Rich Lister Paul Little is battling the double-whammy of retreating foreign buyers and nervous banks but holds faith that his $210 million Gold Coast residential tower will get off the ground.
As the latest daily headlines from the banking royal commission send banks ducking for cover, and investors – both foreign and local – face higher costs from the imposition of extra taxes or loss of earlier stamp duty breaks, it’s a tough time to be in apartment development.
Melbourne-based Mr Little began marketing his first Queensland project, a 35-storey, 263-unit tower, in November and the environment has turned south even during its relatively short lifespan.
“It’s a market that now pretty much has relied on domestic demand more so than offshore demand,” he told AFR Weekend. “So that’s a slightly different market than when we first started the project.”
He hasn’t yet sold enough apartments to kick it off.
“We’ve got to reach a level of sales that I’m comfortable with before we start building, even given the fact that the build probably takes the best part of two years,” he says. “But there is a level of sales that we haven’t quite got. We’re quite close but we’re not quite there yet.”
‘We’ll achieve the benchmarks’
He’s pushing his sales team to make it work.
“I think there is some pressure internally that I’ve put on the project and I’m confident that we will get there,” he said. “We’ll achieve the benchmarks.”
Apartment developers across the country are hustling to find alternative sources of funding to get projects out of the ground and meet lenders’ tighter requirements at a time when the once-dominant market of mainly Chinese buyers has vanished. The former boss of transport company Toll in February said sales to Asia-based buyers were between 10 and 15 per cent below expectations.
But Mr Little, who ranked 50th in this year’s Financial Review Rich List with an estimated wealth of $1.54 billion, is in a better position than many of his counterparts. He hopes to get bank funding for Signature, as the Gold Coast project is called, but can do it without them.
“At the moment the banks are not funding anyone under – I’m talking about development funding – anything short of, I think, 50 per cent would have been the minimum LVR,” he said.
“We can do better than that … If it’s something that there’s not a lot of interest in will fund it ourselves. If there is some competitive interest we’d like to use the banks.”
He also said his company was close to selecting a manager for the building.
“I think that’s within probably a week or two of being resolved,” he said. “There’s quite a lot of interest.”