Sustainable Land Development

Research Report

Contents

• Situation analysis

• Research findings

• Case studies

• Recommendations

Situation Analysis

4

Embracing sustainability is the great challenge of

the 21st century.

• In recent years, governments, businesses and

consumers have become more aware that

our natural resources, particularly oil and

water, are finite, and that human activities

are taking a toll on our environment, for

example through global warming.

• In short, we have realised that the way we

live right now is unsustainable.

• This has helped drive interest in sustainable

development, or the idea that we must find

ways to meet the needs of the present

without compromising the ability of future

generations to meet their own needs.

Ecological footprinting analysis reveals that 1.2 planet earths are needed to cope sustainably

with the world‘s current levels of consumption and waste. If everyone in the world enjoyed

the same lifestyle as the average North American citizen, 5 planet earths would be needed.

5

Sustainability is about making sure our economies, communities

and natural resources have the capacity to continue into the

future.

• To prosper in the long term we must find a way to manage our economic, social and

environmental systems harmoniously, without trading one off against another.

• The activities associated with land and real estate development represent a

particular opportunity to embrace and promote principals of sustainability through:

– Greater efficiencies in energy use;

– Improved water use;

– Protection of ecosystems;

– Better waste management;

– Use of environmentally responsible materials; and

– Use of good design to build stronger communities.

• In recognition of this opportunity, increasing numbers of land

and real estate developers are incorporating sustainable

features into their developments.

6

There is evidence that consumers factor sustainability

considerations into their purchase decisions, particularly when

the claims have been independently certified.

1 Does sustainability sell? Market responses to

sustainability certification. Susan M. Harris

Maunsell Australia Pty Ltd, Leederville, Australia

• In an Australian study, the inclusion of a Green TickTM Sustainability Certification

logo on the labels of seven household products generated a 52% increase in sales.1

• According to Australia‘s market leading electric goods retailers, the energy star

rating system has helped drive increased demand for energy efficient consumer

electronics products.

• Water efficiency ratings combined with a public awareness campaign have switched

consumer preference away from top loaders to front loaders in the last two to

three years.

7

Market research has shown that most people, when prompted,

will say they care about the environment and want to do

something about it, and that it influences their decision

making.

• 35% of consumers say they will pay more for

ethical products.1

• A survey of public opinion in 21 countries

found that a substantial majority - 83%

overall - say it will be necessary for people

in their country to "make changes in their

lifestyle and behavior" to reduce the

emission of gases that cause global

warming.2

1 SUSTAINABLE PRODUCTS: Adding value to sustainability. Marketing Week. London: Jul 17, 2008. pg. 26 2 Would You Pay More to Save the Planet? American Gas. Arlington: Feb 2008. Vol. 90, Iss. 1; pg. 12

8

International market research in the real estate

sector has found similar results.

• Research in the US has found that 36% of potential homebuyers identify the

environment, energy savings or health benefits as a primary factor in their

purchase decision.1

• In a recent survey of new homebuyers in the UK ,92 per cent of respondents said

they would like to see sustainability features as options on new homes, with a

further 62 per cent saying these features should be compulsory.2

• The same research found that, while half of the buyers surveyed were prepared to

pay a small premium for sustainable housing, nine out of ten thought the

Government should provide more incentives.

• The results of a Harris interactive poll commissioned in the US by Move.com reveals

that potential home buyers value "green" building features more than luxury

amenities. When given the choice of features like solar energy panels or energy-

saving appliances, 49 percent considered them important, while only 31 percent

rated luxury amenities as important.3

1 Understanding the Green Residential Consumer. Gregg Logan, Managing Director, RCLCO, 2008 2 ZERO IMPACT. Allister Hayman. Regeneration & Renewal. London: May 23, 2008. pg. 18, 2 pgs 3 New Homes: Changing Homebuyer Priorities Results of Recent Poll. Dena Kouremetis. www.realtytimes.com

9

The findings of some recent Australian research

are even more encouraging.

1 Homebuyers willing to pay more. PRD nationwide. 2008 2 Residential ESD in Oz Lags. Residential Developer Magazine. July 2008

• 2005 data from PRD nationwide research indicated that 83% of respondents would

pay a premium for a home that incorporated the full range of environmentally

sustainable features. Indeed, 44% of

respondents would be willing to pay a

premium of more than 6% for a home that

incorporated the full range of

environmentally sustainable features.1

• A 2007 survey conducted by Matusik Property

Insights supersedes this data with the finding

that buyers are now prepared to pay up to 8%

more for a new house with the full

complement of environmentally friendly

features.2

10

However studies of actual buyer behaviour in the real estate and land

development sector reveal a disconnect between the market research

predictions and reality, as the following excerpt illustrates.

Case study: Consumer demand for green housing - Terramor, Orange County

Estimates vary widely for how much green building practices can add to a home's final price, with

lower estimates at 3% to 5% and higher predictions of 10% to 15%. However there is no debate

about the fact that home builders are crucial to reducing the greenhouse gas emissions that cause

global warming. Buildings — their construction and operation — contribute 48% of emissions, while

transportation adds 27% and industrial activity 25%.

Ara Hovnanian, CEO and president of Hovnanian Enterprises, one of the USA's biggest home

builders, says all things being equal, consumers would choose green. But all is not equal.

"Consumers have not been willing to make the investment," he says.

Hovnanian was one of 10 builders that developed an all-green community called Terramor in

Orange County, south of Los Angeles. He said the results were frustrating; consumers were

unwilling to pay extra for green features such as solar panels to generate electricity.

"We were all hoping consumers would embrace it and at least be willing to pay a substantial part

of the premium," he said. "I can't say we were overwhelmed by the results financially."

Source: “Big home builders say most consumers won't pay for 'green' homes”. Vinnee Tong, Associated Press. 3/7/2007

11

Yet there are examples of sustainable developments that

are indisputably attractive to their target markets.

• Village Homes, a 240-home, solar-powered sustainable development built in 1975 in

Davis, California, has made 28 per cent on capital invested every year for 30 years.

• The Aldinga Arts EcoVillage, a sustainable development on Adelaide's fringe that

started in 2001, has sold 124 of its 145 land release lots and is now selling 25

energy-efficient town houses off the plan. Prices are two to three times that of

similar blocks in nearby areas.

– The eco village model in particular is associated with higher land values. Once a village is

established and the particular benefits associated with this kind of development can be

plainly seen, land in and around the village attracts a price premium.

12

And there is as a compelling business case for developers

to embrace sustainable practices sooner rather than later.

• Regulatory compliance;

• Resource productivity;

• Cost savings and competitiveness;

• Risk reduction;

• Consumer loyalty and trust;

• Partnerships;

• Reputation & improved public profile;

• New markets and business growth;

• Shareholder/investor satisfaction;

• Comparative advantage;

• Local and state government support; and

• Because it‘s the right thing to do.

13

Pollen Strategy has undertaken some preliminary research to

determine the trends in consumer demand and the factors that make

a sustainable development in Australia more likely to succeed.

• To better understand the Australian experience, Pollen Strategy conducted in-depth

interviews with 13 developers – 6 Qld developers who have been involved with

enviroDevelopment certified projects and 7 developers of award winning or

innovative developments in WA.

Research Findings

15

Opinions on the level of demand for sustainable land

developments varied widely amongst respondents.

• In general:

– Niche developers for whom sustainability was the primary focus of what

they do reported a high and increasing level of demand.

• “Demand is huge. 20% of the market is looking for sustainable features and is

willing to pay something towards this.”

• “People are aware that this is the way of the future and are seeking out

developments with some form of green credentials attached.”

– High-end developers focused on delivering a premium product reported

high interest but that demand is tightening with the market.

• “At the high end of the market you can get people to sign up if they‟re

educated.”

• “The high-end segment will champion sustainability because it goes hand in

hand with good design. A developer‟s ability to generate a premium will

become contingent on the incorporation of sustainable elements.”

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• Developers catering either for first or second home buyers, or that

operate in the mainstream to affordability ends of the market, reported

little to no demand.

– “Sustainability is less important than affordability.”

– “In the affordability segment people would like to get involved but are

building to a budget.”

– “At a philosophical level people want to be sustainable, but underlying that is

the question „what will it cost me?‟”

– “Most people are focused on the price point and don‟t look at the long term.”

– “Buyers have become far more cost conscious and are more inclined to shop

around.”

– “We offer free architectural advice on how to maximise the use of solar

passive design in the home, and very few people take it up.”

17

• All the developers we spoke to felt that demand will increase in the

future.

– “In the future, the words „sustainable development‟ will be a thing of the past

– all developers will have to provide the kind of infrastructure we have and all

owners will have to build in the capacity we have covenanted for here.”

– “Eventually sustainability will not be optional.”

• This demand will be driven primarily through legislation.

– “Government legislation has meant that what was once leading edge is now

the norm.”

– “Our local authority is telling other developers to come and look at what

we‟ve achieved here. They‟re saying „that‟s what we want to see‟”.

– “Legislation is required to level the playing field”.

– “The high end of the market will move towards sustainability in the pursuit of

good design, and the low end will be forced to change because the law is

taking us there.”

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• Other drivers of increased demand included:

– Increasing energy and resource prices.

• “As energy and resource prices increase, people may be driven to make longer term

decisions.”

• “The masses are moved on price.”

– Increasing education and awareness around issues of sustainability.

• “Sustainability is a good long term strategy because support for sustainable

developments will increase as people become more aware of the issues.”

– Developer leadership.

• “Through the inclusion of best practice sustainability initiatives in our projects, and

by keeping ahead of the minimum standards required by government, we can raise

people‟s expectations of what a good quality development should include.”

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• A buoyant market is a key enabler of demand in the absence of

legislation, but is not enough to drive real growth in demand on its own.

– “We need a more buoyant market for sustainability to be elevated back up the

decision chain”.

• The market‘s unwillingness to make trade-offs for sustainability was felt

to be a limiter of demand.

– “Future demand will only occur as long as lifestyles aren‟t compromised.”

20

The additional cost of developing land according to principles

of sustainability varies widely depending on how far the

developer wants to go.

• Responses ranged from negligible to $35,000+ per block.

• Some initiatives cost very little, such as designing blocks to maximise solar

passive orientation.

• By contrast, water sensitive urban design was named by most developers

as an expensive component of sustainable land development.

– “It cost around $30,000 more per block and a lot of this was in landscaping and

water sensitive design elements.”

– “The third pipe system cost between $3,000 and $5,000 per block.”

– “We installed underground rainwater tanks at a cost of around $11,500 per

block.”

– “The supply of recycled water to all blocks (from a scheme operated by the

local authority) added around $2,500 per block to the cost.”

21

• Niche developers who view sustainability as a core part of their raison

d‘être, were more inclined to see the cost of sustainable development

holistically, and the interaction between costs and benefits to create

value.

• Some developers noted that the costs are hard to quantify because there

are so many different variables. When taking into account aspects such as

the preservation of large portions of land for open space and nature

reserves, costs can rise exponentially, but there is also a significant

associated benefit.

– “We handed back more than half the site (over 60 hectares) to the State

Government for preservation as a national park for everyone to enjoy. The

cost of this on a per block basis would have been very high.”

– “Some costs are less (no stormwater drainage here and therefore no piping for

same etc), some headworks costs are minimised because of the infrastructure

we have included in the development package but other things have cost more

(ie: waste water treatment plant) etc.”

22

None of the developers felt that sustainability considered

in isolation would lead to a premium for the land.

• “Of the 1,200 blocks we have sold, only one was bought purely for the

sustainability aspects”.

• “Our properties will attract up to $55,000 more than surrounding properties, but

this relates to a wider suit of benefits than just the sustainability per se.”

• “We are able to recoup the cost of investing in sustainability because our

development has features that make it more appealing than competitive

developments. And while there is a link between these features and the

sustainable initiatives that we have incorporated, we would never make our money

back if were to justify the premium on the basis of sustainability alone.”

• “Our market research indicated that people would pay a 5% to 10% premium on a

block, but we are not finding this in practice. We invested around $35,000 per

block on sustainability initiatives and planned to pass these on to purchasers at

cost, but the reality is that people won't pay the extra.”

• “We have not made any premium in the early stages, but expect to make our

money back when we sell the more expensive blocks.”

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A developer‘s ability to obtain a premium for sustainably

developed land is linked to their raison d‘être and the market

they are targeting.

• Niche developers who regard sustainability as the primary focus of what they do reported that purchasers would only pay a premium for sustainably developed land if they felt that they were receiving some clear benefits in exchange for the premium. Social benefits were of particular importance to the niche developers‘ target markets.

– “People are attracted to the idea of a space that does what suburbs used to do, but don‟t do any more.”

• High-end developers focused on delivering a premium product reported that any premium received for sustainably developed land is linked to the superior quality of the product.

– “Any premium that we have made has related more to the location and to our placemaking investments (building community infrastructure upfront) than to pure sustainability criteria.”

– “The premiums we have made in the high end of the market have stemmed from views and quality design rather than sustainability.”

• Developers catering either for first or second home buyers, or that operate in the mainstream to affordability ends of the market, reported that the market will generally pay little to no price premium for sustainably developed land.

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Some developers predict an increasing propensity for

consumers to pay a premium for sustainability features in the

future

• This would be contingent upon:

– Better promotion of the benefits of the sustainable elements rather than the

elements themselves.

– Increasing awareness on the functional superiority of the sustainable product,

stimulating desire.

– More rebates from government.

– More focus on the long term cost savings of sustainable features rather than

the short term cost imposition.

– A greater sense that individual behaviour changes will make a difference on a

world scale.

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Almost all of the features that make a development more

attractive to buyers can be linked to sustainability.

• The features of a development that may increase demand and/or attract a price premium include:

– Location

• Views

• Topography

• Proximity to quality amenities

• Proximity to transport infrastructure

– Presentation

• Landscaping

• Streetscapes

• Built form

– Social aspects

• Sense of community

• Placemaking (provision of community infrastructure upfront)

• Lifestyle

• Safety

• Opportunities for recreation

• Health

– Design functionality

• Liveability of urban design

• Comfort and quality of housing design

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But until developers become more adept at forging these

links, the following barriers will continue to limit uptake.

• More expensive to build:

– Block may not be flat.

– Sustainable features can cost more than off-the-shelf.

– Sustainable homes often need to be architect designed.

• Use of restrictive covenants to control sustainable outcomes:

– The more a developer restricts the person buying the land, the harder it is to attract

people.

• Additional cost and hassle of building an architect-designed home:

– People want the affordability and convenience of off-the-shelf solutions.

• Valuers are yet to recognise additional value of sustainable land development or

houses. – This relates to the price people are willing to pay.

• Education gap: – People often do not fully understand the issues.

• Conflicting values: – The values associated with a consumption culture are often incompatible with the values

associated with sustainability.

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Developers used one of four possible models in setting the

price of land and housing in their developments.

• Price at a premium

– Maintain margin

• By passing on all costs

– Reduce margin

• By passing on some costs and subsidising others

• Match market

– Maintain margin

• By offsetting some costs against savings elsewhere, e.g. less planting of established

trees

– Reduce margin

• By absorbing costs

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In summary…

• The ideal marketing scenario for the rapid uptake of sustainable residential

development is one where consumers assign higher value to sustainably

developed land and are willing and able to pay a premium that at least covers

the additional cost of developing that land in a sustainable manner.

• Then the consumer must also assign higher value to a house that incorporates

sustainable features and be willing and able to pay a premium that at least

covers the additional cost of building that house. (Estimates on the additional

cost of building range from 3% to more than 10%, depending on the level of

efficiency/self-sufficiency achieved.)

• Thus the cost imposition on the consumer is two-fold. Further, we are trying

to construct this ideal marketing scenario in less than ideal circumstances.

• The first undermining force is market conditions: housing affordability is at an

all time low, interest rates have decreased household discretionary income

and consumer confidence is at its lowest ebb since 1992 when Australia was

coming out of the last recession.

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• The second undermining force is that in purchasing a home, most

consumers want to achieve as much amenity as possible, and are reluctant

to offset any amenity for sustainability. This reluctance occurs because,

despite a stated desire to make changes that will reduce our impact on

the environment, very few consumers assign much value to the

mechanisms that facilitate this change (i.e. most consumers would prefer

polished granite bench tops to a grey water recycling system).

• The key challenge for developers then, is to build value into these

mechanisms by using sustainability principles to create better amenity

and market the developments through a focus on the amenity, not the

mechanisms.

• The following case studies provide examples of developers who have had

varying amounts of success in meeting this challenge.

Case Studies

31

Harvest Lakes, WA LandCorp

Overview

• Location: Atwell, WA.

• 20 minutes from Perth CBD.

• 1,100 lots over 115 hectares.

• Lots from $198,000 (2008 prices).

• First land release in 2002.

Sustainability features

• Energy-conserving design guidelines – such as

maximum winter solar orientation and maximum

summer shading, siting and other passive means of

harnessing natural breezes, and landscape elements

that stabilize temperatures inside the houses.

• Restored wetlands integrated with the stormwater

management system.

• Community facilities that have been designed and

built to sustainability criteria, including a primary

school and a community centre.

• Transport oriented design – linking the community

intelligently with transport infrastructure.

• A number of key sustainability design criteria

incorporated into each home to achieve a 5 star

energy rating.

• Investment in artworks as a creative expression of

sustainability.

Harvest

Lakes

―Making your home at Harvest Lakes gives your family a fresh, healthy new life, in attractive, natural surroundings. It's also a

positive step for the world, setting a new standard for communities that take care of people and the planet.‖

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Harvest Lakes, WA

• From the outset, Harvest Lakes‘ developer LandCorp knew that the presentation of the

development and the standard of housing within it would be the primary drivers of

demand.

• Prior to development, Harvest Lakes was a

degraded dairy farm that had been

extensively cleared, with the exception of

a small ridge of trees on a piece of

elevated land. In recognition of the need

for a strong entry statement, the

developers retained the ridge of trees and

positioned the estate‘s entry point to take

maximum advantage of the site‘s

topography.

• As a potential buyer enters Harvest Lakes,

their first impression is of the elevated

land, drawing the eye to the high ridge of

established trees. Then, as they progress

further towards the centre of the estate,

the next major feature of the landscape is

the restored wetlands.

Presentation

33

Harvest Lakes, WA

• To coincide with the first land release, the developers partnered with builders to create a substantial display centre, containing around 14 homes, half of which were two story, and all of which were built to a 5 star efficiency standard, which, at the time, was leading edge. This display centre, coupled with the attractive topography of the site, gave potential purchasers confidence about the quality of the development, while also demonstrating that Harvest Lake‘s 5 star efficiency design requirements could be readily achieved.

• The developers got it right when they decided to make presentation a strategic priority. Subsequent market research has revealed that there were four main drivers of demand for the development: presentation, location, community aspects and sustainability initiatives.

1. Presentation

2. Location

3. Community

4. Sustainability

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Harvest Lakes, WA

Location

• A key location associated drawcard was Harvest Lakes‘ proximity to the city (20 minutes to the Perth CBD) and to public transport (it is served by an interchange of the Kwinana Freeway and a dedicated station on the Perth/Mandurah commuter-rail line).

Community

• Harvest Lakes offers a number of community facilities that have been designed and built to sustainability criteria. These include a $1.5m community centre and a primary school, both of which make use of passive solar orientation and temperature-responsive louvers (eliminating the need for air conditioning and requiring only minimal heating); rainwater flush toilets; and grey water recycling.

• Other community based initiatives that struck a chord with home owners included: – Waterwise Mosaic Project

– Sustainable Living Projects

– Frog Friendly Garden Workshops

– Frog Watch Night Stalks

– Community celebration events

– Welcome events for new residents

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Harvest Lakes, WA

Sustainability

• Harvest Lakes‘ position as Western Australia's first large-scale GreenSmart Estate

gave the developers a point of difference on which to base their ―change your

world‖ marketing campaign, focusing on purchasers making a personal contribution

towards sustainability.

• Additionally, sustainability was

behind many of the decisions

that made Harvest Lakes

appealing in the areas of

presentation and community.

Target Market

• The primary target market was

predominantly owner occupiers

who were purchasing their

second or subsequent home,

including families, empty nesters

and retirees.

• The first wave of residents came

from within 5km of the site.

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Harvest Lakes, WA

Target Market Cont‘d

• Many of these people were former residents of a neighbouring LandCorp

development they had bought into as first homebuyers. Having been in the market

for five to ten years they had built up enough equity to be able to afford an

upgrade to Harvest Lakes.

• The next wave came once the development had established a reputation for quality

and was generating significant word of mouth advocacy from its new residents. This

next pool of people came from as far away as Rockingham and Canning Vale, and

10% to 15% even came from the northern suburbs.

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Harvest Lakes, WA

Results

• Harvest Lakes has consistently achieved high sales rates – 900 of the available 1,100

lots have been sold.

• It is the most popular development in the southern corridor, outselling all other

residential estates and faring well even in the current downturn.

• By offering a wide selection of lot sizes ranging from 200m2 to 1,800 m2, the

developer has captured a broad market, resulting in a diverse range of housing.

• On 1 September 2007 the Western Australian state government mandated a

minimum 5 star water and energy efficiency standard for all new homes. However,

in the years prior to this, Harvest Lakes‘ 5 star plus energy requirement for its

homes was leading edge and did mean that people building in Harvest Lakes paid a

premium for their houses.

• During this time, Harvest Lakes provided a benchmark example of how suburban

residential development can incorporate significant environmental features without

being unprofitable for the developer or unappealing to homebuyers.

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Harvest Lakes, WA

Results Cont‘d

• Today, due to the more level playing field, building a house at Harvest Lakes is no

more expensive than building a house elsewhere.

• The developer maintains a focus on sustainability through the promotion of good

land use, quality built form, passive solar orientation and exploration of emerging

housing trends. The latest addition to Harvest Lakes is a new contemporary village

utilising inner city style housing with a reduced footprint, adjoining the future

retail and commercial centre.

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Coomera Waters, Qld Austcorp

Overview

• Location: Coomera, Northern Gold Coast.

• 40 minutes from Brisbane CBD and 15

minutes from Southport.

• 1,500+ lots over 375 hectares.

• Lot sizes range from 600sqm to 1000sqm+.

• Lot pricing from $305,000.

• First land release 2002.

Sustainability features:

• Masterplanned community with a host of facilities and property options to suit a wide variety of budgets and lifestyles.

• Community based lifestyle.

• 50 per cent of the site land area is dedicated as a nature reserve linked to extensive parkland by 20km of interconnected eco-walking trails

• Minutes from Coomera train station.

• High standard of environmentally sensitive building designs and use of appropriate materials.

• High energy efficiency.

• Native planting recommendations.

• Security.

• Body corporate in place to protect community, presentation and upkeep.

Coomera

Waters

Coomera Waters is a community governed by family values with a beautiful environment to enjoy together.

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Coomera Waters, Qld Austcorp

Vision

• Early in the planning process, Coomera Waters developer Austcorp set a vision for the project as a major family eco-tourism and recreation destination, involving the provision of more than 200 hectares of publicly accessible, environmentally-themed recreation space and education experiences, integrated with residential precincts.

• In keeping with this vision, Austcorp invested in an integrated water management system, walking trails, interpretive signage, an education and research facility to encourage nature study and outdoor learning, landscaped open space, picnic facilities, a grassed amphitheatre for community events and public art.

• An impressive Coomera Waters display and information centre has been open on site since the first land release in 2002.

Presentation

• A key element in achieving the eco-vision for the development has been a landscape design philosophy that incorporates native plants to attract and support wildlife.

• The open space, retained vegetation and landscaping have all contributed to the attractive presentation and resort-style feel of the development, which, along with location, have been the key drivers of demand.

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Coomera Waters, Qld Austcorp

Presentation Cont‘d

• Because the landscaping at Coomera Waters is of a higher standard than a local council is prepared to support and upkeep, it sits under a body corporate, encouraging the involvement of residents in the management of the open space.

• The use of native plants has meant that during Queensland‘s water restrictions, Coomera Waters has remained green and lush in comparison to other developments, and has done so with less strain on the public water infrastructure.

Lifestyle

• In addition to landscaping, the body corporate is responsible for the management of community activities and employs a community liaison officer to organise functions, tennis lessons, pilates, boat outings and other events.

• 24 hour onsite security and a monitored closed circuit TV system means that residents feel safe, and families are happy to allow kids to roam the development freely.

• Design covenants ensure well-designed homes that are more comfortable to live in due to good solar access, cross ventilation and thoughtful location of rooms and outdoor zones.

• All these elements ensure that Coomera Waters thrives as a healthy, active and involved community in attractive surrounds.

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Coomera Waters, Qld Austcorp

Sustainability

• Thus, while not an overt driver of demand, sustainable design has been behind many of the elements that now set Coomera Waters apart as a desirable residential development.

Strategy

• The initial investment in sustainability cost the developer in the realm of $30,000 per block. It took one or two years for the benefits of this investment to become established as ―visible amenity‖ that could be recognised and sought out by buyers, but once this occurred, Austcorp was able to recoup its investment on a block by block basis.

• Land at Coomera Waters is priced to retain the developer‘s margin. No additional margin is made on the investment in sustainability.

• Austcorp‘s corporate tagline is ―creating better futures‖. The desire to achieve the highest possible standards in developing land from a triple bottom line perspective is led from the top down.

• Austcorp has built partnerships with key builders who have become experts in the development‘s architectural covenants. This has helped keep the experience of building a home at Coomera Waters a positive one for new residents.

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Coomera Waters, Qld Austcorp

Target Market

• The Coomera Waters target market is typically third and subsequent homebuyers

wanting a resort-style lifestyle, but not at the Sanctuary Cove price tag.

• The resident profile is more than 90% owner occupier and in many cases residents

intend to stay in their homes for periods of around 15 years or more.

• This means that residents are staying long enough to get a return on investment for

the ongoing reduction in the running costs of their home that come as a result of

sustainable design.

Marketing

• Through its ―Call Off The Search‖ campaign, Coomera Waters‘ marketing has

focused on the surprise of finding so much amenity just 40 minutes from Brisbane

and 15 minutes from the Gold Coast.

• The development‘s sustainable credentials are acknowledged but not prioritised.

44

Coomera Waters, Qld Austcorp

Results

• Coomera Waters is one of the northern Gold Coast‘s most successful developments.

• Over 60% of the available lots were secured within three weeks of the latest land

release in June 2008.

• Overall, two thirds of the current approval has been sold, equating to over 1,000

lots.

• While sales have slowed in the current downturn, Coomera Waters continues to

outsell neighbouring standard developments.

45

The Ecovillage at Currumbin, Qld Landmatters

Overview:

• Location: Currumbin, SE Qld.

• 60 minutes from Brisbane CBD.

• 144 lots over 110 hectares.

• Stage 1: Creek Flat Precinct – lot size:

600sqm to 1600sqm

• Stage 1 average price: $250,000 (2006

prices).

• First land release in 2006.

Sustainability features:

• Autonomy in water, wastewater and energy; 80% open space and 50% of this as flora / fauna reserves ; negligible vegetation loss and extensive native plant regeneration; edible landscapes, permaculture and waste minimisation and recycling.

• A variety of home parcel sizes and prices contained within each precinct, resulting in neighbourhoods of varying ages, socio-economic status and family groups.

• The highest level of sustainable home regulation achievable.

• Fibre optic cabling fed to all homes for high speed communications.

• Use of on-site, local and sustainable building materials of enduring lifecycle.

• ‗Soft engineering‘ following land contour and natural features.

• Intelligent monitoring system installed to each home offering ‗real time‘ monitoring of resource levels.

Currumbin

Ecovillage

―The Ecovillage at Currumbin offers something inspirational ... the chance to live a natural lifestyle within

a vibrant community atmosphere amidst one of Australia‘s most liveable cities.‖

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The Ecovillage at Currumbin, Qld

• The Ecovillage at Currumbin is a sustainable rural development targeted at

mainstream home buyers seeking to live a natural lifestyle within a vibrant

community atmosphere.

• It was awarded the World's Best Environmental Development in the 2008 FIABCI Prix

D'Excellence Awards in Amsterdam.

• The developer‘s (Landmatters) vision is ―to inspire awareness of sustainable living

and development practices by creating a residential community that exemplifies

the world‘s best practices in ecologically sustainable development.‖

• The cost of building a house at the ecovillage is higher than for a standard

development due to all homes being architect designed and the requirement for

utilities such as rainwater tanks and solar power. Landmatters has assisted with

bulk-buying discounts where possible, but owners understand that they need to

contribute to the cost of sustainable features and they are prepared to do this.

• The price for housing in the ecovillage starts at $1,400 per sqm.

"Wherever possible, we have tried to standardise what we do, to do things that the rest of the

development industry will understand. We want other developers to copy these ideas, but unless

it's a standard way of doing things, no developer will pick it up."

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The Ecovillage at Currumbin, Qld

• Landmatters elected to base lot pricing and marketing on the relevant competitive

product. This strategy was selected because, although the ecovillage product is

radically different to the mainstream, marketing it to the consumer in mainstream

ways was perceived to be the greatest opportunity for creating awareness and

making sales.

• The development features an interpretive centre described as ―the classic gallery-

style, feel good, warm place to come and see the product.‖ There is also an

accompanying audio visual presentation that prospective buyers can view to

increase their understanding of the development and their feel for the sustainable

features that have been included.

• The communication strategy focused on generating editorial publicity rather than

paid advertising due to the newsworthiness of the product and the need to educate

people.

• A further reason for pursuing editorial instead of advertising exposure was to avoid

being dismissed as just another developer touting ‗green‘.

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The Ecovillage at Currumbin, Qld

• Landmatters built relationships with journalists and informed them of feel good

stories while also educating them on ecological matters. The strategy worked so

well that most of the best results have arisen as a result of this kind of marketing.

• There has been a conscious effort within the marketing materials to avoid overuse

of the word ‗sustainable‘ and to focus instead on the social and environmental

benefits of living in the village.

• Approximately 75% of owners bought land because of the social initiatives at the

Ecovillage at Currumbin, with the environmental initiatives being the ―icing on the

cake‖. The remaining 25% bought predominantly because of the environmental

initiatives.

• The developers were cognisant that location is a key driver of the decision to

purchase land, so made certain that the land they selected was highly desirable

and sought-after.

• The developers planned for a variety of age, gender, family and socio-economic

groups in the ecovillage‘s social design, and have achieved this in all cases.

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The Ecovillage at Currumbin, Qld

Strategy

• In summary, the Ecovillage at Currumbin was designed to appeal to the mainstream by enabling people with a desire to live sustainably to do it in an easy way (all work and research is done for them)

• The ecovillage was designed to appeal to all age groups.

• The community focused design is the key market advantage of the development.

• To help others in the industry benefit from their experience as a best-practice sustainable developer, Landmatters has made their intellectual property available through guided group visits and the sale of planning reports.

Results

• The AU$45 million (US$38 million) project, which was innovatively funded by a mainstream bank, has experienced outstanding financial success.

• In a slow residential market, the Ecovillage at Currumbin has bucked the trend and presold 90% of its lots.

• Sale prices in later phases have escalated more than 50 percent above their initial valuation.

• As the exit phase of this project nears, Landmatters are looking at moving into education for the industry as a new business interest.

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Mebbin Springs, NSW Sustainable Developments: Property Marketing Corporation

• Location: Northern NSW.

• 45 minutes from Tweed Heads.

• 66 lots over 435 acres (176 hectares).

• Minimum lot size: 1 acre.

• Lots from $389,000

• 5 star rating requirement for all homes.

– Each has solar hot water and rain

water tanks, which are fully plumbed

into the water system, as standard

features.

• Self sufficiency in water supply.

• Grey water filtration system.

• Fibre optic cable for high speed

communications.

• Majority of waste managed at source.

• Solar passive lot orientation.

• Electronic building control systems.

• Community meeting place.

• Vegetable garden, nursery and orchard.

Mebbin

Springs

―Mebbin Springs – neighbours with nature.

A sustainable community, where lifestyle and the environment are uncompromised.‖

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Mebbin Springs, NSW

• Mebbin Springs is a high quality, EnviroDevelopment-certified, rural, sustainable community being developed by the Property Marketing Corporation. It is the vision and passion of the company‘s managing director, Patrick Brodie.

• Patrick‘s companies specialise in sustainable residential land development and sustainable housing. They cater to a niche market and are experiencing strong demand.

• The strategy behind the success of the Property Marketing Corporation‘s developments has been a core competence in buying land wisely and packaging the land with high-quality sustainable houses sold at cost.

• Often land that has been overlooked by other developers can make a perfect candidate for sustainable development. For example, many developers would view a sloping topography as an undesirable limitation on a piece of land, whereas the Property Marketing Corporation views it as an opportunity.

• Patrick‘s construction company, Aurora Constructions, utilises methods of building that require no concrete footings, and specialises in building architect-designed, multi-levelled houses that are often more interesting to look at and that take advantage of the views offered by the topography.

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Mebbin Springs, NSW

Strategy

• The success of the Property Marketing Corporation‘s developments stems from the developer‘s different approach to the upper end of the mid-tier market and an ability to target sites where a sustainable approach will create dividends.

• An important part of this approach is the use of persuasion through personal selling.

• The passion exhibited by the organisation‘s leader is contagious and his feeling for the product translates to a compelling sales story:

• Patrick knows his market and builds houses to suit them. He equates sustainability with good design and is really in the business of selling comfortable, functional, desirable homes sited innovatively on challenging land. It just so happens that a philosophy of sustainability underpins all of these elements.

―I‘ve personally trekked across all four hundred and thirty five acres at Mebbin Springs. It was during the

planning process. I followed animal tracks and hiked up the hills and searched along the ridges. I was

hunting for the perfect position for each lot according to my own strict criteria.‖

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Mebbin Springs, NSW

Strategy Cont‘d

• The Property Marketing Corporation specialises in sustainability but finds that while it is a useful marketing angle for attracting interest, it is unlikely to attract a price premium when considered in isolation.

• The company‘s target market is ―3rd and 4th home buyers who want to build a better home this time.‖ Often by ―better home‖ this segment may mean a ―beautiful, more comfortable home‖. Along the way Patrick‘s company helps them understand how sustainable features can help them achieve this objective.

Results

• Many of the properties developed by the Property Marketing Corporation sell at 30% above their book value or more.

• Sustainable outcomes are perceived purely in terms of their benefit to the target market and the passion behind this strategy is of greater consequence than the pursuit of high margins. This philosophy is translating not only into initial strong demand at Mebbin Springs, but also ongoing strong demand at all the company‘s developments.

Recommendations

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Recommendations

• For a sustainable development to succeed, it must meet the key criteria that

buyers look for in any land purchase decision. These include:

– Location;

– Presentation;

– Social and health aspects;

– Design functionality; and

– Price

• When incorporating sustainable elements into a development, target them

wherever possible at generating increased amenity relating to the criteria listed

above.

• To be of benefit to a developer, sustainability must be included as a core part of

the organisation‘s corporate strategy and be championed by the company‘s

leadership.

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Recommendations Cont‘d

• In marketing communications, try not to focus on the sustainability initiatives

themselves, but rather the benefits and additional amenity that sustainable design

produces.

• Don‘t be afraid to try different things until you find a suite of messages and

mediums that work well.

• Don‘t be afraid to be creative (in the US a developer gave away a Toyota Prius with

every lot sold for a limited time and achieved the best extended stretch of home

sales since the development‘s launch.)

• Use your networks to promote your development.

• Seek publicity and editorial coverage. Understand what journalists want.

• Get the product right and the market will follow.

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Recommendations Cont‘d

• The target segments that represent the greatest opportunity include:

– Third and subsequent home buyers;

– People with high discretionary income;

– Women, especially mothers.

• Develop a relationship with builders who can become experts at working

within your covenant.

• Establish a sustainability vision and refer back to it at all stages of

development and decision making:

– Set principles with longevity;

– Set measurable, performance based outcomes and benchmarks.

• Wherever possible take the opportunity to promote ratings tools like

EnviroDevelopment, as this will help grow the brands‘ recognition and regard,

and consequently their value as a promotional and communication device.

• Use persuasive personal selling techniques to help purchasers understand the

relationship between the development‘s sustainable initiatives and the

amenities that they value when making a purchase decision.

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Recommendations Cont‘d

• Develop ways in which the project can help drive changes in resident behaviour;

• Get to know your site intimately;

• View natural systems as opportunities not constraints (e.g. trees, land contours and

natural drainage lines);

• Apply sustainable thinking to all stages of the development lifecycle:

– Design;

– Land preparation;

– Material selection;

– Construction; and

– Occupation and use.

Design Land

preparation

Material

selection Construction

Occupation

and use

Pollen Strategy

PO Box 5363

East Victoria Park WA 6981

M: 0419 923 383

E: info@pollenstrategy.com.au

W: www.pollenstrategy.com.au