West Village’s Harrison Phillips positive outlook on the SEQ market
Our CEO Kirsty Chessher-Brown interviewed Harrison to hear his thoughts on how West Village is experiencing a very active local owner-occupier market and a normalisation in office leasing.
2021 hasn’t been a smooth ride we were all hoping for on a COVID front but the property market has been a shining economic light. What are you seeing on the ground in terms of West Village, who’s buying?
At West Village, Sekisui House has had the benefit of seven years of masterplan delivery, which has led to an extremely active local owner-occupier market. We are seeing a buyer profile that is extremely educated, very savvy, well-researched, and extremely discerning. Many are taking this COVID-induced opportunity to review their housing choice. The owner-occupier market takes time to convert so whilst you’ve got extremely high levels of interest and lead generation from a marketing campaign, often it takes up to 10 weeks to convert these buyers, but it’s a period of investing in that relationship.
We’re finding 85% of our sales at the moment are to local owner-occupiers and 60% of that buyer group is to the active resizer market – the balance are generally to younger families upgrading from their first or second home. The resizers are wanting a slightly smaller home, but they are placing a big emphasis on convenience and amenity. Access to quality open space, and amenity is driving our buying profile and the amenity story is becoming more and more important. People are taking the view that they need to invest in their lifestyle, because they can’t export that lifestyle overseas at the moment and the family home has become the place you live, work, and shop.
What are you experiencing in terms of leasing?
We’ve witnessed a lot more activity in local business looking to capitalise on what is a tenant’s market. And whilst the big pre-commitment office tenants are few and far between, we’ve seen real interest in smaller floor plates. We have tailored our Greenhouse project to capitalise on smaller local businesses and that’s been quite an active market. I do think we’ll start to see conditions normalise and with the economic growth that’s coming through, we are relatively bullish on office over the medium term.
The other observation we’ve made is the amount of capital that exists in the economy at the moment. Currently, the investment and capital markets for quality retail and commercial assets is extremely aggressive. So that’s a very interesting proposition – I think we may start to see some more activity in the commercial property market sector, more deals flow, and a bit more supply coming through to take advantage of those quality institutional investments. That’s a really exciting proposition.
What long lasting impacts do you think the pandemic will have on the way that we deliver spaces, places and homes?
Brisbane is ready for quality mixed use projects and West Village is a true live, work, play, solution to everybody’s lifestyle. So I think that flight to quality and lifestyle is going to be with us for a long time. I think COVID has probably accelerated people’s take up of product in more convenient lifestyle locations that are close to work, shopping, and amenity.
What’s the biggest challenge that you face in getting stock to market?
We are seeing for the first time in over a decade, quite significant delays in materials and really long lead times on items like glazing and lifts. We’ve just ordered curved glass from overseas for the Greenhouse 12 months in advance, so it is placing a lot of strain on project teams within building companies. The current pressures are resulting in the need for a relationship approach between developers and contractors to manage the build through these challenging times. Construction delays are a big issue and while the issues started in the residential home building part of the market, it’s absolutely made its way into commercial building.
What’s your prediction for the property industry over the next six to 12 months?
I think the macroeconomic situation looks quite positive. Micro-economically, I think when we look at South East Queensland, all the key drivers are there for positive conditions, including population growth, employment and wage growth. Capital is cheap and readily available and there’s a significant amount of infrastructure investment. The big picture looks good for Australia, but I do feel very bullish on South East Queensland as a location and I think we will see sustained, continued growth over the next decade, which will shape the next phase of our city. We think some of the initial spot heat will come off the boil in the housing market buying behaviour in the short-term but we will see sustained and a more moderated level of demand over the next several years.
Ahead of a federal election most likely to occur sometime in 2022, what are the critical things that you’d like to see form part of a campaign?
I think the big question is migration policy and the impact of clarity around population forecasting. We have several industries that are being heavily impacted by closed international borders and I think we need a concerted effort and conversation to get some clarity on our immigration approach. Looking back to South East Queensland, the prospect of the Olympics and the City Deal, and what that means for infrastructure at a federal state and local level, is very exciting. Getting alignment at all levels of government is important in getting a cohesive agreement as to how we’re going to pull Australia into its next phase of growth.
I think issues around international relations are going to be ongoing, and we need to look carefully at how we’re going to position ourselves at a global level, in terms of our trade partners and our supply chains given the issues we’re having.
I think we also need a vision for Australia more broadly. What does our economy look like over the next 50 years and how are we taking our knowledge industries and our competitive advantage forward? We really need to move it beyond real estate and mining to set ourselves up for success. Governments have a role to play in encouraging the private sector to invest and removing barriers to allow enterprise – and drive that economic growth.