With rising interest rates, construction chaos and increasingly challenging regulatory burdens, it isn’t easy being in the Sydney development game in 2023.
But these challenges must be met with innovation and change in the industry, says Fiducia Property Group development director Marie Doyle, who will be taking part in The Urban Developer’s Sydney Residential Developer Summit this week.
“We’ve got so much being thrown at us, from interest rates, approvals, immigration, shortage of supply—it’s a tough time to be building,” Doyle said.
“We’ve been developing in Sydney for 18 years, and if you’re buying and developing in the right locations for the right market, you’re always going to have good product available. But there needs to be adjustment.”
Sydney median unit prices are currently hovering around $776,780. This means that the stakes are high, not just for the developer but for the buyer as well.
Buyers are looking for much higher-spec apartments, with more services, better protections especially when off the plan, and this means that developers have to up their game.
“We’re trying to meet the demands of a very sophisticated buyer,” Doyle said.
“Expectations have changed and so has the liveability footprint. Are they likely to be working from home for instance so is the third bedroom going to be a podcast room, meeting room or office? These new ways of living and working fundamentally impact design and expectations.”
Poor examples from a number of builds in Sydney, which prompted the introduction of the NSW Building Commissioner, have also put the spotlight on quality.
As a smaller, higher-end developer, Fiducia and other small developers have less to worry about.
But a knock-on effect of these issues meant that transparency has become even more important to buyers.
“From sales perspective we’re juggling a lot of things. We’re going above and beyond in value and transparency, meaning that we deliver more to customers than ever before. We’re taking them on a personalised journey and nurturing that through from the interest to the construction phase.
“[These issues] have certainly brought it to the front of mind that trust is so important with purchasers.
“Buyer sentiment and reinvigorating that belief in development again is key. The whole industry has to rise up to get that back on track.”
One thing that Doyle sees happening in the future, and which Fiducia is already looking at, is buying local to ensure quality and greater oversight.
“Things that we do personally in our business and where we've had to pivot are centred around how can we partner with more localised builders.
“Were looking to and already working with local builders with really good reputations, with a lot of staff employed on books so they are not overexposed on contracts.
“At Fiducia, we favour smaller boutique projects like our project at Cronulla where we’ve partnered with a high-quality local builder.”
With the books of major construction firms tied up for the foreseeable future and smaller builders struggling with subcontracting and fixed-price contracts, it has been challenging for developers to reach the ribbon-cutting moment of the development.
But paying more for local product and builders can be hugely beneficial, said Doyle.
“Our builders are integral to our team getting this done. And I love a fixed price contract as much as any developer, but the way we’ve approached recent contracts is having inbuilt flexibility.
“With the current reform and design building guides, it is challenging to make any changes once you have your construction certificate and that process is getting longer, but we’ve utilised that extra time to work with builder to firm up prices along the way, rather than fixing at the beginning.”
Flexibility, paying a little more and looking local will be key to weathering the construction storm currently under way.
“It has already worked massively in our favour. We’re quantifying where our gaps are and where we can save, where we can keep materials onshore, and specify design elements or products or appliances where we can here in Australia.
“We had to change the way we do these things and to flip that whole construction and supply narrative on its head.”
The Urban Developer Sydney Residential Development Summit will be held on Thursday, May 11. Click here to register and learn more.
