On Wednesday morning, we met with Matthew of Legacy Property. He shared with us some of his experiences with developing in the U.S. and contrasted that with what he has learned in the Australian market.
His company was formed in May 2009, which was during the big market collapse that we’re still trying to recover from. Currently, the company’s focus is managing project approvals and acquisition with about 18 or so clients. He noted that banks don’t listen to his pitch unless they know who the receiver will be, so now they market directly to the receivers.
The main aspect that he believes drives the development business is risk. Assessing the risk factor of a particular investment can be a little more difficult in the Australian market because most properties are acquired through public auction. You can research a property and think you know about how much it will cost to acquire it; however, one bid can throw a wrench in all your plans.
Once you get a property, you are required to pay a stamp duty on it and you are not able to “write off” the interest annually as in the U.S. Another critical difference is that the market does not lend itself to renters. People in Australia prefer to own their dwelling and are much less nomadic than we are in the states. With the price of real estate already much higher, this makes for a completely different way of life for many young adults. The locals cope with this by living at home with their parents much after they graduate high school.
We asked Matthew about sustainable initiatives and whether his firm looked to implement more sustainable development. His reply was not much different than what we expected in that the dollar drives the decision-making process. If building sustainable results in more profit, then it will be considered. Today, sustainable development still results in added risk and cost; therefore, it is still not considered profitable. Without a perceived profit, the sustainable market will continue to have very little momentum in Australia and the U.S. alike.
Central Park Development (Sydney, Australia)
We toured the model residences that are part of a proposed residential high-rise underway called Central Park. The development will feature 1 and 2 bedroom luxury apartments with selling prices ranging from around $469,000 to $700,000. The complex will feature many sustainable features that are not usually marketed in a luxury environment. For example, they will use an automated mirror reflection system to reduce solar glare and reduce energy operating costs. Also, they will capture rainwater and reuse grey water for things like irrigation. The individual units are designed to maximize floor space and natural lighting so that residents will not have to run central air. Even if they do need to turn on the air, it will be produced through a set of tri-generation chillers as opposed to the usual HVAC system. There will be green garden boxes of different sizes attached to each unit that will be maintained by the property manager. Many units are fitted with hot plates as to reduce the energy used for cooking and the refrigerators are smaller and properly ventilated to reduce energy usage as well.
The elegant design, low energy usage, and use of natural lighting would all combine to make me want to live in this building. The bottom floors will contain places to eat and shop so that you may not need a car in order to live in the complex. I would give up my 1500 sq. ft. energy hogging, new 4-bedroom house in Ft. Worth, Tx in a heartbeat if I could afford to live here. I love the fact that the sustainable initiatives that will be implemented in this complex essentially raise the property value of each apartment as opposed to devalue them. It shows that with a little thought, great architectural design, and commitment to reducing a carbon footprint, we can achieve a more sustainable living environment.
Green Building Council of Australia
On Wednesday afternoon we visited the Green Building Council of Australia (GBCA). We met with Robin Mellon, Executive Director of Advocacy and International who talked about the Australian Greenstar rating system. He explained that the main purposes of the non-profit organization are to rate tenancies, educate the industry, and advocate sustainable initiatives to local, state, and federal governments.
Some of the key things I took from the presentation were:
- The Green Guide to Government provides knowledge about what different cities around the world are doing to be more sustainable; which has resulted in a competitive market for highly rated sustainable projects.
- The GBCA rating system is evaluated and updated each year according to what the current best practices are.
- The GBCA provides online courses and Excel templates that anyone can access at http://www.gbca.org.au
