Beneficiaries of the property boomPUBLISHED: 11 Oct 2014 02:42:00
Samantha Hutchinson and Rebecca Thistleton
Diners at the Chatswood Chinese restaurant on a Saturday night in 2011 would have hardly given the table a second glance. Elated as the group sitting around the lazy susan were, David Milton and his team from CBRE’s project marketing division were tired. It had been a long day.
But after generating more than $300 million in just one day’s work, it was time to celebrate. The group had sold 292 apartments, 90 per cent of the project’s two buildings, in just eight hours.
“It was the first time in 15 years anything like that had happened,” Milton says.
“I remember thinking at the time it was like the bell had rung.”
Fast-forward three years and the property activity Milton reckons began that day is in full swing and gathering pace.
Former US Reserve Bank chair William McChesney Martin once described good monetary policy as knowing when to take the punch bowl of low rates away just as the spending party gets swinging. In Australia, the throngs of real estate agents and a raft of hangers-on are enjoying that delightful moment when the warmth of the booze has got feet dancing, yet the punchbowl isn’t going anywhere.
House prices are soaring, the value of loans to investors is at record highs, but Reserve Bank of Australia governor Glenn Stevens is keeping rates pegged low. The only potential party-pooper is the threat of macro-prudential rules to trim back bank lending to property investors.
Until that happens, realtors, developers, house photographers, feng shui consultants, furniture stylists and gardeners can barely believe their luck. They are at the right place at the right time, doing the right thing. And in real estate, location is everything.
In a prime spot is Jeremy Allsop.
The Sydney real estate agent, who just turned 30, drove a 1995 Chevrolet Corvette halfway across Australia last Sunday. It was a gift to himself; the same model he lusted over as a child peeking into his uncle’s garage. Its first owner shipped it from the United States and never drove it in the rain. And when Allsop bought it, there were just 49,000 kilometres on the clock and condoms in the glovebox.
He added another 1400km bringing his dream car home. Personalised licence plates are on the way. “I drive it daily; anything I buy I use,” he tells AFR Weekend, alluding to the good wine, shoes and Mont Blanc pens he buys himself as rewards for strong sales.
“I like to do things that other people can’t. Anyone can buy a BMW. This is a little bit special.”
Hunting for the right car took months, but his persistence is why Allsop is confident he will still be in the game for the long run, and if the market was to turn. Allsop’s hunger for success was evident early in his career.
Recalling his first home sale, Allsop says a couple interested in buying the home offered to give him their own home to sell, if he accepted their bid on the other property. His response took them back.
“I said no, that they would pay the amount I told them, and then they would give me their listing,” he says. “I told them the truth: I work for my vendors, isn’t that what they’d want from an agent, the best price?”
Boldness and honesty meant the buyers agreed to pay the asking price. Allsop sold their home, and sold it again a few years later. And after more than a decade of sharp-eyed determination, he has stuck with LJ Hooker and is now a sales manager.
Allsop illustrates his change in fortunes with a simple equation: for every five homes he lists today, there are at least 10 buyers.
When at the start of the century and aged in his late teens, he became an agent, it was 10 homes to five buyers. Homes languished on the market for six months.
Those were the dark days of discontent, when mortgage rates were at 7 per cent and the effects of the mining boom were only in their infancy.
CBRE’s David Milton remembers in 2005 when he sold just 84 properties in one year. The following year he sold 120. This year, his team is expecting to sell more than 3500.
The agent, known for his knock-about country manner, cuts a sharp figure at residential projects wearing an Hermes belt and elegant Italian leather shoes.
When asked what car he drives, he sheepishly admits it’s a Ferrari. Before that, it was a Porsche. “It hasn’t happened overnight, you know,” Milton says. “It’s been a gradual change. Buyers are making decisions more quickly, but it’s a high level of activity coming off a seriously low base.”
Milton jokes that times are good and he’s spending while he can, but memories of tougher times aren’t far away. “The introduction of the GST [goods and services tax] nearly killed me,” he says.
“Three clients went into receivership. It was very tight, extremely tight.
“And in 2004, the market was completely unsustainable. There was an oversupply, we lost a huge amount of money, but it’s made me stay focused, you reduce your expenses, you work on your marketing systems and your IT [information technology], and when the market comes back, you’re in a position to make things work.”
Milton has earned notoriety leading CBRE’s project marketing division, a 130-man team charged with finding buyers for hundreds of off-the-plan apartments.
Under Milton’s watch, Chinese developer Greenland earned $275 million in one day, when he launched the first tranche of 250 apartments at Greenland Centre, its 66-floor residential skyscraper which, upon completion, will be the tallest in Sydney’s CBD.
Greenland’s latest project, Leichhardt Green, within a former hosiery factory in Sydney’s inner west, will yield 240 apartments with prices starting at $480,000.
It launches later this month, and in a marker of the madness, interested buyers have been told to arrive before 7.30am to get a decent spot in the queue when sales open at 9am.
Sitting behind Milton, another cog in the property machine is Mark Wizel. He’s a Melbourne-based agent who sells blocks of land, upon which high-rise fortunes are built.
Like Allsop, Wizel’s foundation days coincided with the financial crisis, in which cutting a path demanded no small level of entrepreneurship.
“We had to find new ways. We’d be selling a building, so I’d find a restaurant tenant for the ground floor first – it’s about finding solutions,” he tells AFR Weekend.
Wizel was born to an enterprising couple who owned an Ugg boot stall at Melbourne’s Queen Victoria Markets. In the ’90s, clip-on koalas and plastic kangaroo road signs sold well to European tourists.
Higher-end products sold better to the few Chinese tourists.
Wizel’s father started stocking Akubra hats, Ugg boots, sheepskins and shark cartilage, and courting tourist guides who brought busloads of Chinese tourists to his stall. “We were selling out by midday.”
Working in the store, Wizel honed his sales skills from a young age.
It was an invaluable experience which would placed him on an enviable footing when a wave of Chinese investment filtered into Melbourne from 2010 onwards.
Now 31, Wizel is known as The Wiz and heads CBRE’s Melbourne City Sales team, which has successfully positioned itself as a link for landowners to Asian developers.
He was best man to Richard Gu, whose AXF Group is building apartments and hotels in Melbourne and Sydney.
His Chanel tie, Louis Vuitton case and sharp suit are more about personal branding than indulgences. Wizel is targeting a market big on labels and image, he says.
It’s a formula that works. His 17-strong sales team, which targets new investors to Australia with an eye to gain their repeat business, has sold more than $1.6 billion of property around the Melbourne CBD and city fringe since mid-2011.
Wizel recently sold a $60 million site on behalf of Grocon to a new offshore group, represented by lawyer Jenny Wang of Berrigan Doube Lawyers.
She has always specialised in property but her client list has swelled, particularly in the past year. She says she is used to long hours but has been surprised at the hours her clients work.
Wizel knows it all too well, but says it’s not just the offshore developers demanding that deals get done at a faster pace.
Last Valentines Day, he nailed a $21 million St Kilda Road site at 2am, having pulled the vendor and a local buyer into the Rialto Tower boardroom at 9pm. The five-hour negotiation began with Wizel grabbing roses and a juice bottle to honour the date, February 14, and break the ice between the two parties, one locked at buying for $20 million, the other selling at $21.5 million.
The prospective buyer was Caydon Properties director Joe Russo, whose wife and school-aged daughter followed him into the negotiating room. Stuck in a deadlock, it was his daughter who broke the impasse. “My dad’s not going to give you any more money,” the 13-year old chimed in from a corner of the boardroom table. “You might as well take it.”
They got the tower for $20.9 million.
Wizel’s ascent may not surprise pundits who have watched the number of off-the-plan apartments filling weekend property pages. Nor will it surprise the families who live in central locations fielding multiple knocks at the door each week from developers with their eyes on their site.
But other, more tangential sectors of the market also report they are feeling the same warm flow of the wealth effect trickling out from the housing market.
More than a decade ago, Lizette Akouri spent $2000 to have a Chinese grand master of feng shui tour her home. His advice on how she could improve her wealth, health and general fortune had such an explosive impact on her life, Akouri switched careers to become a feng shui consultant herself. It would prove to be a fortuitous move.
Nowadays, the Macau-born resident of Sydney’s North Ryde has built a steady client book of potential home buyers, existing home owners and retailers asking advice on how to manipulate energy flow and magnetic fields in their dwellings to harness positivity and avoid bad fortune.
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