Turning the property slump into an advantage

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The continuous reports of the weakening property market may have rattled many people, but using a strategic property plan will help in overcoming the current hurdles in the sector.

 Harry Triguboff, one of the top property billionaires in the country, for instance, remains calm about the market’s bleak situation even though he has more at stake than most in the industry.

“If prices fall, I’ll buy the land cheaper. As long as you don’t lose your cool. You have to look at things in the longer term,” he told Bloomberg.

Triguboff has assets worth $13 billion, according to the Bloomberg Billionaires Index, and he plans to continue expanding his business even as the downturn in the Sydney property market gets worse.

Data showed that national home prices dropped 5.6% in the year through January, making it the biggest annual decline since 1983, according to data from CoreLogic. The hardest hit was Triguboff’s hometown of Sydney, where prices slid 12% from their mid-2017 peak.

Drops in Sydney prices are expected to continue until mid-2020, and are set to bottom out at 20% below their peak, according to Ben Udy, an economist at Capital Economics. In addition, the fall could hurt the apartment market.

Triguboff, though, is unfazed by the dwindling values. He was able to rise above several slumps in the past, including one of his notable challenges in the mid-1970s when debts almost paralysed his business and projects had to be funded from his own reserves.

 “We build at the same rate,” he told Bloomberg.  

The key to his confidence? The flexibility in his strategy. Triguboff builds apartments for the sale, rental and short-stay markets, and alters the amount of stock made available depending on where the demand is strongest, according to Bloomberg.

Meriton, his company, has 9,000 units available for rent. It is envisioned to expand to 10,000 units by 2020. Its Meriton Suites division is the largest owner of hotel rooms in the country.

“I don’t care whether they lease or they buy. So where leasing is concerned we are very strong. I build 40 units a week and I can lease 150 units a week. So where is the problem?” Triguboff told Bloomberg.

When presented with issues that can hamper the growth of his business, such as constraints on foreign buyers and a slowdown from China, Triguboff remains hopeful.

“China has more than 1 billion people. And they love Australia. I think they love Australia as much as we love Australia. So there will always be enough of them that will buy,” he told Bloomberg.

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