This blog highlights 5 different items that can get overlooked or missed when you are identifying a property to develop. The below is by no means an exhaustive list and you should always look to engage with professionals when purchasing land, however, it does give you a good starting point.
Storm and Waste Water Connections
The first and most obvious point is your connections to services, primarily Wastewater and Stormwater. We commonly find developers who have acquired a site that does not have direct access to one of these services, this can be a costly mistake.
All new developments will be required to tie into these services and if they are not adjacent to or on your site it can be costly to put the infrastructure in place to connect these. It is vital to identify where your connections for a development site sit. If they are offsite, you should have a budget allocated to that civil work. Tying into a line that is across the road or down the street could end up costing you upwards of $100,000, affecting the feasibility of the development.
Further, if the services are on your neighbour’s property then you will need their permission to access and complete the work on site. This normally involves getting the neighbour to sign a contract (a standard format is available; however, we often encourage clients to draw up a more formal copy) that allows this work to be completed. Lenders and the local council will require these for their sign off’s. This contract must include the consent plans for the work and the development. It is common for the neighbours to seek compensation, at times extortionate, for the contract to be signed. We suggest dealing with this early in the process and identifying an alternative if the neighbour is not conducive to a solution.
For sites in Auckland to review the services connections and some other details I highly recommend utilising the Auckland GIS website. There are other websites available for other local authority bodies.
Powerlines
Powerlines are another item that is important to be aware of when you are looking at a site. If you are building too close to the power lines (within 3.5 meters – which includes scaffolding) then you would need to secure an exemption from Vector or move the lines underground.
The process to get an exception can be tedious and costly and often ends up not being approved by Vector. We often see clients who are required to redirect the power lines underground. This in itself is not a deal breaker and can be done at a reasonable cost, however, if not identified early enough it can mean that the programme is halted and this may result in time delays as well as additional costs, which when you have leverage, can be quite costly.
You can find further details on working near power lines here.
Water Meter / Connection
This is one I discovered myself recently. Quite often in Auckland, Water Meters have been incorrectly placed inside the neighbouring properties' boundary. When sites are being redeveloped and your neighbours' meter is on your side of the boundary it will need to be moved to the correct property. Technically speaking, this should be done at the neighbours' costs, however, the neighbour is not obliged to do it, so often this cost is absorbed by the developer.
This can be quite a simple solution. If it is being moved within 2 meters, a flat fee of $400 is payable to Watercare. If it is further than that, it can be more costly. Often not so much as to fully impede the development but more than you would like.
Again, it may also be something that holds up the programme and this is something you want to avoid.
This link has further information on this point.
Flood Plains / Overland Flow Paths
We are watching this with particular interest after the recent weather events in the upper North Island. We imagine that councils are diving into more detail around these line items. It is something that is commonly overlooked as part of site acquisition due diligence. Identifying if your property sits within a flood plain or has an overland flow path through the property is an important pre-acquisition step.
If your site sits within a flood plain or has an overland flow path you will be required to provide some mitigates to these as part of your resource consent design. This could mean additional costs with further civil works or lifting of the units or perhaps a reduced density on site. Again, these are items that are easily identified early and can have a big impact on your development.
Again, check out the GIS website here.
Contour
This is not so much something that people miss (hard not to tell if a site is sloping!) but often something people underestimate. If a site has a slope it will generally require some retaining work to be done. The greater the slope, the greater the retaining work. This can also mean that there is a lot of soil that may be required to be removed from the site, or delivered to the site. These items will add additional costs to the project budget. We frequently find developers underestimate the cost of the civil works on their site if it is sloping and margins can be chewed up quickly.
Another item to note with sloping sites is that if the services connection is uphill you will be required to put in pumps to move the waste up the pipe. This can limit the saleability of the properties in the future with discerning buyers worried about future maintenance costs. This is true of Kainga Ora who will not purchase developments that require pumps.
Again, something to be aware of and take properly into account when doing your due diligence on a site.
Overall, there are lots of factors that come into the picture when purchasing a development site and the perfect site is not easy (or cheap) to come by. We recommend engaging with trusted professionals when you are working through the acquisition process to ensure you make an informed decision.
If you are looking to acquire a site or develop reach out to the team at Lateral Partners!
Please read our Disclaimer Statement for more information.
