SYDNEY strata ADVISORS

Independent Advice for Strata Owners Before Major Repairs or Selling to a Developer

 

Confidential, independent advice for Sydney strata owners and owners corporations

Advice for owners before engaging developers, agents or neighbouring properties.

Many older strata buildings are facing major levies for concrete repairs, waterproofing, lifts and façade upgrades.

At the same time, some of these buildings can attract developer interest or have redevelopment potential due to planning changes or their location.

In many cases, these two issues arise at the same time, creating a decision point for owners about whether to commit further capital to the existing building or consider selling the building.

Making the Most Money from Your Strata Building

The key question is no longer just how to repair the building. It is whether owners should continue spending on the existing building or whether the site is more valuable if sold to a developer.

A common and often costly mistake is committing to major expenditure or engaging with developers before the building’s true commercial position is understood.

Early advice helps owners understand their options, preserve flexibility and avoid commitments that are difficult to reverse.

Augusta Advisors provides independent commercial advice to owners.

We act only for owners, never developers.

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Should you keep spending on repairs, or sell to a developer?

For many older apartment buildings, the financial question is no longer simply:

“How do we repair the building?”

It becomes:

“Should owners keep investing in the existing building, or does the land have greater strategic value?”

You may be in this position if: 

  • Your building is facing a large special levy

  • Concrete repairs or waterproofing works are necessary

  • A developer has approached the building

  • Waterproofing or building defects are an issue

  • Lift replacement or façade upgrade works are being considered

  • The building’s services or infrastructure are ageing

  • Insurance and maintenance costs are increasing

In some cases, major repairs are justified. In other cases, owners unknowingly commit substantial capital to buildings where redevelopment potential, amalgamation or developer demand may justify a different strategy.

The cost of getting the sequence wrong can be significant and is often difficult to reverse once commitments are made.

A developer has approached your building, what you need to know

When a developer approaches a building, many owners assume the site must be highly valuable, but the reason the developer has approached the owners is because they are trying to exclude competition by going direct and buy the building more cheaply.

Developers typically assess sites using detailed residual land value feasibility analysis, extensive market evidence and experience in identifying ways to increase yield and value.

Experienced developers are expert in taking advantage of planning controls, inside market information, clever design and site efficiency strategies to improve their financial outcome from a project.

Most owners do not have access to the same level of information.

This information gap regularly undermines strata owners ability to negotiate the maximum price when dealing with developers, particularly when the engagement with the developers occurs too early, without independent advice and clear commercial strategy.

As a result, direct approaches by developers, whether made directly to owners or through an agent, combined with this imbalance of information, increase the risk of owners selling at a price that does not fully reflect the full value of the property.

LMR and TOD: why planning uplift does not automatically create value

Recent planning changes, including Low and Mid-Rise Housing and Transport Oriented Development controls, have created additional redevelopment potential for some strata buildings in Sydney.

This is particularly relevant in:

  • inner suburbs; 

  • lower North Shore locations; 

  • harbour-side suburbs; 

  • coastal locations;

  • areas near stations and centres; and 

  • older apartment precincts with relatively low existing density. 

However, planning uplift alone does not determine value.

The commercial outcome may depend on:

  • site dimensions and frontage; 

  • views and orientation; 

  • access and site constraints; 

  • whether neighbouring sites are required; 

  • achievable apartment yield; 

  • construction cost; 

  • planning risk; 

  • achievable apartment sale prices; and 

  • developer demand. 

Some sites with apparent planning upside may not be commercially viable, while others may be substantially more valuable than owners initially realise

Collective Sale and Strata Renewal in NSW

Collective sales and strata renewal processes can create strong outcomes for owners when handled correctly. However, they also involve:

  • However, they also involve:

    • coordination between multiple owners; 

    • differing financial objectives; 

    • negotiation complexity; 

    • timing issues; 

    • developer selection; 

    • legal process; and 

    • value allocation concerns.

  • A common concern among owners is fairness. Questions often include:

    • Will renovated apartments receive higher value allocation? 

    • How are views, aspect and floor levels treated? 

    • Can disharmony within the building be managed? 

    • What if some owners want to sell and others do not? 

    • Can redevelopment realistically be executed, even if the site has potential?

These issues are important and should be addressed early through strategy, process structure and independent advice.

How independent advice changes negotiation and outcome

Developers, agents and owners have different objectives.

Role Typical role
Developer Seeks to acquire the site at a price and on terms that satisfy the developer's required return and risk profile.
Real estate agent Markets the property once a sale strategy has been established.
Augusta Advisors Advises owners only, aligns fully with owners' interests and focuses on maximising owner outcomes, protecting negotiating position and reducing owner risk before major decisions are made.

For owners, value is not only about headline price. The outcome can depend on:

  • timing; 

  • competition between developers; 

  • process control; 

  • transaction structure; 

  • risk allocation; 

  • conditionality; 

  • neighbouring site coordination; and 

  • negotiation strategy. 

The objective is usually to maximise price and terms for owners while shifting as much development and execution risk as possible on to the developer.

Get in touch to discuss your property

What the first step looks like

Initial Strategic Advice is designed to give owners a commercially informed position before major decisions are made.

The review may include:

  • assessment of redevelopment potential; 

  • review of LMR, TOD or other planning controls; 

  • high level feasibility and developer demand analysis; 

  • consideration of amalgamation opportunities; 

  • likely strategic options available to owners; 

  • key risks affecting value or execution; 

  • likely negotiation and process considerations; 

  • value allocation and fairness issues between owners.

Disuss your property
 

The output is intended to help owners understand:

  • whether sale for redevelopment is realistic; 

  • whether major repairs should proceed first; 

  • whether developer approaches reflect real value; 

  • whether neighbouring sites matter; 

  • what process is likely to produce the best outcome; and 

  • whether action should be taken now, later or not at all.

This is not a formal valuation, legal opinion or sales campaign. It is independent commercial advice for owners before strategic decisions are made.

Speak to one of our advisors

Common situations where owners seek advice

A developer has approached the building

  • Owners want to understand whether the proposal reflects realistic site value, whether stronger alternatives exist and how to negotiate for themselves.

The building is facing major special levies or concrete cancer repairs

  • Owners want to understand whether substantial expenditure should proceed before redevelopment potential is assessed.

The owners corporation is considering a collective sale

  • Owners want clarity on feasibility, process, timing and negotiation strategy.

Planning changes may affect the building

  • LMR or TOD controls may increase redevelopment potential but commercial viability and the consequent potential return to each owner still needs to be tested.

Owners are discussing neighbouring sites

  • Amalgamation can increase value but also introduces additional complexity and coordination risk.

Older buildings in high value Sydney locations

  • Older apartment buildings in harbour, coastal, inner ring or high value suburban locations may have redevelopment potential that is not reflected in the current use of the property.

What our clients say

  • “Augusta initially provided us with advice about how to best take advantage of the potential of our Rosehill property.

    They identified and appropriately managed a delicate and problematic property issue to a successful conclusion, adding a great deal of value in the process.

    At all times we felt very comfortable in dealing with the principals of the business, who we found very trustworthy and had an expert understanding of achieving the best commercial outcome from the property.

    We would have no hesitation in recommending Augusta for a similar role”

    Greg Ball | Managing Director
    Envirowash

  • “Augusta showed us the options for maximising our return while controlling our risk. Augusta helped us to clarify our thinking about the best strategy for our property. Augusta really understands the property market and development.”

    Neil Burley | Director
    Sydney Antique Centre

FAQs

  • Yes, that’s a common situation. The land value for redevelopment can exceed the total combined value of the strata apartments.

  • It can do but not in every situation. Also, initial developer interest and the pricing they may eventually formally offer can be quite different.

  • Yes, it’s natural that different owners we’ll have objectives and financial circumstances. We find that often when there is good management of the process and the pros and cons of the process become better understood by the owners, they can become more aligned.

  • If the building is likely to have redevelopment potential, then assessing redevelopment potential first can be beneficial for the owners and can avoid substantial expenditure that may prove unnecessary.

  • It is not unusual for some owners not to be interested at the outset. Our experience is that as owners become better informed, have time to consider their options and more clearly understand the financial implications, the numbers often shift towards supporting a sale for redevelopment.

  • Yes, any of these discussions with us are confidential and there is no obligation to proceed.

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Speak with Augusta Advisors

I’m an individual owner

If you are concerned about major repairs, special levies, developer approaches or redevelopment potential, contact Augusta Advisors for a confidential discussion.

I’m on the strata committee or owners corporation

Augusta Advisors can provide an initial committee briefing discussion to help owners understand the building’s optimum commercial position before major decisions are made.

Speak with one of our advisors today