No Change to Status Quo Ahead, Victorian Developers Warned

Victoria’s property development sector should quietly prepare for four more years of status quo. That is the warning from industry heavyweights who say that relief from current policy settings remains frustratingly distant despite mounting pressure for reform. “If you’re smart about it, I’d be planning for both scenarios but weighting your attention on the one that says there may not be a whole lot of change for our industry after November,” Hunter Collective founder Danni Hunter told attendees at The Urban Developer Melbourne Outlook event last week. Frustration continues to grow over infrastructure cost blowouts and corruption investigations that have dominated headlines in recent months. But it won’t be enough to force a change of government in the November state election, according to Hunter. It’s a game of numbers now, she said, highlighting the Liberals’ formidable challenge: they need to win 18 seats while losing none. “The numbers are really against them,” Hunter said. “The electorates are still very aligned with where Labor holds seats.” Builder frustration meets political realism Henny managing director Ben Turner expressed frustration with the government but said that the industry would be best served by staying realistic about the political outlook. “We’ve each just spent $5000 [in taxes] towards big infrastructure projects,” Turner said. “And that’s going to weigh on everyone’s mind—that it’s a government absolutely wasting money. “But sometimes the devil you know is better than the one you don’t know.” Despite the CFMEU being placed into administration following corruption allegations, the scandal had been “brewing for 3 to 5 years and hasn’t yet taken a dent out of the Allan government”, Hunter said. She said this was symptomatic of a deeper issue—an “erosion of trust in politics and decision-makers” beyond Victoria. Hunter raised minor parties and independents as a potential wildcard where, even if Labor retains government, a shift in crossbench numbers could force policy compromises. “It won’t be big numbers; it’ll be in who holds the balance of power,” she said. Her advice to the industry: don’t let political noise become a distraction. “We’re here because we love Melbourne. If you focus too much on the politics, it’s a waste of energy. It’s awful, but we’ve got a job to do.” ▲ Danni Hunter, Ben Turner, Marco Gattino and Blanco Norton at the Melbourne Outlook event. Pivot to innovation now a priority Rather than wait for government relief that may never come, industry leaders are focused on what they can control. Developers say the industry must embrace “innovation, diversification, and partnerships” to determine success over the next term. “I don’t think [taxes and depressed sentiment are] necessarily going to change with either a change of government or change of policy,” Hunter said. Turner, the only builder on the panel, identified the emerging partnership model between developers and builders—particularly through early contractor involvement processes—as the industry’s “greatest opportunity” for navigating the current environment. Wickton director Blanco Norton said productivity gains from data centre construction could eventually benefit residential development as big tech’s R&amp;D spending flows through. “All the construction smarts that are following the DC money into the market will start to come to the forefront and should trickle down into the living and other sectors,” Norton said. Interest rate relief unlikely Adding to the industry’s challenges, economic forecasters say interest rate relief is unlikely over the next 12 months as the Reserve Bank navigates an increasingly narrow target band for unemployment. KPMG director of planning and infrastructure economics Terry Rawnsley told the event that the unemployment “green zone”—where inflation remains controlled—has shrunk dramatically, now sitting between just 4 per cent and 4.4 per cent. With unemployment currently at 4.1 per cent, any movement in either direction triggers problems, Rawnsley said. “If we tick down to 4 per cent, we start to kick off inflationary pressures—that’s what happened at the end of last year,” he said. “If we tick up to 4.4 per cent, too many people are unemployed and the economy slows. “The Reserve Bank has a pretty tough job threading that narrow band.” His forecast: the RBA will “sit tight” for the next 12 months, watching monthly inflation data before making any moves. ▲ KPMG director of planning and infrastructure economics Terry Rawnsley with The Urban Developer chief executive Adam Di Marco. This means project finance costs will stay elevated regardless of political change, adding another dimension to the industry’s focus on operational efficiency over policy hope. Goldfields managing director Marco Gattino, who operates across five states, identified energy costs as another challenge outside political control. “We haven’t spoken much about energy, and that’s a big problem,” he said, calling energy prices and inflation a “major threat”. Despite these headwinds, Gattino said Melbourne’s fundamentals remain sound, with the city “at least 5 to 8 per cent below, in terms of revenues, to make the model sustainable” and suggested there would be price upside once current stock is absorbed. For an industry that has spent years hoping for relief, the message is clear: prepare for continuity and find competitive advantage elsewhere. “If the tax system and feasibility environment isn’t going to change, we just have to get better somewhere else,” Hunter said. “It’s not an easy job, but the time is right for the challenge, and I encourage us to all step up to it.”

No Change to Status Quo Ahead, Victorian Developers Warned

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