Australia’s sixth richest man and most successful property developer, Harry Triguboff, celebrated his 80th birthday on Sunday night, while also preparing for his ‘biggest ever’ land purchase.
Triguboff’s Meriton Apartments could exchange contracts with Goodman Group as early as today for the purchase of a Sydney industrial site for $100 million, where he plans to develop $750 million worth of apartment towers, shopping centres and speciality shops by 2017.
If the deal goes through, The Australian reports it will be the billionaire’s largest land purchase, equalling the $100 million spent on acquiring his South Dowling Street site four years ago.
IBISWorld figures show the residential property development market is having a mild growth period, with annual growth rates at 0.6%.
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IBISWorld industry analyst Tim Stephen told SmartCompany the market was only just starting to recover.
“At the moment we’re in a situation where a lot of the residential construction businesses and developers are coming off a pretty rough period when many major productions were put in the pipeline.
“Demand for apartments has remained pretty healthy, with above average approvals, but demand for overall residential development is below the average,” he says.
Negotiations over the site have been on and off, but Meriton executives told The Australian yesterday a deal was forthcoming.
SmartCompany contacted Meriton this morning, but the company was not available to comment prior to publication.
Talks are believed to have begun in February this year between Meriton and Goodman Group, with the announcement of the rezoning of areas for residential development by the New South Wales government.
Triguboff is planning on developing similar apartments to the units at his South Dowling Street site, where older apartments were last year selling for around $600,000.
The billionaire said there have only been strong areas of price growth in selected pockets of Sydney, driven by interest from Asia.
“This price growth is due to the strong demand from Asian buyers who consider Sydney to be relatively cheaper than the cities of Shanghai and Beijing,” he told The Australian. “The real test for the property values will be if China’s economy starts to slow,” he says.
Triguboff says Mascot does not currently have many units, motivating his decision to build there.
Stephen says Meriton and other large companies have continued to prosper because more people are gravitating toward living in apartments and units.
“Meriton and other big companies have done quite well because their focus is on units and apartments, while a lot of the other guys which have focused on other developments have done quite poorly,” he says.
Stephen says the demand for apartments is likely to continue as the residential property sector bounces back.
“At the moment there is pent up demand for housing. A lot of people have been saving money over the past few years and renting for a while. As sentiment turns around, the big construction companies will see this coming.
“Interest rates are forecast to stay low over the next 18 months and bank competition is high, making loan rates low, this is going to see an increase in property development,” he says.
This article first appeared on LeadingCompany’s sister publication, SmartCompany.