Specialist Disability Accommodation (SDA) is a hot topic. Do the returns sound too good to be true? Have you considered it for your next development project? How do you manage the minefield of information?
SDA is purpose-built housing designed to meet extremely high needs or extreme functional impairments of eligible Australians under the age of 65 funded by the National Disability Insurance Scheme (NDIS). Done properly, SDA can be a very strong investment and is worth considering for any potential residential project when determining its highest and best use.
Eligible Australians, known as participants, often supported by their families and Supported Independent Living providers (SIL), are in the driver’s seat when it comes to the choice and control of their housing solutions.
This participant purchase power drives SDA market forces, requiring investors to be responsive to the special needs and unique preferences of participants to future proof their investments.
Our top 6 tips towards a successful SDA development are:
1. Site Location
The cliché ‘location, location, location’ rings especially true when considering SDA. SDA is successfully transitioning previous models of group homes and reliance on makeshift solutions including aged care facilities to purpose-built housing. It aims to integrate participants well within the community, providing opportunities for social and economic participation as well as helping them stay close to their families and support networks.
2. Site Characteristics
In addition to the right geographical location, you also should consider the right site with SDA housing having unique design standards. Put it on the wrong block of land, your budget will quickly blow out. Put it on the right block of land and it can outperform any other building type including standard residential houses, duplexes and other building types such as childcare centres and residential apartments.
3. Housing Type & Design Standards
Quality SDA is notable for not looking like traditional specialist housing, typically blending well within the local community. With a variety of housing options within the SDA market including apartments, townhouses, duplexes and standalone dwellings, investors will find that there are unique configurations, specifications and funding models for each build. The key for any investor is to build a high-quality, fit-for-purpose housing solution where participants can obtain the support they need in an environment they are eager to call their forever home.
4. Participants & Funding
Once the dwelling is built, registered with a SDA Housing Provider and participants have moved in, SDA funding commences. The funding is passed to the investor by the SDA Housing Provider with Commonwealth-funded Participant Reasonable Rent Contributions (RRC) also realised. SDA funding is calculated on the number of participants actively living in the registered dwelling at one time, its location, building type, design category and requirement for on-site overnight accommodation (OOA). The biggest mistakes we see investors make include the expectation of 100% occupancy at any one time and the assumption that the participant will be approved for the maximum funding allowance. A purpose-built SDA feasibility with supported assumptions at the commencement of your project is essential prior to investing.
5. Development & Exit Strategy
Aligned with an accurate purpose-built SDA feasibility, a considered development and exit strategy needs to be prepared. Depending on your financial goals, you may be better suited to build and hold your investment or to build and sell to another investor who is better prepared to hold the investment, understanding the participant demand risks.
6. Realistic ROI
Realistic ROI – A plan may look fantastic on paper but needs to be delivered well to maximise your ROI. Don’t get caught with promises of high returns without understanding this highly specialist sector. Arm yourself well, do your own research and connect with experts in the industry including SDA Housing Providers, Development Managers and reputable builders with expertise in the SDA sector.
Atrio are experts in developing Specialist Disability Accommodation (SDA). With a strong pipeline of SDA builds across the Eastern Seaboard of Australia, we are uniquely qualified and experienced to assist investors, fund managers, Housing Providers, participants and their families. Head to www.atrioproperty.com.au for more information.
