Keep calm and communicate: this seems to be the general consensus from some of Brisbane’s private residential developers on how to manage the uncertainty surrounding the impact of the coronavirus pandemic. The COVID-19 downturn has had an undeniably dramatic impact on agent activity and listings volumes in residential real estate, prompting sobering speculation about the impact of the pandemic on Australia’s residential market. Many potential buyers are hesitant to enter the market because of this, and just as many developers are scrambling to ensure that their projects are completed on time.
Cameron Black, Managing Director of PropertyMash.com, Queensland’s leading new property portal, sees the market now making its first baby moves back from the initial complete lockdown.
“We are seeing activity on our portal increase significantly over the past 2 weeks as activity in the community in general increases. I think we will see a slow but steady increase in activity, particularly amongst first home buyers and downsizers. Naturally buyers are being conservative and acting more cautiously than in the past, however the main fundamental drivers that cause most property purchasers, being it downsizing, moving because of a change of jobs, or buying your first home, all remain, and whilst activity will have dropped in the short term, I am expecting it to slowly come back.”
Riye Arai-Coupe, partner in boutique residential development, management and advisory company Bluebird Property Partners — a consultant to the consortium developing Brisbane’s Queens Wharf project — said there are signs of businesses emerging from the chaos of the initial stages of the pandemic now it’s clear that the total shutdown of the construction industry appears increasingly unlikely.
“Over the last few weeks we’ve seen a lot of businesses now actually feeling a bit more settled and starting to see a little bit of light at the end of this tunnel” Arai-Coupe said.
It’s a forward-looking vision shared by Jim Watson, director of Brisbane-based boutique residential developer Golden State, who says that while the unprecedented circumstances of the last month had been “incredibly challenging”, lessons had been learned from the way the business positioned itself during the Global Financial Crisis.
“You need to reflect on the return of capital, not the return on capital”, Watson maintains, adding that it’s important to keep abreast of the market and ensuring channels of communication with funders and selling groups are maintained. “You’ve got to try and stay ahead of the game, but most of all, you’ve got to stay calm.”
Brook Monahan, whose Mosaic Property Group is behind a pipeline of projects across south-east Queensland, says the GFC was instructive for his business too — albeit differently.
“One of the things we’ve held a pretty strong view on since the early days of this crisis is that it wasn’t the GFC, which was really important given the speed at which the information flow was coming at people, and the inability of most people to be able to process it all—there was no precedent. We saw in March a lot of anxiety across the board [so] it was a period for us which really required some perspective and calm. We didn’t have our businesses shut down, we were lobbying pretty hard to make sure that construction remained an essential service and the industry has benefitted as a result.
“We’ve not only benefited from being able to maintain continuity of business, we’re also a cornerstone of the recovery on the other side [of coronavirus]. My view is to keep some perspective and to keep calm.”
Maintaining this sense of calm has helped Watson’s Golden State steer some nervous buyers through settlement during COVID-19 — but he says being supportive and hands-on with clients has always been an important part of the process.
“We’ve been doing that for the last three years,” Watson says, adding that the difference now is a need to be sensitive to the economic impact of the pandemic on individual buyers’ situations, even if it means sales might be delayed.
“While there was a lot of chaos around us, it’s actually been one of the most controlled sales campaigns we’ve ever been involved in. There were a lot less moving parts, so you have is just a very slowed-down sale process. People can only come in pairs, you probably only get two inspections a day, but the people who turn up are real. There’s no time-wasters. No-one’s going out of their way to look at an apartment unless they have a genuine interest.”
Monahan agrees: “While new inquiry has dropped the quality of inquiry is as high as it’s ever been. There’s probably less ‘tyre kickers’ if you like — people who are inquiring are pretty genuine. Now, they mightn’t be genuine about buying next week, but they’re genuine about buying at some point in the immediate follow-up period.”
In terms of where he sees opportunity over the next couple of years, Monahan is convinced the Sunshine State has a bright future on the back of a trend towards interstate migration from southern capitals.
“Our view is that, if anything, the trend of interstate migration from Sydney and Melbourne will continue on an upward basis [and] I think Queensland will get a further boost from that out the other side as people who possibly were looking to make that decision have some time to consider what’s most important in their life. More space, better access to beaches, hinterland, lifestyle, more affordable property — my view is, if you design product that meets what the local market wants we genuinely think that Queensland becomes more desirable looking forward to the next three to four years.”
Note some comments were taken from The Urban Developer’s virtual residential summit in April 2020.