PROPERTY AUSTRALIA: Turbocharging our economic rebound
This article was originally published by our cousins across the ditch at Property Council Australia. It has been republished with permission to provide comparison to the current economic climate in New Zealand.
The signs of Australia’s economic recovery are emerging and the opportunities for agile and entrepreneurial businesses have never been better said our panel of leaders in last week’s livestream event.
Housing construction – the “engine of the economy” – was in much better shape than feared in early April when sales and enquiries “collapsed”, said Andrew Whitson, Stockland’s group executive and CEO for communities.
“Every dollar invested in residential housing generates $3 for the broader economy,” argued Whitson, who leads the Property Council’s Residential Development Council. This made housing a “fundamental” lever to stimulate the economy.
While record-low interest rates have played a role in the rebound, Whitson also applauded the “smart policy” of the $25,000 HomeBuilder grant. Customer response was immediate, with a “surge” in new enquiries within the week. “We put additional people at sales office to control walk ins,” he said.
While the scope of the HomeBuilder scheme was still up for debate – and apartment development remained a sticking point – “for house and land Homebuilder has been very positive”.
Whitson did fire one warning shot. Australia’s migration intake this year is expected to plummet, but the effects on the industry wouldn’t be immediate. Around 96 per cent of migrant homebuyers reside in Australia for three years prior to making a purchase, Whitson said, which meant the halting of immigration would hurt down the track.
But Australia entered COVID-19 with an undersupply of about 80,000 dwellings annually, Whitson added. “I don't think we'll go into a big oversupply; we will remain in equilibrium.”
Buildcorp Group’s principal Josephine Sukkar AM was also pleased with the government response to COVID-19. The JobKeeper scheme had been “helpful” as companies scrambled to retain talent, and Sukkar was “grateful to government” for keeping construction sites open.
The industry had been “agile” and the few instances of COVID-19 on construction sites was telling, she added. Even hospital construction sites at the “epicentre” of the pandemic remained safe. “Construction workers can change the way they work very quickly.”
Sukkar was optimistic that “construction will not come out of this too badly”. Investors continued to see Australia as “attractive” but the competition for offshore capital would be fierce in the years ahead. New Foreign Investment Board “hurdles” were concerning, but “we build great buildings, we have great product, and we really are an open investment country”.
Sukkar said it was Australia’s moment to be “entrepreneurial”. “If we want to be a part of a growth economy, what does that look like?” Reviving manufacturing and reinventing the vocational training system were good places to start.
Australia emerged from the global financial crisis “a little less bruised” than the rest of the world, “and we are in a position to do this again,” Sukkar said.
Optimistic and cautious
Deb Coakley, executive general manager of funds management for Dexus, agreed that Australia had had a “far more gentle experience”. But she warned that, as part of a global economy, recovery was still some way off. Dexus was both optimistic and cautious, Coakley said, as it dealt with both health and legislative unknowns.
While it was “too early to tell” what the “new normal” looks like, Coakley was confident that the office would play a central role in that future. Dexus research published last week found a “very big proportion” of people wanted to return to the office, particularly millennials who were “missing osmosis learning”.
COVID-19 had driven a cultural shift in attitudes to technology and flexible working, and there was now widespread acceptance that working from home was not “taking a day off”. But face-to-face connection was still best for innovation, strategic development and creativity, Coakley said.
Coakley said “apprehensions” about returning to work were less about sitting next to colleagues, and more about sitting next to strangers on public transport. A “spike of interest” in cycling to work would require office owners to move quickly to reopen end-of-trip facilities, and investment in bike lanes should be a priority for governments, she said.
Remaining positive in the early days of the pandemic was challenging, but Whitson said Stockland was focused on meeting the rapidly shifting expectations of customers. One obvious opportunity was enhancing the “digital experience” which Whitson said “we’ll all have to embrace to win customers”.
Coakley was also looking to the future and the transformative ideas that would make the “stress and apprehension” of 2020 worthwhile. “Out of the ashes rises the phoenix,” she said.
Sukkar said it wasn’t enough to identify opportunities. Leaders needed the courage to act on those opportunities and that demanded “steel in the spine”. Making “big, bold decisions” didn’t mean ignoring fear, but “acting in the face of that fear”.