieve a Positive Financial Outcome
Mounting Costs in Ageing Apartment Buildings
Owners in ageing apartment buildings, whether strata or company title, are increasingly facing the reality of mounting repair and maintenance costs. Common areas, structural components and essential services such as plumbing, electrical systems and lifts all degrade over time. In many buildings, deterioration of concrete, including concrete spalling or “concrete cancer”, has become a major issue, requiring costly and complex rectification. Special levies for these works can be large and often divisive among owners.
When Repairs No Longer Make Sense
There is a tipping point where continuing to fund repairs becomes less viable than considering redevelopment. In Sydney, numerous changes to planning controls in recent years have created additional development potential for many properties. Sites that were once limited in density or scale may now support significantly larger or more valuable developments. For many buildings in the right location, this creates the opportunity for landowners to collectively realise a return far exceeding the sum of their current individual unit values.
Key Questions for Redevelopment Viability
However, realising that opportunity requires careful, objective analysis.
What is the realistic redevelopment potential given the current planning controls and design standards?
What is the likely land value in a redevelopment scenario?
How does this compare with the existing market value of the individual units?
And how should any uplift in value be fairly allocated among owners?
Augusta Advisors has a structured process for addressing these questions. We are experienced in assessing redevelopment value and quantifying the premium over current market value that can be achieved. We can also advise on fair distribution of proceeds among owners and ensure that strata owners are not exposed to common traps, such as under pricing, imbalance in negotiation power or developer terms that reduce the return to owners.
Unlocking Value Through Redevelopment
For many apartment owners, redevelopment presents a positive and viable path to move beyond the burden of costly and ongoing maintenance, while unlocking significant financial value. With a structured approach that puts landowners’ interests first, redevelopment can be a sound and attractive alternative to investing further in ageing, high maintenance buildings.
Get in touch to have an initial discussion with one of our advisors today.