In part one of this article series – Development Risks Pt 1 – we discussed some of the risk factors when developingresidential property.
In this article we will take a brief look at: The development process delays, Changes in regulations and Market trends.
Development process delays
The biggest factor causing delays within the process of development is usually during design phase. If your due diligence during land purchasing failed to uncover factors that will directly affect the design, such as environmental factors, this phase can be a long drawn out process.
Changes to regulation
building design regulations and local laws are continually changing. Not erratically however, if the design process has been extended due to other factors as mentioned above there is risk your approvals to develop may lapse and new applications made. This may expose the development to the revised regulations. Which may not be in your favour.
Creating one building type and placing it in different localities may pass local development regulations however, local market acceptance will view your offering in quite a different light. It would be prudent to perform adequate market research to determine what trends are in play in that locality
In the next article in this series we will be discussing: Missed opportunities, Initial purchase and Business management