Orchard Property Group’s Brent Hailey on developing during COVID

Our CEO Kirsty Chessher-Brown interviewed Brent on development in Queensland during the pandemic.

Brent Hailey, Managing Director at Orchard Property Group

You’ve been in the development game for some time. How does your experience so far of 2020 compare to some of the other tough years that the industry has faced?

Every upswing tends to be demand-driven but the downturns come as a consequence of different conditions. I think what’s really interesting this time around is that we’re going into a period of slowdown that is not caused by a drop in demand or capital constraints, this time it’s a health issue. We need to remember that the banks have gone into this very well capitalised. Governments have responded incredibly quickly to provide support wherever they can and they’re actually supporting not only our industry but also the public at large. What is really great to see is that the federal government is encouraging the banks to support borrowers and they’re encouraging landlords to support tenants. We have a collective effort and collaboration, which we have not witnessed before in any downturn.

The way industries are responding to the programs that are being put in place may mean that it will be a soft landing. Obviously, we’re officially in a recession and there are lots of people without jobs. That drop in productivity is playing on a lot of people’s minds. Let’s face it, your home and your car are probably the two biggest financial decisions you make in life so to put yourself out there and consider a big purchase like a home is a pretty gutsy move at this point in time

It’s worth noting though that a lot of the people who have lost their jobs in Queensland are from industries that support a high percentage of casual or part-time workers, most of whom weren’t necessarily in the property market anyway. 

I own more pairs of rose-coloured glasses than anybody else in the industry. Provided everybody keeps responding the way that they are, it will keep consumer confidence high and that will probably lead to a soft landing.

The big issue for me is the international migration situation and the influence of that on the headline numbers. By the time the federal government even starts considering opening up the international borders, which is likely to be next year sometime, we’ll have had nine months of basically no international migration, so that tells you that numbers are going to be considerably down. That will really temper what confidence is starting to flow through the community now.

Is that confidence underpinned by the way governments have responded to the health crisis?

I think it has given people in Queensland a sense of confidence, we are essentially living very normal lives. I have family in Melbourne and it’s a completely opposite situation down there. They are really concerned for their future, for their kids, for their jobs.

You talk to some of the people in business in Melbourne and they are thinking that there may be a contraction of Melbourne’s population, simply because without that international migration, there is a real possibility that deaths will exceed births. So, you might actually see their population fall back a bit.

We’ve got the complete opposite up here. There is this growing sense from some within the industry that the way Queensland is managing the health crisis component, our lifestyle, and all of those fundamental factors that have existed here for a long time, will drive better interstate numbers than we’ve seen for a while. I am predicting that south east Queensland will be a real beneficiary of the health scenario.

The potential handbrake to our future success is jobs. We’ve seen it before when there has been an influx of young people to the State and they’ve worked part-time for six months and can’t land a full-time job. In the end, they’ve gone back home to live with Mum and Dad. While that might seem simplistic, I really think it’s going to be a huge opportunity for south east Queensland, if we can get our act together.


Where do those jobs come from? Are big infrastructure projects the answer?

We’re very, very fortunate that we have got a range of really active employment sectors. We have mining, development and construction and tourism. I think of what both Sir Joh Bjelke-Petersen and Peter Beattie did to attract big business to our State. They both spent time in the southern capitals doing deals on land tax and payroll tax relief and other incentives. We were the envy of the rest of the country and our economy was strong.

I won’t try to analyse where we lost our way, but I think we can return to those glory days with some tailored fiscal management, targeting dollars for job creation purposes.  

Infrastructure is also the obvious thing that is lacking. It is a constraint on everything at the moment; the roads are blocked, you can’t get a project up and running because of drainage issues or there’s the pumping station that needs to be built.  But it can be done. You just have to have a will to work out the solutions and apply them quickly.


What’s your view on how 2021 will play out?

If we can get our ducks in a row in Queensland, it’s probably not going to be too bad. I do have a concern that there is that bring forward component to HomeBuilder, but putting my rose-coloured glasses back on, there’s enough underlying demand here in Queensland, and we have such constrained supply that I believe it will keep the market in equilibrium. On the bring forward effect of HomeBuilder, we’ve still got a long way to go to see how many of these enquiries become applications, and how many applications are approved and are funded by the banks. I was up in Noosa last weekend and all of the accommodation was booked out. Most of our office has taken, or is taking, short holiday breaks in Queensland and supporting our tourism industry and our State. I am an optimist, definitely a glass half full person. You can’t be in this industry and operating successfully unless you are an optimist. But I’ve just got a good feeling about Queensland, and particularly about the south east.

What are some of the most difficult issues that you’re finding that you need to deal with on a day-to-day basis to get land to market?

Infrastructure. The blockages are worse than they’ve ever been. During my time as president of the UDIA, Brian Stewart (former CEO of UDIA Queensland) used the term “vertical fiscal imbalance”. He said the money’s not getting down to where it really makes a difference. I think about the announcement of the Building Acceleration Fund. I see what’s been able to be achieved in the Flagstone and Ripley PDAs. At today’s interest rates, Treasury would be able to borrow $200m and pay less than $2 million a year in interest. So why isn’t it $500 million and why isn’t there a commitment to replenish the fund, based on demand, every year for the next five years. Let’s unblock all of those infrastructure blockages because the way we’re going about it now is time consuming and inefficient. We are just spinning our wheels all the time talking to councils about the same issues and trying to clear the same roadblocks.

Due to the uncoordinated approach to infrastructure delivery, I am constantly witnessing inefficiency and waste. If it could be properly coordinated and funded, the savings would be immense.

Overall those years that I sat around the Institute’s Board table, we always said that the three big issues affecting the industry were the quantum of the fees and charges, the planning system constraints on land supply and the inefficiency of infrastructure provision. After about 10 years of raising the same issues, somebody new to the table questioned why we have an industry body when we discuss the same issues, year after year, with little resolution. Doug Merritt said “imagine what it’d be like if we didn’t have UDIA advocating for the industry”.