How We Decide Which Developments to Show Sovereign Investor Members — Our Curation Process Explained
Not every off-the-plan development that crosses our desk makes it to our members. Here is the framework we use to assess which opportunities are worth your time — and which are not.
Every week, developers and project marketers present us with opportunities to introduce their projects to our investor network. We decline most of them. This article explains how we decide what makes it through — and what doesn't.
What we assess
1. Developer track record
The first question we ask is simple: has this developer delivered before? We look at completed projects — not marketed ones. We check completion rates, settlement valuations versus contract price, and whether buyers who purchased at prior projects were satisfied.
A developer with a strong marketing operation and no completed projects is not someone we work with, regardless of how compelling the renders look.
2. Contract terms — particularly sunset clauses
Off-the-plan contracts contain a sunset clause — a date by which, if the development is not complete, either party may rescind. In Queensland and Victoria, legislative amendments have tightened the circumstances in which developers can invoke this clause, but the risk has not disappeared. We review specific sunset clause terms in every contract before presenting a project.
3. Valuation risk at settlement
Contract price and settlement valuation are not the same thing. If a buyer pays $650,000 for an apartment off-the-plan and it settles at a bank valuation of $580,000, the buyer must fund the $70,000 shortfall from equity or alternative finance — or risk losing their deposit.
We consider the local comparable sales evidence at the time of assessment and the trajectory of the relevant market segment. We do not recommend projects where we believe valuation risk is material and not clearly disclosed.
4. Rental guarantee structures
A developer offering a guaranteed rental return is not giving you anything for free. That guarantee is either priced into the purchase price, funded from settlement proceeds, or both. We assess whether the underlying yield — without the guarantee — is credible for the location and asset type.
5. Body corporate levy estimates
Developer body corporate levy estimates are frequently optimistic. We compare developer estimates to comparable completed buildings in the same area and flag material discrepancies before presenting a project.
What we do not do
We do not receive referral fees from developers that influence which projects we present. We are paid on placement — by the developer — when a transaction completes. That structure is standard in the industry, and we disclose it. The difference is that we apply the same assessment framework regardless of the commission on offer. If a project doesn't pass our framework, we don't present it.
General information only. This article describes our internal assessment process and does not constitute advice on any specific property or investment. Seek independent advice appropriate to your personal circumstances.