Meeting the market: In quest of the perfect Camelot

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The Australian

2 December 2010

Written by Katherine Jimenez

 

It’s a strategy that has served global engineering and construction firm Laing O’Rourke well when it comes to residential developments.

Look for a unique feature and a location with a scarcity factor.

“It’s not a written-down strategy but we look for . . . locations that are in scarce supply or (where) you know that sales are going to be in demand and have a premium attached,” said Mark Maryska, general manager of NSW developments at Laing O’Rourke.

He also looks for a unique or distinguishing feature that sets a site apart rather than a block of land next to 500 apartments, where someone could build another “cookie-cutter building”.

It was with that strategy in mind the group undertook a $45 million residential development in Sydney’s beachside suburb of Manly.

 

And it’s paying off.

The development, known as Latitude 33, is Laing’s first residential project in Sydney, but the group has many runs on the board in Queensland.

Although predominantly focused on infrastructure projects, Laing also undertakes extensive building work across healthcare, education, defence and residential development. Most of its residential work is in Queensland.

“We wanted to establish a residential branding in Sydney and . . . we wanted to start down there (Manly) and put a residential flagship in a blue-chip area, Mr Maryska said.

Laing started the project in 2007 when it entered into a joint venture with the landowner to develop the site, known as the Art Deco Camelot apartments, which had been a part of Manly since 1919.

With completion just a few months away and in a tough housing market, 16 of the 26 units have sold at prices ranging from $1.3m to $2m.

Key to that result, explained Mr Maryska, was the price point and fast-tracking the completion of the display unit, which he said helped people get a feel of the quality of finishes and layouts.

He said there was new beachfront stock in Manly, but priced at $3m. Latitude 33 is about 100m from the beachfront.

“We’ve got the advantage at the moment,” he said.

Retaining the historic Camelot facade in the development was also important, he said.

 

The most common mistake developers made, Mr Maryska said, was getting the wrong product, in the wrong location.

For example, building large units along the beachfront in Manly was quite successful because you were not limited by a price cap.

“We were very conscious not to build units that were going to exceed a price point,” he said.

Mr Maryska said someone else could have built much larger units on the site and asked for $3m, but they would not have got the pre-sales because they lacked a premium beachfront location.

“You really have to understand the market, what people are prepared to pay, in what locations and then backtrack and design your apartments to cater for that,” he said.

Laing’s model for residential developments involves partnering with landowners to undertake projects. Such an approach worked with landowners who did not want to just sell their block of land in the market, but did not have the skills or money to capitalise on the upside of a completed development.

For smaller developers, Mr Maryska’s advice is to get the right mix of one-, two-, and three-bedrooms to meet the market.

“The problem that I have seen on a number of developments (is) they are left with a whole bunch of apartments at the end that no one wants to buy because the market isn’t there,” he said.

“It’s really researching and understanding who’s your target market . . . and really designing to suit that, rather than just going in and carving up the building to get as many units as you can in there, because you think you are going to sell more apartments and make more money . . . It doesn’t work that way.”

Laing’s next residential project in Sydney is in Newtown, worth about $100m. For Mr Maryska, the key areas in Sydney are the inner-city areas, eastern suburbs, and northern beaches.