Managing Property Development Risk

The Major Property Development Risk Categories

Property development, as you probably know, is not without risks. The government red tape alone can be what makes a seemingly viable project unviable.

The major risks to consider when developing a property are:

• Regulation and Legislation;
• Costs;
• Timeframes; and
• Stakeholders and Community.

In the next few sections, you’ll notice that each one of these risks can affect the others; with timeline delays potentially increasing costs, legislation affecting both costs and timeline, and stakeholders and community having a potentially profound affect across the board. Let’s take a closer look at these risk categories and how we can minimise risk through smart development risk management.



Managing Regulation and Legislation

Regulation and Legislation is probably one of the biggest risks to contend with when developing a property, in part because it actually ties into the costs and timeframes of a project. Unfortunately, it’s never as simple as, “This agricultural setting is ideal for a Bed & Breakfast, let’s set it up here!”. Where and how you can develop is tightly controlled by your local planning scheme, regional plan, and state legislation.

If we continue with the agricultural property example and the B&B, here are handful of examples of what you could come up against with regulations and legislation:

• The property may be within the regional plan’s Priority Agricultural Area (PAA), which can restrict what is uses are allowed on that land – it may be strictly for agricultural purposes only;
• The local council’s planning scheme may have precincts with strict codes that differ to the standard Agricultural codes of the planning scheme;
• There may be a limit on how many dwellings can be on the property;
• There may be tourism restrictions for that zone;
• And so on.

How do we deal with this risk?

This is where town planners are an essential part of the de-risking process.  When you hire a town planner, you hire someone familiar with the legislation, jargon, government departments, and requirements. Town planners can be used in two ways to de-risk the legislative side of your development project:

1.      They can carry out a site investigation that quickly identify obstacles for your development project before you get in too deep; and

2.      They can be used to identify available land within a specified area that would be most suited with lowest risk.

Is it the end once obstacles are identified? Absolutely not. A great part of the de-risking process, for a project that may not strictly conform, is to attend a pre-lodgement meeting with the planning department of your local council (or relevant State department if required) to identify any possible angles to get the development through and accepted. Whilst never a guarantee of approval, it’s great for weighing up your options and risks before you sink too much into a development.

Managing Costs

Without a doubt, cost is always the one risk at the front of every developer’s mind. You can be as passionate as you want about a project, but budget is essential and you want to circumvent any unnecessary costs to maximise profits.

The town planning process deals primarily with the infrastructure fees and charges and the application fees associated with getting council approval for a development project.



How do we deal with this risk?

At the time of completing a site investigation, a town planner can identify council fees and charges that will be applicable to the development. This can be provided as a part of the fee proposal, allowing a developer to crunch more accurate numbers before committing to a project.

Additionally, a town planner can identify, as a part of the application report, what specific requirements there are for the development that could potentially affect building costs down the track. For example, there could be a requirement for things like particularly high fencing and screening, specialised flood event reports, or extensive buffer landscaping that might add to the estimated costs of a project.

By identifying these issues early on in the process, risks can be assessed before fully committing to a development and potentially a massive financial outlay.

Managing Timeframes

No matter how relaxed a developer might seem, timeframes do inevitably matter. Timeframes are woven throughout every aspect of your development, right from the development application phase, with every road block potentially costing a developer money.

Some common and important development application timeframe issues that should be noted are:

• Getting your application in may be time-sensitive due to particular local government incentives or to keep ahead of specific economic forecasts;
• The application process has strict timelines through to the decision, not only for the council to rubber stamp the application but also for the applicant to respond to information requests;
• The development approval received is finite – if you don’t start the development in time, you may have to reapply and pay the fees and charges all over again;
• Public notification will add time to the approval of your application; and
• Decision appeals will also add costly time to the application process.

How do we deal with this risk?

The preparatory work that a town planner does, before commencing work on the application, is to quickly assess the type of development against the relevant codes. This allows the town planner to advise on the likelihood of hold ups, rejections, and need for appeals.

By predicting potential issues for your development, it allows for a better tailored report to be constructed and case to be put forward. It also prepares the developer for any anticipated timeline roadblocks, allowing them to budget the time and money required.

Forewarned is forearmed.

Managing Stakeholders and Community

This risk category comes into play for three main reasons:

1. The development is determined to be Impact assessable in the planning scheme and so requires public notification periods;
2. The development is a part of a major project that may affect surrounding sensitive uses and requires careful management of stakeholders and community; and
3. The developer would like public feedback to help shape and strengthen the application.

Have you heard the phrase “too many cooks in the kitchen”? Well, this can be true of stakeholder and community involvement in a development. Whilst a certain amount of involvement may be a requirement for the development, it’s hard to ignore the fact that the more people involved in the development project, the higher chance it has of taking longer and perhaps even costing more than originally budgeted.



How do we deal with this risk?

Believe it or not, town planners are quite often involved in community and stakeholder engagement, particularly in the instances mentioned above whereby public notification or community consultation is a requirement.

A town planner will create and facilitate a strategic engagement management plan to meet requirements and inform a project, ensuring that community and stakeholders are heard whilst still maintaining a tight deadline (and budget!).

De-Risk Your Property Development Today!

Got a project in mind and want to ensure property development risks are professionally, efficiently, and carefully managed? Book your initial consultation with Planning Approval Group today and kickstart that development with peace of mind.