Keep calm, and communicate: that’s 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.
But in Queensland’s south-east, developers speaking as part of The Urban Developer's virtual residential summit share a sense of optimism about the outlook for the local market—especially when it comes to units and townhouses.
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.
“For us, it’s really been about working with our clients and making sure that their strategies and their development proposals are robust enough to carry through the next three to six months in particular—but really focusing on what is beyond that, making sure that we’re not taking our eye off that horizon,” 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.
With regards to the sales process, Watson—who launched a boutique project selling four whole-floor units in April—adds that while the pandemic may have slowed things down, the ability of the real estate industry to adapt almost "overnight", combined with the quality of interest in the product—made the launch surprisingly successful.
“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.”