40 lot residential section development, Glendhu Road, Glenfield
In mid 2010, we were approached by Cameron Wilson of Oyster Capital to assist with the acquisition and development of a strategic
land holding in Glenfield, on the North Shore of Auckland. The land holding had already been fully consented
for a 40 lot subdivision and was being tendered for sale by the family who had owned the land for several decades.
Having worked closely with Cameron over the past eight years we were naturally interested in investigating this opportunity closely. As market conditions continue to be challenging with residential property sales at lows not seen for decades, the dynamics to make this type of project successful are extremely complicated. The current market has high market risk combined with very low capital availability and a tight banking market.
Having said this, even difficult markets can create excellent investment opportunities for us. In this case we plotted several road markers for Cameron to follow in structuring this opportunity. The key elements being (a) market risk – to be minimised by pre sales, (b) construction risk – to be minimised by a fixed price contract with a reputable contractor and (c) planning risk – all consents to be
in place.
Cameron was able to execute on all these key areas (a) he obtained sufficient pre sales from a large house builder to significantly minimise market risk. Then he went on to sell the balance of the lots to individual buyers, (b) he engaged with a well established and reputable civil contractor and agreed a fixed price contract and (c) obtained all consents so that the day we settled, construction was able
to commence.