Matthew Abraham: Why invest $670m in SA? Ask an expert
Matthew Abraham asked his brother-in-law and Moelis Australia chief executive Andrew Pridham why his firm invested $670 million into SA. The answer ... is pretty straight forward.
Opinion
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At $60 for a small trailer load, the dump tucked behind Adelaide Airport is one of our city’s lesser-known tourist attractions.
Adelaide Waste and Recycling Centre at the arse end of Morphett Rd, North Plympton, attracts desperate dumpers from near and far, your tired, your poor, your huddled masses yearning to breathe free, bringing the wretched refuse of their teeming garages.
And so it was that on Wednesday I was disposing of some wretched refuse with the help of a man who, a few weeks ago, bought half of Marion Shopping Centre.
Andrew Pridham, my brother-in-law and chairman of the Sydney Swans, is CEO of Moelis Australia, the investment bank that managed the super-massive $670 million investment in the “Marion shops” by Singapore-based SPH REIT.
Andrew’s not afraid of rolling his sleeves up.
When he was still in primary school, we gave him a small paintbrush and a big tin of olive-green paint and set him to work painting metres of pine logs on a new garden bed in our then Athelstone home.
I did my block at him for getting paint on our orange wool blankets flapping on the clothesline. The whole experience was character-building, for both of us.
He happily describes himself as “just an idiot from Mitcham” – ham and pineapple pizzas at the El Dorado on Belair Rd and next door, Golden Chicken back in the day – but obviously he’s no idiot.
The Marion deal is the biggest single real estate acquisition in South Australia’s history. In this year, it’s the largest in Australia and one of the biggest deals of its kind in the world.
They now plan to pump another $200 million into modernising and expanding the centre.
So, on the drive home with the empty trailer rattling behind, I wanted to know this: “Why would anybody invest $670 million in Adelaide?”
The answer, he says, is simple.
Adelaide has a highly-educated population, excellent schools and universities, lower wages but a lower cost of living and more affordable housing, it’s easy to get around, taxes on commercial property investments have fallen and land tax is set to follow.
Some of his employees live in Adelaide and commute to Sydney. Oh, and this may surprise some of us but we’re well-managed by our state governments.
“It always surprises me that the people who are most negative about SA and Adelaide are people who live in SA and Adelaide,” he says.
“Adelaide’s not a dump. People who come here to visit or to do business recognise that. But it’s got that reputation and the people who live here give it that reputation.
“The biggest mistake SA has made in the last 30 years is to try and do something it’s not good at, and that’s trying to attract big business, banks, businesses that aren’t naturally going to come here.
“Nine times out of 10 you’re better off working out the things you’re good at, and getting better at it.
“Can Sydney ever be a cheap place for people to do back-office work? It can’t be. Can Sydney ever have world-class vineyards 25 minutes from the CBD? No, it can’t.”
These views are particularly relevant when set against the push by Treasurer Rob Lucas to reform land tax rates.
Torturous compromises will mean a short-term budget hit, but long-term dividends. It’s exactly what he should be doing.
The radical 2015 step by former Labor Treasurer Tom Koutsantonis to immediately cut stamp duty on the non-property part of business transfers and to abolish stamp duty completely on commercial property transactions from 2018, had almost no short-term ballot box bonus. But it sent a strong “come on down, the taxes are lower” message to global investors.
We do need to recognise what we’re good at and get better at it – especially keeping costs down, not just for business but everyone.
Andrew’s optimistic that if we play our cards right, we’ll see a lot more investment in SA. He raises one red flag – the Government has to be “careful of overdevelopment, of not destroying the architecture and fabric of Adelaide”.
Hooray to that, because a dump is a great place to visit but nobody wants to live there.