Some win, some lose in Australia’s big apartment crunch and we identify a big winner as being Wooloongabba. We catch up with one of Australasia’s most successful property developers, Nando Pellicano, to find out why he is so impressed with this Brisbane suburb.
Kevin: Woolloongabba is thought to be Brisbane’s most affordable inner-city apartment market and was voted as one of Australia’s best investment suburbs two years running – in 2014 and 2015 – by Your Investment Property magazine.
That’s why we are excited to tell you about South City Square, right in the heart of Woolloongabba ��� a mixed use, multi-stage, neighborhood development offering apartments, a hotel, supermarket, boutique cafes , restaurants, and cinema, all surrounding a 5000-square-meter open recreational space.
South City Square has attracted plenty of local interest, in fact stages one and two are sold out and are under construction while stage three is due to be released to the public later this month.
Joining me now to talk about this exciting development and the family business behind the development is Nando Pellicano of the well-known and highly respected Pellicano Group.
Nando, thanks for your time.
Nando: No problem, Kevin. Good to be here.
Kevin: Nando, building and development, of course, has been in your family for generations. Tell me a bit about the history of how the family business was founded in Australia and how it’s developed since then.
Nando: Back in 1967, my father and my uncle started the business as bricklayers, just as teenagers. They originally started out just building some homes and some three-story units for external clients and contractors. From there, they developed a business and moved into developing their own projects, firstly in residential projects.
The business continued to grow, and in the early/mid 1980s they expanded into commercial, industrial, and retail. And from there, developing our own business parks and then a lot of the projects we developed, we then started to retain long-term ongoing ownership of. From that, we started to build up a property portfolio in the early 1990s.
Fast forward to today, we’re a builder, a developer, a long-term property investor with a lot of the projects that we create across Melbourne and Brisbane.
Kevin: There is no doubt that the brothers could never have seen what’s happening today. It is unique also in that it is privately owned. It’s a family business. How is the business structured now, Nando?
Nando: My father has two boys, being myself and my other brother Antonio, who are in the business, and my Uncle Nunz also had two sons who are also in the business. The four of us of the next generation are all managing directors now, so we deal with all the day-to-day running of the business, and we’re evenly spread across construction, property, and finance.
Kevin: Nando, what words would you use to describe the company?
Nando: Being a family business, values, integrity, and reputation are very important for us and are always at the forefront of our minds. Obviously, the name of the company is our surname. We’re very proud of what my father and my uncle have been able to create and achieve.
They always remind us that a reputation takes years to build but it can be gone in a matter of minutes or hours. So we’re always very conscious of making sure our last development is the best it can be. Because we are vertically integrated with construction and development and also long-term property ownership, we really do look at each part of the process.
The design phase: we’re spending the extra time and attention to detail to make sure we’re putting in the right plant and equipment, the right materials that are going to last the test of time.
Obviously, as the builder, if things do go wrong you have to go back and fix them anyway. So rather than trying to save a bit of money up front but then have potential issues, we’d rather spend a bit more money up front and then reduce the ongoing issues down the track.
Really, those family values and morals are very important to us, and that filters through in how we approach the business.
Kevin: I’m going to mention in a moment, too, about how you can have the opportunity to meet Nando at a special function we’re going to put on in Brisbane, but I’ll tell you about that in just a moment.
What are the challenges you see facing development companies now, and what are the plans for Pellicano in the future?
Nando: There are always challenges in any business – daily, weekly, monthly. Probably at the moment, people who are reading the newspapers, there’s probably a bit of a pull back from the banks on funding and who they are going to fund and what they’re going to fund.
Fortunately for us, the fact that we have been in business for 49 years – it’s our 50-year anniversary next year – we do have longstanding relationships with all the major banks and we are very well supported by them. That should hold us in good stead. Bu that’s probably one of the biggest challenges I would think at the moment.
Kevin: I know that’s causing a lot of concern with consumers, too, and I’m so glad you mentioned that point because that’s probably one of the key reasons I would think that someone would be very confident about buying into the product we’re talking about in Woolloongabba.
Just in closing, I’ll talk to you about Woolloongabba because that’s the reason we are holding that function on the 4th of August. I’ll give you the details on that in just a moment. I’m really keen to hear from you about why you chose South East Queensland and in particular, why you chose the Woolloongabba market.
Nando: The wider South East Queensland market: we have been developing and building in Brisbane for over 10 years, and we’ve had an office up in Brisbane since 2007. We’ve always liked Brisbane and what it has to offer, and also South East Queensland. If you look at the long-term trends, population growth, employment growth, infrastructure spending, it has a lot of things going for it. And it’s also affordable in many areas when you compare it to where Sydney and Melbourne currently are.
Brisbane more specifically has always had a big tick from us. And then I suppose looking at opportunities and where to invest our money, it’s no different to whether an investor is looking to buy one apartment, it’s the same approach we take as developers on where do we buy development sites? It’s where we can find value for money in areas where there’s good employment growth, good population growth, some infrastructure spending, and good infrastructure already in place.
Woolloongabba ticks all those boxes. It already has great transport. It has got some great employment generators with some major hospitals nearby as well as the CBD. The rental market from a residential point of view is strong. There’s always good demand. And it’s affordable. To be two kilometers from the CBD and where the price points are in Woolloongabba we found very attractive.
We’re very confident on Woolloongabba. We’re Woolloongabba’s largest developer. South City Square is actually our fourth project within Woolloongabba, so we’re tried and tested in the area.
Our first project was Eastwood, which was 84 apartments, which we finished a few years ago. We then completed a Quest Hotel – it has 132 rooms – which is also on Logan Road in Woolloongabba. We retain ownership of that asset still in one line, and the reason we have retained ownership of it is because we still see some really good capital growth over the next five to ten years.
Then a project we just recently completed, Trafalgar Lane, was 150 apartments and 2000 meters of commercial retail. Again, we’ve retained ownership of the commercial and retail component of that building in our long-term property portfolio.
Kevin: I’m going to give you the opportunity now to get up close and personal with Nando at a special Real Estate Talk event that we’ll be holding on Thursday the 4th of August. You can hear me talk to Nando once again live on stage, and we’ll also be joined by Malcolm Aikman who is a director of property consultancy firm Urbis who specialize in property planning and design.
I plan to discuss with both gentlemen the Brisbane market fundamentals – which areas are going to perform well, what to look for in apartment development, and lots more. That’s going to be a great opportunity for you to learn a lot more about this very vibrant Brisbane market. You can book your seat now by visiting RealEstateTalk.com.au.
Nando, I’m really looking forward to catching up with you. There are so many more questions I want to ask you about the Brisbane market, about developing generally, but it’s been great spending some time with you today, and I appreciate that. Thank you very much.
Nando: Looking forward to it, Kevin. Thank you.