Direct Property, Residential Property

Property fragmenter lists first development project

property fragmented

A property group offering fragmented investments at smaller entry figures has opened access to its first ground-up development.

Fragmented property exchange Bricklet has opened access to its first development project using its fragmented investment model and is offering a return on investment (ROI) of 40 per cent for those who invest at the start-up stage.

The new project, which is being marketed by real estate agent Futurealty, involves a pooled investment property of seven townhouses at Avalon Beach on Sydney’s northern beaches. The townhouses will be specifically built to rent and pitched at tenants aged over 55 with investment in the project divided into 280 equal segments worth $31,885.

The Bricklet model is similar to the fractional investing model available to SMSF trustees, but instead of buying into a unit trust, investors directly purchase and hold a stake in a property offered through the firm’s platform and have their name on the title alongside other Bricklet owners.

Bricklet chief executive Darren Younger said the project is the first ground-up development to be fragmented by Bricklet, which to date has six completed projects listed, attracting $4 million in investments.

Younger said 40 per cent of the segments on offer had been sold and the project was expected to return 42 per cent on the initial investment and 8 per cent rental yield after completion.

“That figure is an ROI over the two years of the development to completion, during which there will be no rental return, but is relative high because we are offering investors the ability to come in early at the development stage instead of at the end of that stage,” he said.

He said the ROI was based on the total value of all Bricklet segments available, which would equate to $8.9 million, compared with the completed property valuation of $12.7 million or $45,357 per Bricklet.

“The final value is based on the estimates of three appraisers and we are offering investors, including SMSFs, a discounted price to come on board early,” he said.

My SMSF director Rob Joseph has advised some clients to consider investing in property via the Bricklet model and said the model offered transparency around the ownership of property.

“There is a clear-cut ownership structure where investors are legal owners of property compared with beneficial ownership under other models. Investors have easy access to property investments without having to hold an entire property and can invest in a range of properties in different locations,” Joseph said.

Younger said the increased demand for property investments that are accessible to SMSF investors with lower balances will continue to drive the development of new fragmented product offerings.

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