Billionaire property developer Harry Triguboff has warned he’s “tempted to stop” building apartments in Sydney due to planning delays, as he predicts the government’s efforts to boost supply through rezoning will fail and the housing crisis will only get worse.
The Meriton Apartments managing director has called on councils and planning authorities to do more to help developers get projects off the ground and ensure their profits are “protected”, rather than “being arrogant” and telling them “what the law says”.
Mr Triguboff, 90, said unless authorities listen to developers’ concerns about the “problems plaguing NSW”, more would continue to go bust, apartments would not get built and prices would keep increasing.
“I am the state’s largest apartment builder but if I have to waste years building in Sydney, and not in other places, I will not build here except to finish on my empty blocks of land,” he wrote in an opinion piece for The Australian on Wednesday.
“The problem is that there is not enough action to back up the official sentiments on housing. I see that our authorities in NSW are promising that production of units will increase, but for this to happen blocks of land for many hundreds of units must be sold.”
Developers “don’t have enough money to buy sites” so governments “can rezone whatever they like, but there won’t be action”.
“When authorities rezone land, they must ensure that profit can be made,” he said.
“The basic problem is that they don’t know how to do it, nor do they care. They think they know the answer. That is why we have too many offices and not enough apartments. Authorities must stop being arrogant and must understand the market. If developers come with problems, they must be helped — not told what the law says. Laws have to be changed very often because conditions change. When making rules and deciding on density, profits must be protected.”
In December, the NSW government announced plans to automatically rezone areas surrounding new Metro stations, allowing for denser housing within a 1.2-kilometre radius. So-called “tier one” transport hubs identified for accelerated rezoning by November 2024 are Bankstown, Bays West, Bella Vista, Crows Nest, Homebush, Hornsby, Kellyville and Macquarie Park.
The government estimates the changes will see the construction of up to 47,800 apartments within 1200 metres of these stations over the next 15 years.
A further 31 “tier two” locations will be rezoned to allow for new homes to be created within 400 metres of train stations and town centres.
And in a direct attack on NIMBY-ism, the sweeping planning reforms will significantly kneecap locals councils, forcing them to allow terraces, flats, duplexes and other medium-density housing to be built in low-density residential areas they control.
But Mr Triguboff — Australia’s fourth richest person with a net worth of $23.8 billion, according to The Australian Financial Review — outlined the challenges facing developers in Australia who were “going broke more than anyone else”.
“They can’t all be dumb,” he said.
One problem was lack of investors buying units due to the low return of about 2.5 per cent, he said, adding investors now only made up about one quarter of the market.
“For units to be taken by investors, council costs have to be brought down,” he said.
“But the councils have no intention to do that either. So, there will not be much sold for rent. Besides, the banks are refusing to provide finance for builders. So, nobody cares about all these added costs. Everyone wants units to be built, but few will be. Thus, rents will keep going up. The price of units will also go up because there is no supply.”
Neither major political party was serious about bringing developers’ costs down, he claimed.
“This apathy has to stop,” he said.
“I am building more than 2000 a year and could build 4000. But councils fabricate problems for which I would gladly take them to court, but our present rules don’t allow me to do so. And the planning department is not at all helpful. I have almost stopped buying in Sydney, and I am just using up my empty land.”
Mr Triguboff said Meriton completed three blocks of serviced apartments in the last quarter and was active in Brisbane and Surfers Paradise, “but we need more approvals”.
“It is most interesting to try and understand how much longer they will allow production to drop and for supply to fall further and further behind in NSW,” he said.
“And prices are rising and rents are going up. All the planners here (in Sydney) have to do is act normally and I will be back. But I don’t like my chances.”
Mr Triguboff made similar comments in 2022 under the former Liberal government, complaining that council approval red tape meant “at present you cannot build in the state of New South Wales”.
NSW Planning Minister Paul Scully said in response to Mr Triguboff’s op-ed that increased construction costs and labour shortages were a “national problem that all levels of government are trying to resolve”.
“In NSW, we’re implementing planning reforms to support the delivery of more homes, recognising that the next generation are struggling to buy or even rent in NSW,” he said.
“We’ve already announced the biggest reforms to planning in a generation, including reforms to low- and mid-rise housing with the aim to increase capacity for an additional 110,000 homes in well located areas by mid 2029. A policy Planning Minister Stokes tried to introduce in 2018 that was not supported by his own party.”
Mr Scully said the Minns government had also announced eight “Transport Oriented Development (TOD) sites which will all have a minimum of 15 per cent affordable housing, 31 smaller TOD sites that will have a 2 per cent affordable housing contribution that will increase through time, new bonuses and a state significant assessment pathway for larger developments that include 10-15 per cent affordable housing and we have a target of 30 per cent social and affordable housing on surplus government land to be used for housing”.
“The Secretary and Deputy Secretary of the Planning Department are consulting daily with councils and industry to help them understand the proposed changes and how they might implement them,” he said.
On Thursday, Inner West Council — which takes in the affluent peninsula suburb of Balmain attacked by critics as a shut-off retirement home for rich NIMBY boomers — said it was “carefully assessing” the reforms put forward by the state government and “will be seeking engagement and negotiation to address concerns we have”.
“We don’t believe these reforms can be rushed through, but we won’t be rejecting these rezonings outright, our intention is to be more constructive than that,” Mayor Darcy Byrne said in a statement.
“We agree in principle that increased density near transport hubs is a sensible way to provide more homes. We’ll be seeking a more fine grained approach that makes use of the detailed planning Council has already done in these precincts.”
Total dwelling approvals fell 9.5 per cent in December driven by a decline in apartment approvals, according to figures released by the Australian Bureau of Statistics (ABS) last week.
“Approvals for private sector dwellings excluding houses drove the December decline, falling 25.3 per cent,” said Daniel Rossi, ABS head of construction statistics.
“In 2023, there were 59,174 private other dwellings approved, compared to 73,041 in 2022. This reflects a 19.0 per cent annual fall. Approvals in less volatile, private sector houses, fell 0.5 per cent in December.”
Total dwelling approvals fell 18.4 per cent in Victoria, 11.8 per cent in South Australia and 2.7 per cent in Tasmania, but rose 8.2 per cent in Queensland, 7.9 per cent in Western Australia and 2 per cent in NSW.
Commonwealth Bank economists Stephen Wu and Harry Ottley noted that at just 13,086 dwellings, “the level of approvals nationally is near decade lows”.
“While volatile, the trend and level of multi-unit dwellings looks soft, especially compared to the pre-Covid apartment boom,” they said.
“Higher interest rates, building costs and constraints in the construction industry are a disincentive for developers to invest in new projects. The more significant planning process involved in larger projects also means that multi-unit dwelling activity takes longer to respond to stimulatory policy such as the monetary easing we expect later this year.”