News


The Residential Revolution

October 9th 2018

Discovering new typologies and innovations that are contributing to a new era of affordable, high-quality housing. Takeouts from the recent #Urbanity Conference

Words by Katie Lodge

In this moment of constant and rapid disruption, the business of real estate and property has remained frustratingly immune. Sure, we’ve had some developments in technology with apps to help buy and sell real estate, make the sales process more seamless with the integration of CRMs, and the incorporation of data to inform, but fundamentally, property models in the traditional sense haven’t budged all that much.  

Right now in Australia, we are seeing some interesting new business models in property coming to the fore. Resident and architect led models – where the power is largely put back into the residents hands (ie. not the developer) – are becoming much more common, particularly in Melbourne. The uptake in other states it seems, is much slower. And then of course there is the build-to-rent model, which gives the tenant a louder voice; more freedom and flexibility over how and where they live.

It was interesting to hear from Panos Miltadimio, Lucent Capital’s managing director who has been involved in cornerstone developments like the Nightingale typology. This is a very different approach to the norm, with developer profits being capped at 15%, and much of the decision making process made by the collective of residents coming together to have greater influence in how their new homes will take shape. The example Panos discussed utilised a ballot system (as a result of the amount of interest) to narrow down the buyers and participants. It took around 32 months from the group coming together and acquiring the site to the completion of the build. They made many decisions around the type of building they were designing, however Panos and the team were careful to manage expectations.

Assemble’s strategy director, Ben Keck joined the conversation to discuss how they are taking on a very different model of development – build- to-rent with extra benefits. Here, they are helping to bridge the gap between renters and buyers, but also giving the option of a five-year lease with the opportunity to buy their home at the end of it.

This is a structure we have seen for many years in the auto industry, but for whatever reason is only just making its way into the development space. The purchase price and rent is fixed over that five-year period so tenants – prospective buyers – have a realistic goal to aim and save for. They aren’t locked in for the full term and they have the ability to sublet for up to two of the five years, providing a good amount of flexibility.

This model is very much a long term play for the developer. There is no quick ROI, however they have guaranteed rental incomes for an extended period of time. With equity returns set at roughly half of those with the off the plan purchase approach, it will be interesting to see how successful this type of format is. As a renter myself, I certainly see the benefits, however for a developer, it definitely doesn’t sound like a ‘quick win, fast cash’ solution. Perhaps though, this is exactly what our society needs – happier tenants and a potential solution to more of us making it onto that property ladder, which for many, feels more like climbing the lofty heights of Jack’s beanstalk into the clouds.

Hailing from the UK, I have always been surprised at the lack of compulsory allocation of social and affordable housing on new developments in Australia. Admittedly, I haven’t worked in the UK for almost a decade, but from my memory of working as an architectural assistant on large-scale residential developments, most, if not all of them over a certain value and density, had a requirement to provide a percentage of the stock for those with lower income and in-need of housing.

With the huge challenge of affordable housing and homelessness that we face in Australia, its baffling to think that there isn’t more enforcement of such a policy on our shores. It would be refreshing to see some policy changes to introduce a greater percentage of allocation to more affordable housing. There will be divided opinions on this, but having a more diverse and mixed community neighbourhood has the potential to both provide aspiration to those in a less fortunate position who are often stuck in a cycle due to their immediate surroundings and experiences, and at the same time, foster greater empathy from those more privileged. It would also provide more options for our key workers who are so integral to the fabric of our society. As leaders in the industry and in positions of influence, we need to remember that our focus should not be on simply delivering housing – but on delivering neighbourhoods. Places that have spirit and vitality. Places that have pride and diversity. 

Natalie Allen, director of the City Makers Guild, shared some insights following her recent international study tour with the group with the intention of learning more about collective urbanism from countries like Berlin and Vienna. There are approximately 62% of people living in some kind of social housing models in Vienna and banks in some of these European countries are embarking on innovative financing models. The spirit of community and intergenerational living is also much more prominent in many of these locations.

So why and what are the barriers to incorporating more social and affordable housing into Australian developments? I don’t have the answers, but perhaps part of the solution lies in looking at some best-practice examples from our brothers and sisters across the ocean and seeing which parts can be successfully adopted and tailored here down under. For now though, I’m optimistic about the changes in these emerging models like build-to-rent, Nightingale and the like, and the stronger focus on developing thriving communities with more people-focused outcomes, and a sense of place.

For more on this and many other topics, visit Urbanity here

IMAGES

Nightingale Housing, Melbourne
Designed by Breathe Architecture
Developed by Lucent
Photography by Peter Clarke