WA stamp duty rebates a boost for Paul Blackburne

Source: The Australian

Perth apartment developer Paul Blackburne is about to unleash $1bn worth of new projects thanks to what he calls one of the most significant initiatives for his state’s economy in 20 years.

West Australian Premier Mark McGowan announced last week that buyers of new apartments will receive stamp duty rebates as part of a stimulus package aimed at boosting the state’s sluggish housing sector.

For the next two years, buyers of a new residential unit or apartment in a multi-tiered development will be eligible for a 75 per cent transfer duty rebate of up to $50,000. The rebate will be on top of first-homebuyer assistance packages.

Blackburne’s eponymous property group specialises in apartment projects where units sell for an average $1m and more, targeting owner-occupier baby boomers who are downsizing — a strategy that has reaped its ­rewards, given he has little ­competition.

“For larger high-end apartments there is almost no supply,” Blackburne tells The Australian.

“I really shouldn’t tell anyone as it’s the best market in Australia to work in!

“Over the past few years we have built up a large pipeline of new prime sites in line with our counter-cyclical strategy. We have purchased sites in high-end areas that have a shortage of supply of larger high-end apartments … and an increasing demand from local owner-occupiers.”

All that sweet sweet cash
All that sweet sweet cash

Blackburne has just launched his new $280m ONE Subiaco project at the 5451sq m Subiaco Pavilion Markets site in Perth’s inner west for which he paid $25m a year ago and where he plans to build mostly high-end apartments costing between $1m and $17m.

Demand has been strong. Blackburne may bring construction plans forward, while the state government’s new stamp duty initiatives means he is also fast-tracking other plans.

“We had planned to launch five new large-scale projects over the next three years as the WA market improves. With a 75 per cent stamp duty rebate for the next two years, we plan to bring forward these launches to within two years. The WA market has hit the low of the cycle and in the past three months east coast and overseas investor inquiry has increased 34 per cent across all projects as an average.

The ONE Subiaco project includes a $17m penthouse. Picture: Supplied
The ONE Subiaco project includes a $17m penthouse. Picture: Supplied

“While local owner-occupiers make up most of our buyers, we have seen investor buyers increase, too, quickly.”

Blackburne predicts the new measures will double sales rates for off-the-plan apartments like those he is selling. About 62 per cent of his buyers are aged 55 and over and locals make up most of his clients, though the amount of investors buying rose from 12 per cent to 18 per cent in the past three months.

The ONE Subiaco project includes a $17m penthouse that Blackburne’s sales staff have been spruiking to wealthy buyers, and one he is increasingly confident of selling by the end of the year.

Blackburne this month will undertake settlements on his $143m Essence project in Claremont, one of several he is undertaking or planning to build in high-end suburbs or areas where there has been little supply of luxury apartment buildings.

“When we launched it two years ago we sold most within three months and mostly to local owner-occupiers,” he says. “There are less than 4 per cent fallovers (or defaults) from 145 apartments as most buyers are local owner-occupiers and they are worth more than what they paid.”

Blackburne’s strategy has proved a big success, with him now being a prominent member of The List — Australia’s Richest 250 with an estimated $553m fortune thanks to his ownership of the private Blackburne Property Group.

He says he typically tries to spend $50m-$75m each year on new sites and, while Perth prices would probably increase rapidly if more investors and foreign buyers entered the market, Blackburne is content with his plan to sell mostly to cashed-up locals.

“My theory is that, while we welcome investors and foreign buyers, if I can always ensure I supply homes locals want to live in, we will always maintain a strong business,” he said.

“We may not do as much as we could in a boom, but our business model keeps going through good and bad times as people always need somewhere to live.”