$44m Kellyville sale unlocks property flip trend

A Sydney developer has on-sold a north-west Sydney development site to a Chinese mining company – and agents say it won’t be the last.

The Western Sydney-based Bathla Group pocketed $43.7 million for the 2.2ha site at 17 Balmoral Rd in Kellyville, despite having approval to build 290 residential units on the property.

The developer, which had planned to construct the residential project over 12 to 24 months, instead handballed the site to the Chinese buyer, who made the substantial offer after two months of negotiations.

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CBRE Capital Markets senior manager Alex Mirzaian, who facilitated the sale, says development sites are now so highly sought after, particularly in Sydney’s west, that many developers are seeing better value in selling their land rather than bringing a project to fruition.

“Guys who have bought sites in 2014 and the start of 2015 that were set to settle at the end of the year, have suddenly woken when they’ve come to do their funding reports that there’s a couple of extra million dollars in their pocket,” Mirzaian says.

I’ve literally just got off the phone with somebody else looking to do the exact same thing in Kellyville

“It starts to make you think well, if it’s worth a couple of extra million dollars and the resale values are increasing 20% year on year, then the developer might be willing to pay more for the site than what we paid for it.”

The Hills Shire Council has zoned the site, which lies between Bella Vista and Kellyville railway stations, for high density residential development. It is part of a proposed residential and business district that will include new public spaces, neighbourhood parks and a town square.

Mirzaian says there is a strong indication that the practice of selling development-approved sites is becoming more prevalent as developers seek to unlock their money and take advantage of ongoing strong demand for land.

Some of the confirmed zoning that is coming through the pipeline now is making for overnight capital growth

“I’ve literally just got off the phone with somebody else looking to do the exact same thing in Kellyville,” he says.

“It’s something that’s becoming more common. You’ll always make more money by constructing a site, (but) you can completely de-risk a process by doing it (selling).”

“Some of the confirmed zoning that is coming through the pipeline now is making for overnight capital growth. That overnight capital growth sometimes is better seen to be sold due to the risk levels associated with construction.”

“There’s all these sites that have been purchased raw. There’s so much opportunity in the north-west that people have capitalised on a year or two ago and now suddenly the re-zonings are confirmed and they’re sites that are getting a lot more than one house. They’re sitting on five-acre parcels and these five-acre parcels can carry 300 apartments.”