The Accountant
Tim Peel
Partner, PricewaterhouseCoopers
What are the major issues and challenges you’re facing in property?
The prolonged underperformance of the listed property sector evidenced by widespread discounts of share price to NTA. This has led to a real shrinkage in the listed sector, lower deal flows generally and, in many cases, a focus on buying back equity rather than expansion.
With the reduction of capital flows from the listed sector, capital inflows into property are now more diverse. The overall mix has shifted more towards asset deals rather than portfolio deals.
Superannuation and sovereign fund money has been prominent in investing in private and unlisted structures. These types of investors want far greater control over the assets being invested into – particularly in relation to buy/hold/sell decisions.
How has a challenging economic environment and changing property industry affected your sector?
The tightening of available credit and high costs of banking has really dampened the construction sector. The lack of growth has brought about a real focus on costs.
Has anything come as a surprise?
A pleasant surprise has been that Australian assets have continued to be popular with international investors, even while the Australian dollar has been strong. Investors are seeing investment into Australian assets as a proxy for investment into China – but with greater transparency and without the complications of getting money into and out of China.
Investors have also been encouraged by seeing that the current strong Australian dollar has held its value for some time and may continue to do so, given the outlook for extended periods of low interest rates in other major economies such as the US.
What is the future of your sector as it relates to the property industry? Do you anticipate major change?
The future for our sector will revolve around an understanding of and closeness with Asia. Successful advisors in Australia will need to have some experience of working in other Asian countries and it is critical that the Australian offices of advisory firms are closely linked to their equivalent offices in Asia.
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The Engineer
Stuart Fowler
Australian regional director, Norman Disney & Young
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What are the major issues and challenges you’re facing in property?
The skills shortage in Australia remains a major challenge for the engineering fraternity. Although activity in traditional commercial building markets remains subdued, there remains an ongoing requirement for talented engineering design staff in our major centres of operation. |
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How is your sector evolving to meet these challenges?
Our business is carefully focused on sector-based diversity. We have been actively diversifying into industrial, defence, transport, utilities, mission critical and health project opportunities for some time, as a means of improving our business fundamentals against cyclical downturns in commercial property.
How has a challenging economic environment and changing property industry affected your sector?
At present, we are focused on improving bottom line earnings rather than turnover growth. NDY continues to invest in new technology platforms, which allow us to better respond to client challenges in ways that allow us to leverage from the diverse range of talent that resides within our business.
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The Quantity Surveyor
Stephen Mee
Director, Rider Levett Bucknall
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What are the major issues and challenges you’re facing in property?
Whilst the engineering and infrastructure sectors are buoyant, the number of large construction projects across the country, in the non-residential and residential sectors, is very slim, together with the uncertainty of the true extent of impact of carbon tax on the construction industry.
Reduced work volumes have caused tightened margins and contractors have departed the market causing collateral damage, with subcontractors being forced to shut down. |
How is your sector evolving to meet these challenges?
The shortage of new commercial developments coming online in both Sydney and Melbourne is driving the refurbishment of B and C grade commercial buildings, which is a key opportunity for many in the industry.
The result of contractors departing the market will be limited choice and ultimately cause a shift in the market mindset towards financially stable and reliable contractor selection.
How has a challenging economic environment and changing property sector affected your sector?
Across our sector, like many in the industry, there is a general tightening of belts. We are taking the opportunity to review overheads, work practices and services provided.
Another effect is the extent to which local industries will suffer as further off-shore products are sourced and implemented to avoid any carbon tax impact.
Has anything come as a surprise?
Given the traditional delivery timeframe, developers need to recognise the opportunity exists now to implement projects at very cost effective outcomes before market prices commence to rise again but the current momentum to re-engage needs a jolt.
What is the future of your sector as it relates to the property industry? Do you anticipate major change?
The balance of technology, youth and experienced practitioners and demand for reducing business overheads will be a continuing challenge for the industry as the need to produce quicker results may reduce the local industry skill base.
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The Architect
Abbie Galvin
Prinicipal , BVN Architecture
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What are the major issues and challenges you’re facing in property?
One of the major issues is a very volatile procurement framework for our projects. From project to project, procurement methodologies are changing significantly; from early contractor engagement, design and construct, mid-phase novation through to traditional lump sum.
This can often mean it becomes very cost and program driven and one of the challenges is not to forget the client in this new environment or to forget the enduring design quality. |
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How is your sector evolving to meet these challenges?
We are having to be much more flexible in our approach to adapt to the integral role that contractors play in the process. We have to leave our traditional “capital A” architect’s hat at the door, broaden our approach to be inclusive and learn from other disciplines, whilst still being the advocate for the client and for an enduring and sustainable built environment.
How has a challenging economic environment and changing property industry affected your sector?
Speed. Things have got faster, programs continue to get tighter and, of course, fees get smaller.
What is the future of your sector as it relates to the property industry? Do you anticipate major change?
Building information modelling (BIM) is increasing in its impact and requiring higher levels of collaboration than ever before.
There are many things that are under pressure to continue to support the speed of change that this new collaborative world involves from the service providers, i.e. the architects, builders and engineers, through to the technology platforms and ultimately those who maintain and operate our buildings.
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The Planner
John Wynne
Managing director, Urbis
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What are the major issues and challenges you’re facing in property?
The continuing creep of demands on the proponents of development projects – the people that build our great cities – has created an operating environment significantly riskier than many other areas of investment and to the detriment of the broader community through undersupply and overpricing of product. |
How is your sector evolving to meet these challenges?
Many institutional players are simply opting out of property development or taking significantly different approaches to manage the risk of this industry. Others are adopting a highly constrained and cautious approach to doing their business and are looking to ride out the difficult times in the hope of better things ahead.
How has a challenging economic environment and changing property industry affected your sector?
It has caused long-term structural change, much of which is to the detriment of people looking to buy houses, open offices, establish new factories, construct seniors housing or build new schools, hospitals and churches. The necessity to manage the high risks and low returns of the property sector has simply contributed to choking the necessary ongoing supply of product catering for the inevitable growth of our cities.
Has anything come as a surprise?
The biggest surprise has been the preparedness of institutional property developers and investors to stay in the game, particularly in NSW which has been a highly unattractive property market for a long time.
What is the future of your sector as it relates to the property industry? Do you anticipate major change?
Cities will continue to grow and there will be constant and ongoing demand for a wide range of players in the industry to deliver what is needed to build liveable cities.
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The Lawyer
Melinda Graham
Department head of property, projects & planning, Thomsons Lawyers |
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What are the major issues and challenges facing you in property?
There have been several recent innovations in the law, which are having a direct impact on the work we are doing. These include the various planning reforms in each state (both existing and anticipated), Federally sanctioned safety reforms (The Workplace Health and Safety Act) and the Personal Property Security Act, which despite exempting real property and fixtures, impacts security interests in other chattels in property sale, leasing and lending transactions, the Building Energy Efficiency Disclosure Act, the Carbon Tax and changes to the tax treatment of land rich companies. |
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How has the challenging economic environment property industry affected your sector?
For each of our state markets the lack of available credit continues to inhibit new development and construction in the private sector. The risk aversion of banks has amplified the red tape which developers have to overcome to raise project and construction finance. This leads to time delays, the enemy of developers.
This economic environment has to some extent changed the profile of our client base. We were acting for clients in 2007 which do not exist now. Others have consolidated. All are taking fewer risks.
How is your sector evolving to meet these challenges?
A national presence for lawyers has become more important for clients which operate across the country. This is important in the property sector as property laws are generally state based.
In our experience clients enjoy a single point of contact in, perhaps, the state of their head office, while using the firm’s interstate resources when necessary.
What is the future of your sector as it relates to the property industry? Do you anticipate change?
Technology for lawyers has created opportunities for the practice of law and lawyers must embrace it. This is not new and in this regard the future is now.
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The Consultant
Alex Collinson
Partner and real estate group leader (NSW), Deloitte |
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What are the major issues and challenges you’re facing in property?
Our business has seen less M&A activity than we might have expected within the listed REITs. There has been more focus on inbound investment and operational improvements within the Australian REITs. We have also seen that the economy is performing differently in different states, and we have to be flexible to meet those demands.
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How is your sector evolving to meet these challenges?
We are helping our clients to make better use of their assets – be that reducing cost, optimising systems, focusing more on risk or getting more out of their data.
This requires some new thinking and an increasing focus on data. Every company has access to a wide range of data, but helping clients understand and derive value from their data is an incredibly interesting challenge and an opportunity for them in terms of benefits it can deliver.
How has a challenging economic environment and changing property industry affected your sector?
The conversations are different to what they have been … we have seen increasing offshore investment into the Australian market, so staying close to our overseas colleagues is important. We also have to ensure we bring the best of the firm to our clients to develop the best solutions.
Has anything come as a surprise?
The time it has taken for the recovery in the property sector to really take hold has been a surprise. I think everyone would have expected things to have picked up sooner. We are still seeing uncertainty persisting in the wider economy, and this is inevitably reflected in different industry sectors.
What is the future of your sector as it relates to the property industry? Do you anticipate major change?
What we see is a continued evolution of what we are seeing at the moment – a continuing focus on efficiency and environmentally sustainable products, whether in new buildings or retro-fitting existing stock.
We see the growth and availability of data as an opportunity to help our clients gain a competitive advantage. We are assisting organisations to harness and act on the insights provided by their data assets to grow their business and better understand their costs.
Finally, with the housing affordability crisis that exists in Australia, we are seeing our clients focussing more on developing a tailored response to this macroeconomic trend, from the perspective of the products they offer to the market and how they can influence the policy debate.
