27 Selbourne Road KEW

Comments on 27 Selbourne Road KEW

Rated as land only
Summary of Issue 

We have bought two blocks against real competition at $5,000 plus per sqm in last fortnight - next door and 9 Barrington.
Development sites are starting at $5000 and going to $10,000 per sqm in Inner Melbourne
On those estimates of $5,000 for land = $3,800,000 to $4,000,000.

Earlier this year (March) 100 metres away we bought 93 Wellington St Kew - we priced that at $3,000 per sqm and bought it at that. Bigger land size and arguably better block - did have a Heritage overlay and required major reno. 914 sqm bought for $2,950,000. Good buying. On those numbers our estimates would be $2,300,000 for land and $400,000 for building or $2,700,000 to $3,000,000. http://www.james.net.au/rating/93-Wellington-Street-KEW

And there-in lies our challenge
1. To secure
2. At a price
3. But we are his best buyer - his house would not go well at auction for a buyer - for a developer… maybe and maybe not - the question is, what risks are you prepared to take to find out where another buyer would go to?

We have no title - we have taken land size off government database for initial estimates

Rating Comment for next door - 70 Wellington Street Kew
Gave Pricing Advice $1,945,000 to $2,345,000 - bought for $2,202,500 after pass-in against 2 bidders to $2,135,000.

This property has very much had a chequered history in recent times and is one of the lower rating homes we have assessed - mainly due to the fact that apart from the location and lack of DIFFICULT Heritage (it does have a new building permit, despite Heritage; so STCA) it has almost no appeal to anybody except at the cheapest of prices - with one exception - a specialist buyer.

The current campaign is confused in its execution and until tested, nothing is certain.

With regards to pricing - we recently purchased across the road (with a Heritage Home in need of a reno) at $2500 per sqm - recently 37 Wellington sold at $5000 per sqm (house and north rear). Land in premium Kew, eg Sackville Ward is achieving circa $5,000 per sqm eg 20 John St. The current agent quote says it should be worth more than Sackville Ward. This is not Sackville Ward.

So, who could be your competition?
1) Entry level buyers - nothing much goes below $2m - however the home is very poor
2) Builders (professional and amateur) - working your way back from finished product $4m - $1.5m = $2.5m. That is really pushing the envelope. More would be $3.5m - $1m - making $2.5m for land heavy.
3) Overseas Asian buyers - this market is still strong, but the calculators would start to implode around $2m

However, 19 Rossfield - a reasonable comparable for land did sell just over $2.3m or $5000 per sqm last weekend. It’s really not about value or pricing or quality - it is what it is. It’s about does it make sense for you and if it does, then in all likelihood your main competitor will be the seller. Of course, this business is not one of certainty, not one of reasonable doubt - more balance of probabilities.

Strategy - test before auction next Wednesday - go to auction if that proves unsuccessful and bid conservatively to a pass-in and then decide afterwards how to handle a deal same day or risk and deal later in the week/month/year?

This works as a piece in a puzzle not as a standalone - a resale would be expensive, if there was a change of heart.