Port Stephens Council will invest $3.3 million to develop eight townhouses at Soldiers Point hoping to multiply what it would otherwise earn on the land sale.
Borrowing proceeds from its 155 Salamander Way shopping centre development the council hopes that building the homes will earn a tidy $1.1 million profit if not more.
“The council has resolved to re-purpose some of those returns from Salamander Bay to generate further economic return,” the council’s property services section manager Glenn Bunny said.
“It’s another good economic investment for council that ultimately benefits the rate payer.”
The development is located at 14 Bagnal Road Soldiers Point.
The council has previously moved to develop the site in financially harder times and had let a previous development application lapse.
“The market wasn’t as buoyant as it is now,” Mr Bunny said.
“Housing of this kind is in pretty short supply on the Pensiula so it’s not only good economically, it’s also great for supplying people with housing choice.”
The council sought a market appraisal on the unimproved land with an estimated return of between $650,000 and $750,000. Each of the three bedroom units when built is expected to return $550,000 to $575,000.
It has based this on recent property sales.
One of them is an adjoining three dwelling development at 16 Bagnall Avenue – three bedroom, two bathroom and double garage – for $660,000. A four bedroom, two bathroom, double garage, single level dwelling went for $685,000.
The council has already moved to secure a construction certificate so that it can send the project out to tender.
“We’ve proved time and again that we can do an appropriate development in the appropriate place and get the returns that benefit ratepayers,” the mayor Bruce MacKenzie said.
“We had someone stand up and criticise us at council recently for not investing in the Nelson Bay CBD and that if we did we could get a 12 per cent return. That’s rubbish.”
Cr MacKenzie said the Soldiers Point development was another example of the council investing wisely.
“We’re a commercial-thinking council and I’m a commercial-thinking mayor,” he said.
“I’ve made some great investments for council for 40 years.
“People said we shouldn’t do the Pepper Tree Road development at Medowie either and that’s earned us hundreds of thousands of dollars.”
Once the townhouses are built the council intends to market them individually through a real estate agent based on the Peninsula, through a competitive process.
Final pricing will be determined at that time in consultation with the property advisory committee and based on an independent valuation.
Construction is not expected to begin until early 2018 when funds become available from the shopping centre development.