How two uni students built $20 million development firm Oz Property Group after finding post-GFC property value
Tuesday, April 18, 2017/
When Raghav Goel was at uni close to 10 years ago, he was aware of the opportunities awaiting him in the corporate world — he just didn’t want them.
Keen to take on a challenge he could shape and control himself, Goel, who is now 28, co-founded Oz Property Group together with Akshay Deosthali, now 30, after coming across an opportunity to build two townhouses on a site in Chadstone in 2008. The entrepreneurs discovered that having launched a property business at the same time as the Global Financial Crisis (GFC), there was plenty of valuable opportunities on offer.
Now turning over $19.8 million and looking at securing $25 million in revenue for 2017, their company has completed, or is currently working on, 12 projects across Melbourne, and has an eye to get more skin in the game in the hotels sector.
Goel spoke to SmartCompany about how to convince people to listen to you when you’re a teenage businessman, and why Australia has things spot on for entrepreneurship.
I was probably 19 at the time when we started, and there were a couple of my friends who were a similar age at uni together. We were all inclined to look at something outside of the corporate world, and that’s where the motivation came from to start the business.
My family was always very keen on the property sector and we happened to come across an opportunity close to Chadstone. It was a small opportunity for two town houses, and that’s how it started. But I’d be lying if I said I was interested in property at that stage — I definitely wasn’t thinking about it. I was interested in infrastructure and how cities were built, but more bridges and roads.
I studied economics and I come from a family of economists; my parents and grandparents were all economists. That helped — just having a macro overall view of the economy was helpful. When you’re taking risks, it’s helpful to understand where the economy is heading.
When we started it was around the cusp of the GFC, and there was really good value in terms of buying at that time.
But I think just getting people to take you seriously was the biggest challenge at that time. It’s an attitude that a lot of people sometimes have, if they look at 18- or 19-year-olds sitting across the table.
I found that dealing with people who actually took you at face value — instead of trying to teach you a lesson about how they would do it — [they] were the sort people we got along with a bit better, and ended up dealing with on some of these projects.
I think probably just listening to their point of view and what they had to say was the most important thing for facing [that].
The biggest challenge that comes to mind [in our sector] comes from the collaboration. It’s a positive in our industry. We get to collaborate with different design professionals, architects, businesses … but the challenge is each one has their own ways of working, each has their own stake holdings.
That was the biggest challenge starting off — finding the right teams to work with. We’ve got a few brand values we try to follow through on every thing that we do, and putting it simply, it comes down to finding collaborators that share similar values.
Speaking as a developer and seeing what’s happening in the industry in general, a lot of developers have taken the approach that they just look at a piece of land as a piece of land. They’re usually rejecting the history, how it’s interacting with the street scape, and the people around it.
The approach [from] us, and that more and more developers are starting to take, is actually to look at the community and start for there. Look at what the physical surrounding context requires for it to fit in, rather than stand out.
When it comes down to these projects coming into the world that way, when they are built, they usually stand the test of time. That’s as opposed to a glass tower, which when the next one’s build, it’s going to be outshone.
Housing affordability is a challenge, and being the age I am, I have friends in situations where affordability has really affected them personally.
The challenge for our industry is creating enough supply. The best example I can give on that is even on a 10- or 20-unit development, the planning process for us is up to two years. Sometimes that wait is where the new demand is being created, and supply unfortunately cannot keep up with demand.
I think generally, the industry has been focused towards the investor side a lot more that the owner-occupier side. And a lot of the reasons around that are the way the tax structures have been set up.
We’re firm believers that that balance needs to come back into the industry. And Victoria for one has made a push recently towards that, which we actually commend.
I’m a migrant, and coming from a country like India, which is a very high pressure, competitive environment, I actually find Australia is one of the few countries that gets the work/life balance pretty spot on. My sister is the US and she struggles with it, but we find the working environment in Australia actually allows a balance.
With business, it’s just about having a go — I think that’s what it comes down to. There’s enough support out there, we’re in a strong economy and we have been for many years. So if people have new ideas, then they should definitely have a go — there’s nothing to lose really.
For us, future challenges will be more around recent zoning changes and recent tax changes, which are sort of meaning we are having to relocate a lot of things again.
I’m not suggesting that’s a bad thing — some of those are addressing things like affordability — but what it means is rebalancing on where the next demand is going to be and whether government policies are going to allow us to do things.
The overall goal for Oz Property Group is to possibly balance our approach a bit and look at the hotel sector in more detail.
At the moment we’ve got one hotel, in Melbourne city, and we’d like to add another one to our portfolio. So that’s what we’re constantly working towards.
The one thing that comes to mind about why I wouldn’t go into the corporate world is having informal channels of communication.
We work in an open office where if there’s an idea, we literally shout out. When we visit corporate offices, that’s certainly not possible, everything is so structured and some of the innovation gets lost.
That’s the fun part about working in an environment like ours.
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