The Big Opportunity of Greenfield Development
When it comes to investing in property, most everyday investors follow the exact same path. Buy a home, rent it out, and hope to make money either from rental income or the future resale of the property.
But what if there was a smarter way to invest in property? To increase your returns and achieve capital growth even faster.
Greenfield development provides a huge opportunity. It refers to any real estate construction project on undeveloped land. Essentially converting farmland or government owned land into brand new communities. Greenfield sites are generally positioned near highways, or on the edges of cities or towns, with the purpose to construct new residential and commercial buildings.
Future new development boom predicted
With a shortage of affordable housing, state governments across Australia are feeling the push to provide clear pathways for the development of new houses.
Here’s why the opportunity of Greenfield development is only going to grow:
- Supports population growth and the desire for more housing
- Compared to ‘Brownfield’ (redeveloping existing buildings) it can be more affordable
- Usually has extra space allowing for future expansion
- New suburbs support modern, sustainable lifestyle e.g. cycle paths, solar power
In the final quarter of 2021 the Victorian government released over 6,000 new lots. Similarly, the NSW government announced it was opening up greenfield sites around the state for the development of 18,000 new homes.
Manufacturing capital growth from the outset
Greenfield developments are usually only accessible to the wealthiest investors. These professional investors jump on these opportunities because they offer higher returns than other real estate investments. The reason for this is the land is purchased with a built-in opportunity for manufacturing capital growth through development. These investors know the cost of the land plus the cost of construction will be less than the final value of the property after the development is completed. This offers immediate equity and protects against fluctuations in the property market.
To discover more about how everyday investors are accessing opportunities that outperform the property market, book a discovery call with Finnia.