The Urban Developer Awards 2018: Winner Excellence in Commercial Innovation
We had a very eventful couple of days in Brisbane attending The Urban Developer's Urbanity 2018 conference. Not only did we have the pleasure of being asked back for a second year to present, but we also had the pleasant surprise of taking out the Excellence in Commercial Innovation gong at the inaugural Urban Developer Awards 2018!
On Day 1, we were invited to present and participate in a panel discussion on the topic "Co-design and Collaborate: A Differentiated Approach to Human-Centred Design That Is Democratising Development".
With my co-presenters Nat Woods from The Sociable Weaver Group (Small Giants Developments) and Anthony Duckworth-Smith from The Australian Urban Design Research Centre, we explored a range of new syndicated and community-led development models that have recently emerged in Australia and New Zealand. If you'd like to download the slides from my presentation on the day click here.
On Day 2, we were lucky enough to be announced as the recipient of the Excellence in Commercial Innovation award. To be recognised by an independent panel of industry judges for what we have achieved over the last 8 years was a really nice moment. It was nice to take a moment and reflect on how far we have come since 2010 when my friend Dan and I decided to build some homes for ourselves with a couple of friends.
Thanks very much to Adam and David and all The Urban Developer team for putting on another great conference and organising the awards.
An except from our Expression of Interest for the award is below:
- Property Collectives is a citizen-led development model that brings people together to develop homes at cost. Typically around 15% less than market value.
- We empower like-minded people to take control of the location, design, quality & cost of their future homes.
- By working as a collective and increasing group buying power, we provide a more affordable alternative for people to build and own great homes in great locations.
- In the last 8 years Property Collectives has established itself as one of the leading deliberative development groups in Australia.
- The model has the potential to empower middle-income families to take back control of their housing choices and access housing that better meets their needs.
- In 2010 myself and my friend Dan Demant (an architect at Six Degrees) wanted a 3 bed home in the inner city but we didn't like the quality of townhouse that was being delivered into the market. We couldn't afford to buy homes of the quality we were seeking. So we decided to undertake a development by ourselves with two other friends who were at a similar life stage and after the same thing.
- So we grouped together bought a site and built 4 x 3 bedroom triple storey townhouses on a 525m2 site in Northcote. Each Jver kicked in a 1/4 of the cost and received a townhouse each at cost on completion. This was the start of Property Collectives.
- This project finished in 2013 and since then we have started 8 more projects. We are building 54 homes working with 45 JVers. Just over half are owner occupiers and the rest are long term/ethical investors.
- All the participants are looking for affordable solutions to obtain higher quality housing in locations that they couldn't necessarily afford by themselves. They are also wanted to retain control of the design and built form outcomes.
- We've taken this unique JV structure and over the 8 years we have created a framework and process for people who want to take control of their housing choices.
Participants enjoy increased affordability, better built-form outcomes, increased control, a sense of community and increased wealth.
- We are the leading deliberative development management group in Australia. Our model and process empowers people to take control of their housing choices.
- We are currently building 54 homes across 8 projects in Melbourne and researching projects in Perth, Adelaide, Canberra & NZ.
- The original objective was to build 4 quality homes for myself and my friends. On completion of our first project each townhouse cost $630k and were valued at between $750k - $800k.
- These homes have featured as examplars of good design for 2 local councils and been the subject of tours for Moreland and Darebin Council's strategic and statutory planning departments as well as the Resilient Melbourne project team.
- The objective now is to make this model more accessible to people across Melbourne and beyond. We are weeks away from finishing our second project and for those participants the cost of each home will be around $1m and values around $1.2m.
- We are delivering affordable housing now to middle Australia. Without any government subsidies or support.
- The process has evolved and been refined as more projects have come on line. Our projects differ to typical speculative developments in a number of key ways:
1. project inception
2. site acquisition
3. sales and marketing
4. design development
- We form most of the collective before we purchase the land. Only once we have a group of people wanting a similar type of product in a similar location.
- Site acquisition is a collaborative process. Only once all the participants agree on the site and agree on a price do we proceed with the acquisition. The collective is created once the acquisition is made.
- The collective is then formed as additional participants join after site acquisition. There is no need for agents or presales.
- The collective then is in control of the design development and development process.
- As Development Manager's (DM) we guide the groups through this process but the collective remains in control of its project.
- Budgets differ depending on the project. Our role as DM's is to manage this on behalf of the collective.
- At the moment there are 2 DM's involved in managing these projects.
- Since 2010 we have worked/are working with 54 partners delivering 58 homes across 9 projects. We are currently managing around $51m of projects with a forecast GRV of $68m.
- Through our first two projects in Northcote we have demonstrated this model can deliver high quality housing at between 15-20% less than the market.
- We are also helping to introduce the model to NZ.
- As far as we are aware we are the only group in Australia that is providing this development management service that empowers and enables citizens to work together as a developer.
- The model addresses a number of failures in the housing market.
- Housing affordability by providing homes at around 15% below market value.
- Housing quality by allowing owners to control the design and build of their own home and gaining economies of scale in build pricing.
- Allowing individuals to take back control of their housing choices.
- Making it easy for people to negotiate the development process by providing development management services to enable the model.
- Because of the degree of control this model gives to participants, the scale of the projects undertaken are best suited to projects of up to around 10 dwellings. Beyond this the model would most likely need to be tweaked to dial back the amount of control participants have.
- At a scale of around 6-8 dwellings we see a massive opportunity for the model to scale beyond melbourne into over citys and markets where housing affordability is a significant issue.
- The model has the potential to provide a practical solution to the development of the "missing middle" in many of our cities. Potentially as the population ages and many downsizes look for retirement options that allow for community and housing options that they can control.
- The key to the success of the growth of the model will be skilled development management with great people skills wanting to develop using this model.
- There are 3 key risks we mitigate through the model.
- Social - managed by ensuring all participants share our vision around the quality of product we want to create. All members must have a long term intention to be involved. We also have a very clear process and legal structure which we fully explain to people before they get involved. This way all participants start the process on the same page and are fully aware of what rights and responsibilities they have on the way through.
- Market - mitigated by participants getting their homes at cost. Thereby baking in a circa 15% buffer if the market moves on completion. We also focus on well located inner city sites within 7 kms from the cbd and target a product that is not luxury, but aspirational.
- Financial - members are financially vetted prior to involvement and the model provides a less risky transaction for banks which results in higher gearing on construction. Individual gearing at completion drops to around 50-60% LVR which further reduces settlement risk.
- Bringing together a disparate group of people who don't know each other to conduct property developments together is not something most people would attempt.
When we started Property Collectives the project participants were taken from a small network of family and friends.
- After the first couple of projects though the participants grew beyond our network. To solve this we needed to have a strong vision around the purpose of what we are doing and a robust process for ensuring the people that participate are in the financial position to do so and have aligned values and the right attitude to be able to cope with uncertainty and collaborate with others to achieve our ultimate aim.
- Added to this is the fact that we are doing something different and new. We have had to work hard at building relationships particularly with banks to ensure that they understand our model and are willing to fund and support it.