While the property market falls on the east coast, Perth property magnate Paul Blackburne is laying the foundations for what he believes will be a quick rebound in his hometown.
So much so that he predicts Perth will defy the residential property gloom across the country in the next three years, averaging 4-5 per cent price growth annually compared with a falling or plateauing sector elsewhere.
And Mr Blackburne said the banks were helping out, loosening lending restrictions to developers in the west while tightening their practices elsewhere.
The 42-year-old rich lister last week paid $25 million for the 5451sq m Subiaco Pavilion Markets site that is set to be transformed into a $250m high-end residential apartment and retail project that could include more than 300 units, shops and cafes.
But Mr Blackburne, who has an estimated $553m fortune from his Blackburne Property Group, said he had to move quickly to snap up the site when it became available because interstate and foreign developers were starting to pile into Perth, seeing it as the market to be in as a downturn hit the eastern states.
“We grabbed it within 24 hours of it coming up,” he said. “Across the last six months, we’ve seen east-coast and overseas developers coming back to Perth. They are looking for opportunities but want to stay on Australian shores and they see this as the best market around. The banks are being more aggressive in Perth now.
“They’ve got a certain amount set aside to lend for residential developments and they see the risks being greater for development lending in Melbourne and Sydney than here. We’ve suddenly had some competition for our debt financing and we asked why. They said they see Perth as a stronger market for developers.”
The Subiaco deal adds to the 800 apartments worth about $500m that Mr Blackburne’s company already has planned or under way and nearing completion in Perth. Between 70 and 90 per cent of the projects have been presold.
Mr Blackburne said about 70 per cent of his buyers were West Australian owner-occupiers and about 50 per cent were baby boomers downsizing from larger houses into units and helping drive a comeback for the market.
“Anecdotally, we’ve noticed an upturn here in Perth over the last three months and that should start to flow through in the official numbers, I think. And we think that the market has bottomed out here now. I believe we will get solid growth of 4 to 5 per cent each year here for the next three years.
“It is not a return to the boom times of a few years back, but it certainly is better than it will be on the east coast, for example.”
Real Estate Institute of Western Australia data released last week showed Perth’s median house and unit prices increased 1 per cent and 4.9 per cent respectively in the June quarter compared with a year ago.
The Subiaco deal continues Mr Blackburne’s strategy of pouncing on relatively cheap sites ahead of an upswing in conditions. The site was reportedly bought by another rich lister, Melbourne-based Andrew Abercrombie, the chairman of listed finance company Flexigroup, for $35.67m in 2007.