Is The Block the world’s worst development?

Washington Brown has crunched the numbers on The Block’s latest development in Melbourne’s inner-city bayside suburb of Port Melbourne, and something just doesn’t add up.

 From a financial point of view the development, which consisted of transforming a 1920s art deco building into a luxury apartment block, was one of the worst he has ever seen.

While I understand the magic of television, Channel 9 has outdone David Copperfield in creating the illusion of a profit to the public!  Depreciation Quote Schedule

Let’s look at the numbers:

According to reports Channel 9 bought the site for around $5 million, which allowed for 6 apartments. Only 5 were sold on TV and for calculation purposes let’s say the acquisition costs is $4.2 million.

The construction cost and depreciation allowances totalled over $11 million, for the 5 apartments alone.

That’s $15.2 million alone in construction and acquisition costs.

It’s worth noting that under the Income Tax Assessment Act 1997 the initial vendor (ie. the developer) has an obligation to pass on the actual costs of construction to the purchaser, where the costs are known.

Let’s not forget there’s then a variety of other costs involved in buying and selling, and undertaking a property development, including:

Whilst some of these costs may have been avoided due to contra deals, the bulk would have to be outlaid by Channel 9. Depreciation Calculator

I estimate these additional costs to conservatively be $2 million, which brings the total cost to $17.2 million.

The Block’s total sales realised just a little over $12 million, leaving the development in the red by around $5 million, yet it has been indicated that profits of up to $715,000 were made by the contestants.

That something David Copperfield would be in awe of.

You know it’s the peak of the market when reality TV shows are pulling rabbits out of a hat to show a profit.

Whilst the contestants may have walked away with some ‘profit’, if the numbers are to be believed as shown on the show that development was a stinker.

The worry is these shows give an unrealistic expectation to would be budding renovators.

The 14 Property Must Haves For Every Property Investor

Every investor – whether expert or amateur – should be looking for the same things in a property investment to ensure its success.

While there is no exact formula for buying a successful investment, it’s handy to have a checklist to consult to make sure you’re on the right track.

property must haves

Below are some of the fundamentals you should be looking for when buying. Be aware that this isn’t an exhaustive checklist. However, it can serve as property investment tips that will help guide your decisions.

Property must haves:

Construction Cost Estimating: A Case Study

construction cost estimating

Construction cost estimating examples Case Study

Client: Commonwealth Bank/Ecove Group

Project description: Site 3, Sydney Olympic Park, NSW Depreciation Quote Schedule

This development comprised a 25-storey tower, housing two retail tenancies and 267 apartments over four basements. A two-storey commercial pod, consisting of six commercial tenancies, including associated site works, also formed part of the development.

Washington Brown provided pre-contract cost planning services to the developer, as well as a full cost management auditing service to the financier during the construction phase.

We also provided monthly contractor payment recommendations and reporting to the financier, along with variation assessment, cash flow analysis and contractor reviews.

Washington Brown worked to ensure the builders maintained the lump sum contract price and the financier’s/developer’s interests were maintained at all times.

Work out how much you save using our free property depreciation calculator or make it happen and get an obligation free quote for a depreciation schedule now.

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Using a Construction Cost Estimator

construction cost estimator

Whether you’re building a block of residential units, a commercial or business centre, a high-rise tower or developing a subdivision, it is a must that you are in control of the project cost. We all know that effective cost management is critical to a project’s success.

Washington Brown has extensive experience in all major sectors of the property industry over the last 30 years. This expertise and knowledge is fundamental when assisting our clients in completing their projects on time and on budget.

We have been involved in a wide range of development projects where we have acted as the cost controller on behalf of lending institutions. Our best-practice cost planning service ensures you get accurate cost and construction information for every stage of your project.

We offer specialist advice in the following nine broad areas:

  1. Financial auditing of projects Depreciation Calculator
  2. Development monitoring
  3. Procurement
  4. Construction-contract review and assessment
  5. Feasibility studies
  6. Sustainability advice
  7. Risk identification and management
  8. Value engineering
  9. Tender review and selection.

Washington Brown’s ongoing project monitoring, coupled with our robust reporting systems, helps us detect issues early, giving you time to address them quickly and in the most cost-effective way.

We can monitor, analyse and report on:

We have developed a cost report for the project monitoring that easily identifies the current project financial status, cash flow analysis, variation assessment and risks.

If you need help minimising the risk of overruns on your next construction project – talk to our construction estimating team today.

This blog is an extract from CLAIM IT! – grab your copy now!