On developers and why they need to be our new best friends

There’s a lot of talk in sustainability circles about development, but the reality is we probably need to talk direct to developers themselves if we want to see real impact.

We don’t mean the usual members of the choir, the Mirvacs, Stocklands, or Lendleases – these companies get it.

We mean the much bigger numbers of private developers who collectively have the biggest impact on the ground.

At a lavish lunch event hosted by Eco Outdoor in trendy Dank Street, Waterloo, Sydney, last Thursday, we got the message loud and clear.

There were enough developers, architects and other supporters of that eco system to rival an Urban Taskforce lunch. Perfect.

The audience heard some very interesting reports and provocations on how to build more sustainably, and we could tell it was having an impact, if not a tad uncomfortable impact.

There was Ben Kerr a co-founder of the host company, architects Caroline Pidcock fresh from moderating our own event Circular Disruption the day before and Adam Haddow, national president of the Australian Institute of Architects, and Danish developer Rasmus Nørgaard of Home.Earth, who talked about why his company is fully focused on sustainable projects, without sacrificing profit.

His company has even built a block of record-low carbon footprint apartments.

Moderator was designer Vince Frost from the Frost Collective.

See the full story here.

But the informal chats in the room were equally instructive about the pressures the industry faces right now, which can clearly affect outcomes, as well as perceptions.

For instance, one developer said it was easier to build sustainably in Nordic countries because they tended to have smaller windows to keep out cold  temperatures.

Developers are under pressure

In general it was a dour mood. Each one we spoke to mentioned up front how hard it was to make money in this market. The industry was on the edge of a tsunami, not a good one, one said.

Government taxes and charges, plus planning came in for the usual hammering.

But four or five years ago, you were all doing very well indeed, we offered. Have planning and taxes changed so much since then?

Um, probably not. Maybe it’s the cost of money that’s piling on the pressure?

One insider said there were truckloads of cash being dumped into the Australian market from Asia, with no due diligence to speak of, attracted by the tightening of Australian bank lending. Because we know that finance, like nature, abhors a vacuum, so where one line of lending dries up, another will spring forth, albeit under much different conditions. Such as higher interest rates, in return for bigger risk.

The surge in population might keep the residential market plumped but let’s see where this rocky financial ship ends up.

Certainly, the failure of the Reserve Bank to cut interest rates at its last meeting and the similar vibe from the US is bad news for the enormous costs developers face, especially in holding costs.

Which is one of the main reasons, you can understand, that they want planning delays slashed or eliminated along with developer charges.

While society does tend to expect some kind of continual improvement in quality of housing and city amenity, the fact that these are tight constraints exist at all is considered a major problem for developers.

The logic is there: while no-one can bring down the cost of money, enough lobbying might sway governments to shift their position on taxes and planning.

The lobbying to deregulate planning looks like it’s starting to work with even previously untouchable heritage protections overridden in places like Melbourne. In New South Wales, the government has also done what we thought should have been unthinkable in a capitalist society – and offered to underwrite development by pre-purchase agreements.

With all the pressures they face you can see why developers may not be precisely gamblers but certainly their close cousins.

It’s a fraught job with massive potential upside but also loads of risk, which means they frequently get labelled as greedy. Of course the answer is to build loads of public housing (we recommend 30 per cent) which would take enormous pressure off the private sector if it came with a program to increase skill levels and offsite low carbon construction.

Where will the money come from? Maybe the same place the Covid era finance boom came from. After all housing, the lack of it, is a massive drain on productivity, in times travelled to more affordable homes, in financial stresses that prevent people embarking on more creative productive enterprises and in the crushing stories of hunger we increasingly hear about in this fabulously wealthy country.

Rasmus Nørgaard noted in his address to the Dank Street audience that a city dominated by only rich people serves neither the rich nor the poor.

The guy is super inspiring.

Read the full report.