Ray White Invest has completed a 14 lot townhouse development in the western Sydney suburb of Silverwater.  Ray White Invest purchased the partly-constructed townhouse development from receivers in November 2009.  With just over half of the townhouse development completed, the site represented a good opportunity to capitalise on the strong Sydney townhouse market.

Semi-completed projects carry the risk that the works undertaken may not be of an acceptable quality.  Due diligence focussed on confirming that the works complied with the development approvals, BCA requirements and general industry best practice and that all sub-contractors or suppliers had been paid for work undertaken at the time of purchase.

Ray White Invest was successful in raising and equity capital to complete the project, with the White family taking more that 50% of the equity investment available.

On the back of the pent up demand for Sydney housing, compounded by the increase in the first home owners grant as well as the reduction in stamp duty, the majority of the townhouses were sold prior to the re-commencement of construction. The strong momentum in sales allowed debt construction finance to be readily available and the project was subsequently completed in 12 months.

On settlement of the sales, a net IRR of 47.5% p.a was realised to investors.