0:09

Hello and welcome to CBRE's Talking

0:11

Property podcast series. I'm Kathryn

0:14

House, CBRE's Australian Communications Director,

0:16

and I'm your host for this 2024

0:19

kick-off episode. To

0:21

start the year, I'm excited to be sitting down with

0:23

eight of the country's leading property players

0:26

to get their thoughts on where they see the best

0:28

market opportunities this year, as

0:30

well as the opportunities for industry transformation.

0:33

We're packaging these up into three episodes,

0:35

which will roll out weekly between now and

0:38

the end of January. Today I'll

0:40

be chatting to Charter Hall, CBRE Investment

0:42

Management and Lendlease, and

0:44

make sure to tune in over the next fortnight to

0:46

also get the good oil from Brookfield, Aliro,

0:50

ISPT, Investa and Aware Real Estate.

0:53

So, joining now is David

0:55

Harrison, Managing Director and Group CEO

0:57

of Charter Hall. David, you

1:00

have over 35 years of property market

1:02

experience and have overseen the growth

1:04

of the Charter Hall Group from $500

1:06

million to $87.4

1:08

billion of assets under management since CHC

1:11

listed on the ASX in 2005. I'd

1:14

love to get your insights on where you

1:16

see the best property market opportunities in

1:19

2024.

1:21

Well, it's a complex question because,

1:23

you know, every downcycle we've

1:26

been through, we've typically taken advantage

1:28

of pricing the market. And

1:31

you know, if

1:33

you look at the history of the group, some of our

1:35

greatest growth periods have been immediately after a,

1:38

you know, a correction cycle. So, I

1:40

guess the way I look at it is

1:42

I'm a bit agnostic about any

1:44

particular sectors. Everyone wants

1:47

to talk about alternatives at the moment and

1:49

the living sector and bed, sheds and

1:51

meds. And I think the way I

1:54

look at it is, you know, we manage a

1:56

lot of capital for 40 odd

1:59

thousand retail investors, high-net-worths through

2:02

the sort of some of the biggest institutions globally and domestically. And

2:04

we're always looking out for

2:07

outsized returns for those

2:09

capital partners. So interestingly, I

2:11

think there are going to

2:14

be some fantastic buying opportunities in what, you

2:17

know, are still considered

2:20

traditional core sectors. There's

2:24

a lot of value you can add selecting

2:27

assets that have got risk and de-risking them.

2:29

So that'll be, you

2:31

know, where our focus is. It's

2:33

a bit like having lots of children, you

2:36

love them all, they've all got their different

2:38

challenges and sort of the way I

2:40

look at our different assets and our different

2:42

sectors, we're equally focused on

2:45

them. And as you alluded to,

2:47

you know, some have been a little more

2:49

challenged than others. And I guess

2:51

we'll be looking at, you know, opportunities where

2:54

we can sort of use our deep skills

2:57

to add value. That might

2:59

be in the office sector, it

3:01

could be in industrial, it could be in retail, could be

3:04

in some of the social infrastructure areas that, you

3:07

know, we've now grown the business into. So, I

3:10

guess some might say they're looking

3:12

for, you know, stressed sellers. I guess

3:14

we’re looking for opportunities where

3:18

we think things are mispriced and we

3:21

can use our skills to take advantage

3:23

of that and make money

3:25

for our partners. That's basically the

3:27

business model. I would also say

3:29

that, you know, there's going to be perceptions of

3:33

certain assets and certain sectors

3:35

that get it wrong. It's a

3:37

bit like the listed market. Directionally, it's quite often

3:39

right, but it overshoots on the

3:42

way up and overshoots on the way down and its sort

3:44

of never really sort of directly

3:46

implying what asset values

3:49

will be in the future. So, we sort of

3:52

see that as an arbitrage opportunity and we'll take

3:55

advantage of whatever opportunities emerge.

3:58

Yes, so probably maybe the most

4:00

difficult child being the office sector?

4:02

Yes, well, you know, I think a lot of people are

4:05

quite negative about office. You

4:07

know, the whole work from home phenomenon

4:10

has probably provided

4:12

a more negative outlook than other

4:15

sectors. You know, we're pretty big believers

4:17

in the sort of bifurcation of

4:19

tenant demand towards modern or modernized

4:21

assets. You only have

4:23

to look at, you know, our office occupancy, you

4:26

know, across the major office portfolios

4:28

in the country at sort of 97.5%,

4:30

you know, we're well above

4:32

industry averages and, and as you know,

4:34

average vacancy factors are sitting

4:37

in the mid-teens and you know, for

4:39

us to be two and half percent, it tells

4:41

you a lot about, I don't let

4:43

my team pat themselves on the back. It's not about

4:46

their skills, although that has added considerable

4:48

value. It's also about

4:51

the strategy of having the most

4:54

modern assets you can either develop or

4:56

acquire and being prepared

4:58

to sell older stock that might

5:01

become obsolete and might have more

5:03

vacancy challenges. So, we're

5:05

pretty big believers in

5:07

prime office. One of the

5:10

things that's happening now with the rise in construction

5:12

costs and the rise of debt and equity

5:14

costs is virtually

5:17

80% of all mooted development

5:19

from two years ago is just not going to happen.

5:22

So that puts a pressure cooker

5:24

on good quality assets,

5:27

but there's no doubt that the

5:29

evidence is there that modern, prime assets

5:32

are attracting tenants and maintaining

5:35

higher occupancy than older stock.

5:37

I think we'll also see a

5:40

continued divestment of older stock.

5:42

If you look at most of the major REITs,

5:45

they've been selling older assets,

5:48

one commentator called themold boilers. I think that's

5:50

inappropriate, but..

5:51

I did see that in a Financial Review story

5:54

You know, at the end of the day there's a

5:56

reason why buildings built in the fifties and

5:59

sixties and seventies are being sold and the

6:01

more modern assets are not being divested by

6:04

most of the major property players. So now that

6:07

will eventually, like I saw in the early nineties, the

6:10

last time this country had a real recession, some of

6:12

that older stock will get to a point where it

6:16

gets redeveloped, refurbished as residential

6:19

of some sort, whether it's build-to-sell, build-to-rent, student accommodation. But you

6:22

know, that's a painful

6:24

exercise for people that own those assets. You know,

6:26

we probably prefer to focus our attention

6:30

on the good quality, modern office assets where I

6:34

think tenant demand will be stronger. But look,

6:36

this is just a cycle like

6:38

any other cycle that, you know, everyone thinks industrial's red

6:40

hot, and it is, and market

6:43

rents have grown. But

6:45

we need to be careful in Australia that we don't

6:48

go down the US route and see

6:50

a whole lot of speculative development. One

6:52

of the reasons why Australia's industrial sector has

6:55

had some of the better risk

6:58

adjusted returns is that we all

7:00

learned our lessons from the early nineties. There

7:02

was a lot of spec development in the late

7:04

eighties, both in office and industrial, but you

7:06

know, I saw office values drop 80% in the

7:09

nineties because there was too much supply.

7:11

So hopefully there'll

7:14

be some rational thinking

7:16

around just how much new

7:19

supply is actually created without pre-commitments.

7:22

I think it's one of the features of the Australian

7:24

industrial sector that is going to

7:26

sort of hold us in good stead, but I,

7:28

there's a whole range of different

7:30

sectors that also go through

7:33

oversupply. You know, shopping centre malls went

7:35

through a massive oversupply

7:37

creation in the eighties, nineties,

7:40

2000’s, and then they've been through a pretty painful

7:43

10-year period of, market rents coming back

7:45

because there was too much new supply. So,

7:49

it's not just greenfields, it's

7:51

also brownfields expansion of assets

7:53

that is, I think, the biggest risk for most

7:55

property sectors. So, most of

7:57

the people that have gone through

7:59

cycles and delivered for their investors have

8:02

delivered because they've missed

8:05

the dud sectors or avoided the dud assets

8:07

as much as they've added

8:10

value on the good ones. So I think your

8:12

job, particularly as a large manager of real

8:15

estate, is to avoid as many

8:17

pitfalls as you can and get some

8:20

winners that creates alpha for your

8:22

investors, you know, rather than just being a

8:24

beta player, which, you know, if you look

8:26

at the history of property returns in this country, both

8:28

listed and unlisted, there's been a

8:31

lot of beta players and not that many alpha players.

8:34

So, moving forward onto the idea

8:37

of transformation in our industry,

8:39

I'd be really interested to hear where you see

8:41

the biggest opportunities are in this

8:44

regard.

8:45

Look, I think sometimes you can get a

8:47

bit carried away with sort of transformation

8:49

opportunities if you're a fund manager.

8:52

Obviously, the preferred

8:55

route of growth is organic, however inorganic

8:57

opportunities do present themselves. We've

9:01

obviously, through the growth of the business, grown

9:03

predominantly organically, but we've done a few acquisitions

9:06

like the Macquarie platform in 2010,

9:09

three or four other REIT take privates, like

9:11

Folkstone, ALE pub REIT and

9:13

more recently the Irongate REIT. So,

9:16

I think people sort of

9:18

talk about transformation at a macro level. You've

9:21

got to be careful like,

9:23

you know, the, the reality is that industrial has been

9:25

a big winner with

9:28

the growth of e-commerce. Now, you know, at the

9:31

end of the day there's a zero-sum game. There's only 25 million

9:33

people in Australia, yeah,

9:35

growing at four or 500,000 a year. But there's

9:38

only so much retail expenditure, whether it's online or

9:40

bricks and mortar. So,

9:44

for every billion dollars of sales that is being done

9:46

online, it's got to be taken away

9:48

from somewhere else. So, e-commerce

9:51

has obviously been a big tailwind for

9:53

logistics. It's created some challenges for

9:56

shopping centres, particularly discretionary retail

9:58

shopping centres. You know, they're having a bit of a comeback after

10:01

a really tough time in Covid. Energy transition

10:03

is pretty topical. You

10:06

know, we've just seen the big fight over Origin, and

10:09

you know, people talk up energy

10:11

transition. You know, we see energy

10:13

transition in a number of different

10:15

ways. For example, we are a big

10:18

believer in our triple net, CPI linked

10:20

service station portfolios. Now if you think about

10:22

them, they're just long-term residential development sites

10:26

where we've got a scarcity of land.

10:28

You've got federal and state governments

10:31

now trying to muscle up and get more

10:33

density in cities. Sort of nimbyism has

10:36

sort of created this not in my

10:38

backyard mentality from local government, which

10:40

is why we've got a real supply issue

10:43

in terms of housing stock. So,

10:45

you know, our view is a lot of that will

10:47

eventually move to EV, convenience

10:50

retail with residential above it. Ironically,

10:53

in other parts of the world you've got residential

10:56

10 to 20 storeys sitting above fossil

10:59

fuel service stations. But we haven't

11:01

seen that in Australia and I'm not sure we will. Now,

11:04

if I think about the modernisation

11:06

of our office stock, we

11:09

are moving to net zero. You know, a

11:11

lot of our buildings are electrified.

11:14

We're doing a lot of green finance loans.

11:17

So, I think there's a whole range of different

11:19

ways that you can be

11:22

part of the sort of energy transition

11:25

story without being a direct

11:27

renewable energy investor.

11:30

I know it's a diverse answer to your sort

11:32

of broader question about transformation. So,

11:35

you know, I think there'll be a

11:37

whole range of ways to

11:39

play it. You know, we acquired a large portfolio of

11:43

Telstra data centres from Telstra in 2019.

11:45

I think it's fantastic

11:47

real estate CPI plus half percent

11:49

rent reviews triple net and they're basically

11:51

land value in major markets. And

11:53

whilst that is

11:56

critical infrastructure, eventually it'll go

11:59

through its natural, operational obsolescence and

12:02

that'll create opportunities to do other

12:05

things with those assets.

12:07

Well thank you so much for your time. I really

12:10

appreciate all your insights David; it was really great

12:12

to catch up.

12:13

No problem. Good catching up again. Thanks

12:15

Kathryn.

12:16

I'm delighted to now have Alex Crossing join

12:18

us to provide her views on the 2024

12:21

outlook. Alex is the Asia

12:23

Pacific Regional Head of Indirect Private Real

12:25

Estate at CBRE Investment Management,

12:28

one of the world's leading real assets investment

12:30

managers. The team is responsible

12:33

for more than US$144.2 billion

12:35

of assets under management and seeks to

12:38

deliver sustainable investment solutions across

12:40

real assets categories, geographies, risk

12:43

profiles and execution formats. I

12:46

was lucky enough to have Alex on Talking Property recently

12:48

to discuss the student accommodation sector.

12:51

Thanks so much for coming

12:53

back to share your broader views on where

12:55

you see the best property market opportunities in 2024.

12:59

But perhaps before we kick

13:01

off, maybe you could talk us through, what is

13:03

indirect private real estate?

13:06

Well, Kathryn, I know the name

13:08

could be hard to get, but what

13:10

we essentially are, is we see direct

13:13

real estate as what a lot of the fund

13:15

managers here in Australia do, where they source capital from

13:17

capital partners and acquire, manage

13:19

and sell the real estate

13:22

as fiduciary managers. Essentially what we

13:25

as indirect are doing is we're

13:27

like an outsourced investment team for pension

13:29

funds, sovereign wealth funds, insurance

13:31

companies, and we are

13:34

the capital partner. So, we represent them,

13:36

and we manage their global real

13:38

estate portfolios. So, for instance,

13:41

we have one of the largest sovereign wealth funds in

13:43

the world as a client and we manage all

13:45

of their allocation to unlisted real estate.

13:47

So that's where the

13:50

private real estate part comes in. And the fact

13:52

that we're working with operating partners or fund

13:54

managers to do that means

13:56

that we can then access wherever we want the

13:59

right real estate strategy, whether it's sector and

14:02

geography, with the right group

14:04

to execute that because we

14:06

really think real estate is a local business.

14:08

So, we might partner with a particular

14:10

fund manager in Japan or Singapore

14:13

or North America or

14:15

Australia. Specifically, we can tap

14:18

into their expertise on the ground

14:20

to execute a strategy that we

14:23

think we have high conviction on. So essentially, we

14:25

are the capital partner.

14:27

I hope that helps describe it.

14:30

No, that is great and it's, I do understand

14:33

it more than I did before, which is good. So, it

14:35

does give you a really, in

14:37

your role, you've got a really broad

14:39

view of what's happening globally, and you know, with a

14:42

really wide range of different partners. So, I would be

14:45

really interested to hear where you

14:47

do see the best opportunities. I mean, and

14:49

even I guess where your partners are seeing those opportunities.

14:50

Well, I suppose my remit is Asia-Pac, so I look at both

14:54

Australia and New Zealand as well as

14:57

Asia. Most of our capital is more core, core

14:59

plus in nature from a risk profile.

15:01

So, we tend to focus more on

15:03

developed markets, but we do have some, some investments in

15:06

some of the emerging markets. But as a house we've

15:09

been overweight towards logistics since 2012. We saw that

15:12

as an opportunity to get access, particularly

15:15

across APAC to rising incomes, household

15:17

consumption, household expenditure, and also tapping into e-commerce

15:20

as well. So that sort

15:23

of technological change that we've

15:26

seen, particularly in the last

15:28

15 years. And we are still

15:31

that logistics, well located in consumer demand driven locations and

15:34

types of customers remains a high

15:37

priority or high conviction strategy

15:39

for us. We're not alone, everyone's

15:42

bed sheds and now meds, so we've

15:44

got to come up with something I

15:47

suppose a bit more sexy than that.

15:52

But again, it is beds, as we talked about

15:55

student accommodation, that's been one area,

15:57

particularly in Australia that we've looked to

15:59

get access to the living sector here and

16:01

found it's the one where the numbers stack

16:03

up the most given a number of

16:05

factors, including regulations and taxes. And

16:08

our other exposure is multifamily in Japan.

16:11

So that's been something that for us that's been

16:14

very resilient from both income growth

16:16

and capital appreciation perspective. And

16:19

we've been able to partner there and create a

16:21

strategy there for our client

16:23

base who tend to

16:25

prefer slightly lower leverage than you typically see

16:28

in Japan where 60 to 80% is

16:30

quite common. But back to

16:32

the sheds, beds and meds, we're probably still

16:35

focused on logistics regionally and in

16:37

Australia, Sydney and Melbourne's vacancy rate

16:39

is obviously very compelling. We

16:42

do anticipate that inflation is

16:44

going to remain stickier. You're

16:48

just seeing that globally because of the, you've

16:50

got aging populations and

16:52

you've got post Covid, you had a

16:54

number of people retiring early from the workforce as

16:57

well. You've had this de-globalisation with

17:01

people onshoring and nearshoring to higher cost

17:03

production countries. And then with all

17:05

the geopolitical issues, we're seeing that having

17:07

an impact on commodity prices. So, we're expecting

17:10

all of that to result in much stickier,

17:12

higher inflation for some time and therefore

17:15

higher interest rates. So, we are

17:18

really looking at where can we

17:20

get value and I think that's the biggest challenge facing

17:22

a lot of investors at the

17:25

moment is how do you price things in the

17:27

current environment. So I probably

17:30

varied from the original question there, but

17:32

taking that macro perspective, I think

17:35

we are still very much looking at logistics. We're

17:38

still looking for opportunities in living. Whilst

17:40

we've gone into life sciences in

17:42

the US, I think that's challenging here

17:44

in Australia. We've looked at healthcare in all

17:47

its forms and we still remain quite positive

17:49

on the sector, but we’re finding investing in the

17:51

healthcare sector can be a little

17:53

challenging here compared to when we've invested

17:56

in the healthcare sector in the US just to get

17:58

the returns that we need. And

18:01

I think that is partly

18:03

driven by the fact that the US

18:05

is much more of a private health

18:07

model, whereas Australia is much more of a

18:10

public health model. But that

18:12

said, we’re still keeping an eye on that sector. I

18:15

suppose of those three - beds, sheds and meds

18:17

- that's probably the main ones and we are

18:20

continuing to look at all other forms of the living sector

18:22

as well and just keep an eye because the

18:25

government's policies are very supportive of

18:27

that becoming, a bigger and bigger

18:29

part of the institutional investors’

18:32

universe. So, we are continuing to watch

18:35

and monitor, but we can see things are changing

18:38

quite frequently. So, we are just wanting to make sure

18:40

we know exactly what we're coming into if

18:42

we're going to invest.

18:44

And I guess one of the stronger fundamentals there

18:46

is the lack of supply at the moment and the

18:49

opportunities that presents.

18:52

Yes definitely. And that's been

18:54

something that's been building up for quite some time.

18:56

Smarter brains than mine have looked

18:58

at that and looked to resolve the problems. But

19:01

we all know it's been, you know,

19:03

a chronic undersupply situation over many years.

19:06

And we're not alone. I hear that from my

19:08

US colleagues as well. They're seeing it

19:10

in many markets that they invest in. So, I

19:13

think it's something affecting a number

19:15

of different countries at the moment.

19:17

So, moving on to my second

19:20

question and I know this is a really broad one,

19:22

so it could be answered in many different ways,

19:24

but what about transformation? So,

19:27

are you seeing any areas where you think

19:29

there's real opportunity for transformation

19:31

in the industry?

19:33

Well, a couple of different things. I suppose transformation's

19:35

an interesting word. I would say everybody's net zero

19:37

carbon targets, countries coming

19:39

out with them, building owners coming out

19:41

with it, building occupiers coming out with it.

19:44

We'll see a lot of work in that direction. But I

19:46

don't know if that's necessarily transformation because

19:48

I think a lot of that work has already been done

19:50

and we already have portfolios where we

19:53

are fully net zero carbon. I suppose you could

19:55

say the transformation would be that everyone

19:57

will be there rather than just a handful.

20:00

I would say in the short term, I

20:02

think that market will be, and

20:04

I don't know if transformation is the right word, but

20:07

it will be quite a significant

20:09

shift by having these higher interest

20:11

rates for longer. It's not something

20:14

a lot of people working in the industry have

20:16

ever experienced because we've been in this

20:18

sort of quantitative easing mode

20:21

since 2008 and

20:23

I know people on my team, people I work

20:25

with weren't even, you know, working in the industry

20:27

during the GFC. So, I think

20:29

it will be quite a fundamental shift. And we

20:32

have the three independents on our investment

20:34

committee and one of them has always been

20:36

asking about inflation and you

20:39

know, for years we'd say, why does he keep worrying

20:41

about this? And he

20:43

knew it would come back. It always does. It's

20:45

just, so we, I think that's why

20:48

you're seeing this volatility in the fixed income market

20:50

as bond yields are trying to work

20:52

out this is a structural shift

20:54

in the market and how will

20:56

bond yields settle and therefore how will real

20:59

estate settle as far as capital markets

21:01

for instance because everything was

21:04

driven off that spread to bond yields of

21:06

being the risk-free rate. What premium do you

21:09

need from real estate to justify you for

21:11

the additional risks that you're taking on. So, I

21:14

think everyone getting their heads around that

21:16

will be interesting. I'm sure there'll

21:18

be some reluctant people clinging on to

21:21

the old ways of pricing, not wanting to

21:23

adjust. There'll probably be some pain

21:25

and it'll probably take a little bit of time, but

21:28

we'll sort of re-rate I suppose and get used

21:30

to the, what our research team calls

21:32

the old normal, returning back to

21:35

the old normal of higher interest rates and higher inflation.

21:37

And then probably longer term,

21:40

what I find really exciting is

21:42

all the different kinds of tech coming in,

21:44

whether it's in sustainability, whether it's

21:47

in development, construction, I think

21:50

some of those things are, are really

21:53

quite exciting and could have a really interesting

21:55

impact. I know probably a

21:57

lot of them are still very much at the exploratory stage that I

21:59

read about, but if some of them

22:02

become sort of commercialised and more widely accepted,

22:04

I think that would be some really

22:07

interesting times to see all of those get put in

22:09

place.

22:11

Yes, there's some really rapid advancements

22:13

happening in that area and some really smart

22:15

minds working on that. So, I'm

22:18

looking forward to seeing what evolves there as

22:20

well. Thank you so much for joining me

22:22

again. I always really appreciated your

22:24

time and your insights and hope to catch

22:27

up soon.

22:28

Great, thanks Kathryn.

22:30

I'm now pleased to welcome Dale Connor to

22:33

the program. Dale, you've enjoyed a

22:35

30-year career at Lendlease and took

22:37

on the role as CEO of Lendlease Australia in

22:39

2021 to oversee all

22:42

aspects of the group's development, construction and

22:44

investments business in this region. The Australian

22:47

business has over $30 billion in funds under

22:49

management, $5.7 billion

22:52

assets under management and a $29.2 billion

22:55

development pipeline. So that's no

22:57

small role. I'm really looking forward

22:59

to hearing your insights on where you see the

23:01

best property market opportunities in 2024.

23:05

Thanks Kathryn. Good to have the conversation.

23:07

So, what are you seeing for 2024.

23:10

Where I guess are the best opportunities in the

23:12

market and for Lendlease?

23:15

First off, I would say one of

23:17

the strongest themes that's coming through to the market

23:19

is sustainability in property and

23:21

in construction. And that will only get

23:24

stronger as the pressure comes

23:26

from, you know, climate change and comes

23:28

directly through legislation into how we

23:30

not only build but operate our assets

23:32

and our buildings. And so,

23:35

I think that theme is going to continue to

23:37

be stronger. If I look at sustainability

23:39

for us, I think of it in a couple

23:41

of boxes. One is how we build,

23:44

we are strongly pushing for renewable diesel, sort

23:46

of reducing fossil fuel

23:48

construction. We are looking at electric

23:51

concrete pumps, electric driven cranes, and

23:53

it's all about trying to

23:55

reduce sort of Scope 1 and 2 in construction. Then

23:58

we think about the building

24:00

itself and its design. We've shifted to all electrification

24:03

in our commercial developments going

24:05

forward. So,

24:08

our Victoria Cross development

24:10

coming out of, literally out of the ground

24:12

in North Sydney and above the metro station, all

24:14

electric building. And we

24:17

are thinking of removing gas from all of our kitchens

24:19

in our residential construction. So

24:22

that driving electrification through residential.

24:25

And then you start

24:27

to think about Scope 3, you start to

24:29

think about the building products - concrete,

24:32

steel, glass and aluminum. We've just

24:34

written recently a Scope 3 protocol about

24:37

how we think about boundaries and

24:40

measurement and working with industry

24:42

to help drive embodied carbon out

24:45

of the basic building blocks of construction.

24:48

So, I do think sustainability will

24:51

continue to be something that drives a differentiator between

24:54

those providing highly sustainable products

24:56

in property versus perhaps the

24:59

past.

25:00

Yeah, it's interesting because I think a lot of people

25:02

are looking at Scope 1 and Scope 2, but Scope

25:05

3 is something that's a lot more difficult to

25:07

crack, so it's great to see that that's

25:09

such a focus for Lendlease. I was

25:12

looking at a profile piece that was written about you and

25:14

you were talking about the intersection between

25:16

transport and property, which I

25:19

thought was really interesting. We just did a report

25:21

we called the Metrofication of Sydney and the opportunities

25:23

that opens. So, what are your thoughts

25:25

on, if you could maybe share

25:27

those with me, about how you see that intersection playing

25:29

out?

25:32

Yeah, and I like that Metrofication, and we

25:35

see that intersection of transport and density and

25:38

growth and development happening right

25:40

across the eastern seaboard. It's driven by

25:42

as much Cross River Rail in Brisbane as

25:44

is Sydney Metro, Melbourne Metro,

25:46

Suburban Rail Loop, you know, these types of

25:48

projects, big transport projects, transport

25:51

outcomes for the states. But what

25:54

they really provide is not just

25:56

a value capture of property, but a

25:59

real problem solver to the housing

26:01

affordability and housing availability in

26:03

a crisis that's in Australia.

26:05

So, these are ready-made zones where

26:08

government has stepped in,

26:10

put a big station in the ground, so you've got available

26:12

land and you've got air above those intersectional

26:14

nodes that is ripe

26:17

and ready for density and development. So,

26:19

we see we've fully backed

26:21

that notion of high-density development around transport,

26:23

but not just for

26:26

the top end of town. We

26:28

see it as, as absolutely a

26:31

solution to providing social and affordable

26:34

housing outcomes, especially key

26:36

worker housing outcomes. You know,

26:39

at our One Sydney Harbour Barangaroo development

26:41

in the last tower that we've put

26:43

in, our residential development, we've

26:45

got 60 key worker apartments that'll

26:48

be managed by a community housing

26:50

provider, St George Community Housing. And that's

26:53

a good model. We've seen that model work in London, we've

26:55

seen that model work overseas. So, we

26:58

see that drive to density and development,

27:01

housing mixed use

27:03

and making sure that it sort of

27:05

suits all parts of the residential spectrum.

27:09

Yes, it's such an issue at the moment. So,

27:11

it's great to see that there are some of these opportunities

27:14

to really provide that much needed housing

27:16

and you know, a lot happening in that BTR

27:18

space, people looking at purpose-built student accommodation,

27:21

but I think that social and affordable housing is

27:24

just so important as well. We did a recent

27:26

podcast with a couple of the social and affordable

27:28

housing providers, so there seems to be a

27:30

lot of opportunity in that space.

27:33

That's correct. And you also look at now that

27:35

the HAFF has passed at a Federal level, you

27:37

know, the Federal Government was looking to send funds

27:39

through the HAFF, and the

27:42

easiest way for the government to do that is through the

27:44

community housing providers. And when they

27:46

tee up with placemakers, creators like ourselves,

27:49

it's a good complementary approach to a

27:52

mixed-use development that gets all aspects

27:54

of what you would want

27:56

out of residential. You know, also mixed-use,

27:59

tied with retail, tied with, you know, new

28:01

workplace outcomes. You know, I think, that

28:03

this is certainly the future for our major capital

28:06

cities.

28:09

Yes. So, I know we've

28:11

talked about sustainability already and

28:13

I know Lendlease is really focused on creating that social

28:15

value in the communities where you operate, but

28:18

do you have any other thoughts on opportunities

28:20

for transformation in our industry?

28:23

Yes, look, we are always thinking about, you

28:26

have to think about community and place and about

28:28

the country that we work on. We were a strong

28:30

supporter of The Voice as well. We have an Elevate

28:32

Reconciliation Action Plan. We’re

28:34

proud of that status, but you have

28:37

to work hard at that every day. So, we feel that that

28:39

in everything that we do, we are working on, First

28:41

Nations country and so we need to

28:44

make sure that there's a connection back to country and

28:46

that the place connects to

28:48

the past and the present and the future. And we're

28:50

always thinking about, well, what are the social

28:52

ventures that can also take place in

28:55

those locations? You know, we've got a

28:57

company called Native Food Wastes in one

28:59

of our Sydney O'Connell Place development assets that we

29:02

own with investment and

29:05

it's bringing those sorts of enterprises, you know,

29:07

into the CBD of Sydney and

29:09

demonstrating what native food, looks like and

29:12

tastes like and promote it.

29:14

So, I feel that you do always need

29:17

to make sure that there's a sense of

29:19

community, a sense of heritage, a sense of country in

29:21

everything that we do. You don't want that

29:24

stale environment, that corporate environment. That's not the

29:27

legacy to leave.

29:33

Yes, no, I love that. And I really

29:36

appreciate you joining Talking Property today,

29:38

Dale, and all the best for 2024.

29:42

Kathryn. Thanks for the opportunity. Talk again soon.

29:46

So that's part one of our Outlook series to

29:48

kick off 2024. If you

29:50

like the show and wanna check out more, visit cbre.com

29:54

au slash talking property or subscribe

29:56

through Spotify, apple Podcasts

29:58

or your favorite podcast hosting platform.

30:01

And make sure to tune in next week to hear from

30:04

ISPT Investor and Brookfield. Until

30:07

next time.