Benni Aroni: Capital is Ready, Housing System Isn’t

And the gloves officially came off at Urbanity-26, the flagship annual conference of The Urban Developer on the Gold Coast.

“I’ve probably lived through what I’d consider about seven recessions,” the veteran, who has spent decades at the sharp end of the industry as a builder, property developer and advisor, said before delivering the first of a flurry of one-two combinations.

“But I’ve never seen things worse than now.”

Part of a panel heavy on nuance, discussing the topic Finding Value in a Volatile Investi-verse, his blunt analysis cut through the noise but he quickly made it known he was squarely swinging from Australia’s corner on the event’s main stage.

“I'm not sure I actually believed it, but I always heard we were the lucky country,” he said.

“The truth of the matter is, this is proving it now. Capital wants to be here. Capital is here in droves.

“It’s staggering how much money is available. It’s almost a default position because where would you invest around the world except in a handful of countries.

“Europe’s a basket case, America is run by a lunatic, the Middle East is shitting itself...  and Australia is beautifully placed.

“It has a legal system. It’s a country that has stability. What it doesn’t have is two things: leadership and confidence. And if we could get either of those things, a little bit of both, the opportunities are staggering here.”

On that point, the other members of the panel were firmly with Aroni, who from a building, development and advisory perspective has defined Melbourne’s CBD skyline with projects like the Eureka and Australia 108 towers.

“Ultimately, capital will follow where we can find feasible projects,” MA Financial’s Cathy Houston said.

▲ Benni Aroni says opportunities are rising, including in Melbourne, the city he helped define.

But therein, everyone also agreed, also lies the problem—not the flow of money but what it can viably build.

Ingrid Filmer, senior managing director, capital markets – private wealth at CBRE, described a development landscape where volatility since Covid and rising costs have crushed feasibility.

“It seems to be never ending, and so it’s become more and more difficult to have development stack up. But long term, I think that that is going to create not enough supply and, as a result, a lot of property we’re selling is… for less than what you can build it for… less than replacement value, and that is creating value that a lot of investors [are] now seeking out.”

For Aroni, nowhere captures that contradiction more sharply than his beleaguered hometown of Melbourne.

“We’ve been living with ‘Anywhere but Victoria’ as our mantra,” he said. “But that has changed a little bit because we’re getting so cheap that people are now buying.”

Overall, however, he said: “It is definitely a half-empty glass at the moment, but for the developers in this room… I don’t think it’s delusional to say the opportunities probably have never been better”.

Despite the disconnect between capital and feasibility playing out, from offshore capital’s perspective Pembroke senior regional director for Australia Joe Fitzpatrick said Australia still looks like a model market.

“Australia has proven itself as somewhere that capital wants to come to: great banking system, transparent government... it’s a Grade A economy, Grade A government with the mindset of a building nation, which I think gives a lot of context and belief in what the Australian story is.”

Filmer added: “It’s an interesting environment where people are seeing value and seeing, I think, confidence as well”.

Against that backdrop of capital abundance, policy drag and broken feasibilities, Aroni—who recently stepped down as chair of construction group Hickory but is still advisory board chair of Victoria’s largest residential builder Mirrastone—did not mince his words when offering his prescription.

“Everybody is talking about housing and wanting it and all the rest of it, but all they do is talk, and then they have a summit that nobody gets invited to… if we could get people with a brain, I could pick five people in this room, and they would change things materially.

“This country has got a hell of a lot going for it…we just need people to collaborate and everybody would be a winner.”

The question Aroni’s unfiltered appraisal left hanging was whether leadership, confidence and collaboration would turn up in time.