The List: Property players power fortunes in face of crisis

Owning and developing property remains a sure-fire path to riches for the select few that make it to the very top of local rankings. But it is not an easy ride.

Australian billionaire real estate property developer Harry Triguboff at World Tower Serviced Apartments in Sydney. Picture: James Horan

It seems to be hard not to make money in property, but some manage to lose it all or at least most of it, while others still have managed to climb to the loftiest heights of wealth to land on The Australian’s vaunted Rich List.

Property and development remain quick paths to robust wealth in Australia according to the latest edition of The List, and new fortunes continue to be made.

There are 59 members from property on The List this year, the most from any industry, but wealth in the sector can certainly ebb and flow.

While famous names like former shopping centre magnates the Lowy family have turned their attention to investing, many of the big fortunes remain in residential and commercial property, like Harry Triguboff‘s Meriton operation, who topped the industry with a $20.8bn fortune, and Lang Walker’s diversified business, with both thriving during the pandemic.

Others avoided the potential pitfalls thrown up by the crisis. Max Beck and Lindsay Fox’s Essendon Airport in Melbourne has increased in value as its commercial precinct, including the biggest collection of car yards in Australia. But Terry Snow’s Canberra Airport fell in value as its office park sat empty at times during Covid lockdowns.

The pub market has been hot in the past year, with competition for assets strong between buyers such as billionaires Bruce Mathieson, Justin Hemmes and Arthur Laundy.

Sam Arnaout debuted on The List with a $922m fortune as his Iris Capital has snapped up dozens of pubs and the Lasseters Hotel Casino in Alice Springs in recent years.

But Con Makris has suffered a fall in his estimated wealth as his commercial assets on the Gold Coast fell in value and he sold off shopping centres in Adelaide.

Big names such as Bruno Grollo and his family, including son and scion of the construction empire Daniel, have fallen from The List in recent years. Bruno has been selling buildings and the Daniel-led construction business Grocon fell into administration in 2020 on the back of a string of costly project failures slamming headlong into the pandemic.

But he is on his way up again with his Home build-to-rent business, funded by Singapore’s GIC sovereign wealth fund, looking set to deliver the family name back to city skylines.

What has been notable is the continuing ability of experienced players to pick the right projects and execute on them, with the developers that charged on during the pandemic emerging as big winners.

Walker exemplifies this trend in his development of the $3.2bn Parramatta Square project, with the western Sydney hub now dominating the area, and in rolling out a new tower in Adelaide and kickstarting new projects in Queensland.

Triguboff is also undimmed and has continued to buy up fresh sites during the pandemic, splashing out more than $300m for one inner Sydney block, and has pushed into Melbourne and Canberra.

Rising players include entrepreneur Tim Gurner who used the pandemic to lift his wealth from an estimated $634m to $660m.

His Melbourne-focused firm is now developing a pipeline of properties right across the country.

Gurner told The Australian it had been a wild ride for the business, but the developer was set to reap the rewards of a string of property purchases made during the dark days of the pandemic from the family farm on the Mornington Peninsula.

His empire includes not only projects on Melbourne’s fashionable Chapel Street but also in swanky parts of Sydney and the Gold Coast, and more recently in Perth and Geelong. And he has eyes on projects further afield.

“In mid-2020, when the world was not fantastic, I decided it was a good opportunity to start filling our pipeline for our future,” he said. “We acquired about 14 sites, about 7000 apartments worth of future pipeline projects, we were quite aggressively trying to grow and we’re seeing the benefit of that.

“This industry is not for the faint-hearted, there’s a lot of people on The List but there’s a lot that aren’t and that’s not for trying.”

“Unless you really love it and have a passion it’s a very difficult industry.”

The Covid-19 shift in valuations has seen some sectors challenged, with city offices vacated and CBD retail space deserted.

The boom of e-commerce has seen warehouse valuations soar, driving the wealth of industry veteran Greg Goodman, chief of Goodman Group, busy building new facilities for Amazon in Sydney and Melbourne.

Those who have held on to their retail assets have not had an easy ride during the coronavirus crisis. The values of shopping centres have been under pressure for some years.

Big institutions took hits on their holdings of large regional malls. Wealthy players often own smaller properties including subregional and neighbourhood centres, some of which increased in value during the pandemic and remain in hot demand.

DiMauro group of companies head Nick DiMauro has built a fortune around shopping centres in Australia and New Zealand, sitting on an estimated wealth of $1.03bn, up from $763m last year.

DiMauro said “the right assets are always important” in building wealth but noted a key driver of valuations across the sector were low rates.

With an eye to the future and preserving the attractiveness of his sites DiMauro said the focus was on developing sites to give shoppers “a reason to go in there rather than just to buy clothing,”.

“We’re pure investors. We see an asset, buy it and hold for the long term. It’s not 10 years, it’s 30 years,” he said.

Sydney hotelier Jerry Schwartz has seen both sides of the pandemic, with the $150m forced sale of Sydney’s Four Points by Sheraton last year due to continued restrictions.

Despite the challenges Schwartz lifted his wealth from $517m last year to $550m this year, thanks to “green shoots” and positive trends across the business.

Schwartz said the “bleak predictions” of 20 per cent price falls on valuations hadn’t panned out.

He said the boom in hotel valuations made it too expensive to expand his portfolio, with the company instead investing its funds to enhance its resorts and hotels.

Schwartz said the trick to growing wealth in property was “organic growth, rather than get rich quick schemes”.

“If you grow slowly, you’re able to do things well rather than jump in and take big risks thinking you can make a lot of money quick time.”

The big factor that keeps The List players at the top of the tree is their appetite to build on their operations and take on new developments and execute on them.

While listed real estate investment trusts are taking on more development as commercial property prices have risen so high, private capital remains a substantial part of creating new projects and most of the bets the wealthy are making are paying off.

Their ability to take long-term land holdings and refashion them into new commercial and residential precincts means that they will be with us for many years to come.

Maha Sinnathamby, with an estimated wealth of $1.91bn, up from $1.68bn last year, chairs the Springfield Group which is building a 50,000-strong urban development southwest of Brisbane’s CBD. He said the project’s success was driving its booming valuations, with plans for 52,000 jobs in the area by 2030.

“It is the only city that has been built since the Federation other than Canberra,” he said. “The value of the Springfield estate has continued to increase over time.”

Real estate continues as a path to wealth

Unless you really love it (property) is a very difficult industry