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Buying a property with rezoning potential

Buying a property with rezoning potential

Investing in property is often considered as a safe and lucrative strategy for building wealth. However, within the broad expanse of residential property investment opportunities, one strategy which can be popular due to its potential to deliver exceptional capital growth is purchasing property in areas which are undergoing rezoning. 

This approach can be a game-changer for investors who understand the dynamics and opportunities presented by rezoning. In this blog, we’ll explore rezoning and the opportunities it can present to Sunshine Coast and Brisbane property buyers.

Understanding rezoning

Rezoning involves changing the designated use of a piece of land or an entire area, as outlined in a Council’s zoning laws. These changes can shift an area from low density residential to medium density residential, residential to commercial, industrial to residential, or agricultural to mixed-use, among other combinations. 

The process is typically driven by urban development plans, population growth, and economic shifts, aiming to better utilise land in response to evolving community needs.

In South East Queensland, the population is expected to grow by 2.2 million people to almost 6 million people over the next 25 years.

 

 

 

As a result of this forecast population increased, the Queensland Government will be facilitating planning scheme amendment processes for local governments to undertake and in some cases this will require rezoning or amendments to densities or housing options in some areas, in addition to unlocking new land for building homes. 

The impact of rezoning on property values

Rezoning can significantly impact property values. Here’s how:

1. Increased demand:

Rezoning often makes an area more attractive to a broader range of buyers and developers. For instance, if a residential area is rezoned to allow for a higher density use, developers may flock to the area, increasing demand for properties. This spike in demand can drive up property prices. We are currently seeing this on the Sunshine Coast, in areas like Buddina, Warana, Wurtulla and Bokarina. 

 

2. Improved infrastructure and amenities:

Rezoning usually comes hand-in-hand with urban development initiatives. Improved infrastructure, such as better roads, public transport, schools, and parks, can enhance the appeal of an area. Enhanced amenities make the area more liveable, boosting property values.

 

3. Development potential:

Properties in rezoned areas often come with the potential for higher-density developments. A single-family home lot might be rezoned to allow for multi-family units or high-rise buildings, exponentially increasing the value of the land.

 

4. Economic growth:

Rezoning can attract businesses and industries, leading to job creation and economic growth. An influx of businesses not only raises the demand for commercial properties but also boosts the residential market as employees seek nearby housing.

Case studies: Sunshine Coast and Brisbane areas which have undergone rezoning 

Several areas provide case studies on the benefits of investing in rezoning areas:

Maroochydore, Sunshine Coast:

The rezoning of areas like Cotton Tree and the former Horton Park Golf Course has led to significant capital growth for owners of properties in these areas.  The development of the new Maroochydore CBD has resulted in this area being transformed into a medium-and high-density residential and mixed use district, driving up property values.

Buddina, Sunshine Coast:

This beachside suburb is centrally located and was primarily low-density residential. The Queensland State Government over-rode a proposal by the Sunshine Coast Council, to rezone the area to high density residential, pushing land prices and property values higher due to the development potential of the land. This area is now a mix of high, medium and low density residential and property values have increased substantially in recent years.

Woolloongabba, Brisbane:

The rezoning of this suburb in inner south Brisbane transformed it from a low residential and mixed use area a vibrant medium density residential and commercial hub. Property values soared as developers accumulated properties to enable them to build 11 story storey apartment blocks, and Brisbane City Council created mixed use precincts to attract people to the area. 

Maximising opportunities in rezoning areas

Investing in property in areas which are undergoing rezoning requires careful planning and strategic decision-making. Here are some tips to maximise opportunities:

1. Research and due diligence: Understanding the local council’s long-term plans is crucial. Engage with urban planners, attend community forums, and stay informed about proposed zoning changes.

2. Location is key: Not all rezoning areas offer the same potential. Focus on locations with strong growth indicators such as proximity to transport hubs, universities, or central business districts.

3. Engage professionals: Work with town planners, and legal advisors who specialise in subdividing properties. Their expertise can help navigate the complexities of these sort of properties.

4. Timing your investment: The best time to invest is generally before rezoning is finalised and while prices are still low. Once the changes are officially implemented, property values may rise quickly.

5. Consider long-term potential: While immediate gains are attractive, consider the long-term growth potential. Areas undergoing significant transformation can continue to appreciate over many years as infrastructure and amenities develop.

 

Risks and mitigation strategies

While the opportunities are significant, investing in rezoning areas also carries risks:

Approval uncertainty:

Rezoning proposals can face delays or rejections. Mitigate this by diversifying investments and not overcommitting to a single property or area.

Market fluctuations: Real estate markets can be volatile. Protect against market risks by maintaining a diversified portfolio and being prepared for long-term holding.

Community objections: Local objections to rezoning can impact development plans. Engage with the community and understand their concerns to better predict and navigate potential obstacles. An example of this is the proposal by Sekisui House to develop beachfront land at Yaroomba on the Sunshine Coast. The local community wielded significant power in objecting to this development, and ultimately were successful in a Supreme Court appeal against the billion dollar development. 

 

Conclusion

Investing in properties in areas undergoing rezoning can offer substantial opportunities for capital growth. The key lies in thorough research, strategic planning, and understanding the local dynamics. By carefully selecting the right locations and timing investments appropriately, investors can capitalise on the transformative potential of rezoning, unlocking significant value and achieving robust returns. As with any investment, balancing risks with potential rewards through informed decision-making is crucial to success in these types of purchases.

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