Proper Development

Satterley Property Group

Satterley’s founder is Nigel Satterley. For the origins of the story, he says, “go back to 1970. I started as a home builder (with Statesman Homes) and I sold out in 1980, starting off the business as a real estate agent. In 1980 there was a property downturn and because of my building background, I began working with banks and financiers to finish townhouses, apartments and small office complexes in the suburbs of Perth. I did a lot of reconstruction management work for financiers and building small apartments around the city.”

In 1982, Nigel convinced Sir James McCusker (the founder of Town and Country Building Society) to bid for a block of land, on which the young company commenced its first land development. “Since then we have completed more than 150 residential estates and sold some 55,000 lots.” An estimated quarter of a million people are living under roofs developed by Satterley.

“Land development is a high-risk area and under new banking rules our model is very acceptable to the banks because we have low gearing. We used to gear at 45-55 per cent and are now moving to 35-45 per cent because if you have high debt in this business you can get into trouble if the market turns down. That has been the success of our model – low debt and managing the construction side and the sales side so that you are responsible in the way you do things if you are borrowing, with controls.”

Nigel says the Perth market topped out in 2007. “It entered what I would call a ‘soft recovery’ phase last October, so we had four years and nine months of pretty tough trading conditions. For the next twelve to fifteen months we cannot see any shortage of residential lots in the Perth metropolitan region or in the south of Western Australia.” The company has been closely involved in urban refurbishment projects in Kwinana and Phoenix Rise in Hamilton Hill and the New North in Balga, Westminster, Koondola and Girrawheen, which are among the largest urban renewal and beautification projects in Australia. Satterley offers home buyers choices in some twenty-four estates, eighteen of them in the greater Perth metro area.

“We don’t go up to Geraldton or the Pilbara – no ambitions up there. We are going to grow our Melbourne business – Melbourne is a market we like and we are now coming into opportunities to buy land sensibly. For example we are doing the old Kodak site in Coburg.”

This $282 million redevelopment of the former Kodak site is estimated by the Victoria government to provide more than 250 new construction jobs per year over a four year build out and some 570 indirect jobs will be created in industries supplying goods and services to the development.

The development plan makes provision for at least 600 new dwellings and a mixed use neighbourhood hub on Elizabeth Street between Murphy and McNamara Streets. The site, located to the east of Edgars Creek, is about twenty square hectares and is surrounded by residential properties along Elizabeth, Boyne, Ronald and Tilley Streets. It is envisaged this part will be redeveloped for residential purposes.

Woolworths has also announced it will build a supermarket in the development’s neighbourhood shopping precinct. Coburg Hill is a 400-lot development built on the former Kodak site just 9 kilometres from the CBD. Since launching late last year, more than 85 lots have sold. Satterley Property Group’s Senior Development Manager for Coburg Hill Guy Williamson said the shopping precinct will be a major attraction for not only Coburg Hill residents but those already living in the surrounding area. The Satterley Property Group purchased the site in October 2010 and is now the development manager for the site.

Satterley already has three estates operating in Melbourne and another two in planning with, “another couple on the go.” The company has also started up in Queensland, which is “fine although it is going through a difficult period. But long-term our focus is more on Perth and Melbourne.” Since the two metropolitan areas have economic cycles that do not usually coincide, Satterley can spread the load and reap the benefits of each city as it comes into an upturn.

Melbourne is currently suffering ‘a soft period,’ with oversupply of apartments and land; Perth is in turn entering its first phase of recovery, so prospects are good.” Working interstate has no downside, says Nigel. “We do what the locals do. No rivalry. And the construction companies are very little concerned about the geographical origins of the projects’ finance.”

The group employs over 100 staff in three offices; accounting / treasury functions are centralised in Perth but everything else is spread among the individual city offices. “As to builders, in the Perth region, the grade A civil contractors that we predominantly deal with are very good. At this time they have good capacity and they are getting through the work well; they are chasing more work, which is good. The same is true of Melbourne.”

Nigel was never really tempted to get back into the home building business because, as he says, “we are now a supplier. We supply the building blocks for the builders to put their homes on. Anything we build, we get built for us by the builders. We do the master planning with the town planners and then we work very closely with the home builders on lot sizes and configurations because our product helps them sell a house and their product helps us sell a block ready to build on.” Each state is a little different but the situation in Melbourne is very similar to Perth. Fewer than two percent of blocks are sold without a house and land package.

Nigel also presides over Satterley Invest. “Because of the global financial crisis, we have lots of people talk to us about having residential rental properties in their investment portfolio, so – because we have the land – we have tied up with some quality home builders so we can put a package together for the investor without the channel marketers marking up with big profit margins. So they get the block at the right price and the home at a direct price. We are finding a lot of interest in this side of the business and we have sold the houses throughout our communities where there is strong rental demand. Investors have the reassurance that rents will continue rise.”

The two things to which this business is vulnerable, says Nigel, are interest rates and unemployment. Interest rates are very good; housing affordability is at its best in around eight years with strong population growth while in Melbourne housing affordability is about at its best in four years. “Low interest rates are very important. I think the Reserve Bank does a very responsible job. People are feeling fairly secure in their jobs in Perth, where there is very low unemployment, but in Melbourne it is rising and there is a bit of employment angst which affects consumer confidence somewhat.” The housing market is picking up in New South Wales and in Perth from a very low base, but it remains “very subdued” in Queensland and South Australia.

In Perth, the top twelve building groups control some forty-two home brands and build about eighty-five per cent of the new homes. “It is very competitive, as is our industry, so we serve the builders as best we can – the situation is somewhat different than in Melbourne. It’s a healthy situation because each segment sees competition and the consumers can work out who has got the real value and who hasn’t.”

Quality is a watchword at Satterley – quality developments with quality civil contractors. Australia’s largest independent residential land developer is credited with having transformed “the time-honoured, but second rate ‘carve and sell’ philosophy of bulldozer development,” and introduced “the most presentable, acceptable and user-friendly modern estate community living WA has seen. And we are very good at landscaping streets, parks, sporting fields, entry statements and lakes.”

Nigel enjoys what he does and has no intention of resting on his considerable laurels. “My next destination is ninety, and there’s a long way to go before I get there.” He cites another, older and highly respected developer who recently bought a new $100 million site and promises he has no intention of retiring. For Satterley – Western Australia and Victoria – the further promise is of more of the same quality developments for years to come.

Home Automation

Call it ‘domotics,’ and you are likely to receive a blank stare, but refer to it as ‘smart home’ or ‘home automation,’ and you will get a nod of acknowledgement. For the past few years, consumers have heard the word ‘smart’ attached to countless products and services, from food and drink to snacks like popcorn and mobile phones, which no one seems to refer to as a ‘cellphone’ anymore. Yet what, exactly, constitutes ‘smart’?

June 2, 2020, 3:08 PM AEST