Townhouses delivering exciting opportunities for developers

Townhouses are in high demand and short supply, which is opening up new opportunities for developers and their investors.

The Urban Development Institute of Australia – WA Division (UDIA WA) reports that townhouses are fast emerging as an attractive option for developers, driven by a combination of demand and supply fundamentals.

Building approvals for semi-detached homes in Perth have plunged over the last five years. Yet this type of housing is becoming increasingly popular among both owner-occupiers and investors.

Filling the missing middle gap

The trend towards low maintenance living is particularly prominent amongst downsizers.

Many people within this demographic no longer want the cost and effort of maintaining a large family home, but are looking for a home with more space and privacy than an apartment.

Townhouses fill this ‘missing middle’ of the market, meeting growing demand for low maintenance homes that combine space, privacy and a boutique property.

And this buoyant demand isn’t just about lifestyle.

Townhouses also offer an opportunity for buyers to enter affluent, highly sought-after suburbs at a more affordable price point than freestanding houses – providing the ideal middle ground between an established house and a unit.

High demand and low supply providing opportunities for investors

The challenge for buyers is finding townhouses for sale.

Perth is facing a significant shortage of quality townhouses across the city.

As a guide to just how tight supply is, Urbis analysis shows approvals for semi-detached homes made up 11% of new builds in Perth in 2017.

By 2021 that figure had dropped to just 4%, and supply simply isn’t keeping up with demand.

An attractive development option

Damian Collins, our Chairman at Westbridge Funds Management, says the combination of high demand and low supply is making townhouses highly attractive to both developers and investors.

He adds that townhouses can also have a valuable cost advantage.

“Focusing on smaller scale, ‘boutique’ developments is a more feasible and attractive option for developers particularly when it comes to profit potential,” says Damian.

“The townhouse market has not experienced the same level of construction cost escalation as seen in the apartment market, and there is a wider pool of builders who operate in this sector.”

The upshot is that townhouses in high-demand locations have potential to deliver strong profits to investors in the current market.

“We know from the sheer scale of demand that a quality townhouse product can command a strong price, which further underpins profit potential,” Damian adds.

Westbridge is delivering opportunities to investors

Westbridge has always seized on opportunities for our investors, including capitalising on Perth’s undersupplied townhouse market.

Across our residential portfolio, our Adelma Road Dalkeith townhouse Fund is just a month away from completion. It follows another townhouse fund in the suburb, which is well under construction.

Westbridge also put together a bespoke ‘take out fund’, working with a group of private investors to develop a site in Booragoon into luxury townhouses.

Adding to this, our most recent Cottesloe Fund is now closed, and work will soon begin on eight prestige townhouses on the in-fill site on the doorstep of Cottesloe Beach.

“Westbridge is looking to create further opportunities for investors in the townhouse space,” explains Damian. “The advantage of our agile business model is that we can adapt to market conditions – and seize opportunities for investors when the right location becomes available.

“This is a chance for investors to harness the attractive returns of the townhouse market – where demand far exceeds supply.”

To know more about townhouse product in relation to managed funds, contact us on 08 9321 5566 or submit an online enquiry form below and one of our friendly team will be in touch.

_{This information has been prepared by Westbridge Funds Management as a general guide only. It does not constitute an offer for sale, or solicitation for the purchase of securities, financial products or other investments. It should not be relied upon to determine or to make decisions about the investment objectives, financial situation or individual needs of any person. Westbridge Funds Management recommends investors seek professional advice before making a decision to invest. Westbridge Funds Management and its related entities do not make any representations or give any warranties that the information contained within is or will remain accurate or complete at all times and they disclaim all liability for harm, loss, costs, or damage which arises in connection with the use or reliance on the information. Manager, Responsible Entity and Product issuer: Westbridge Funds Pty Ltd ABN 33 652 852 214 AFSL 533936. Mair Property Funds Limited ABN 48 151 957 676 t/a Westbridge Asset Management. Mair Property Securities Limited ABN 28 091 623 862. AFS License 238386. Momentum Wealth Projects Pty Ltd ABN 29 090 792 439 t/a Westbridge Urban.}