The Property Development Market in 2022 with Andrew Crosby

In this episode of The Property Collective podcast, the Relab team are joined by Andrew Crosby, CEO at Universal Homes. Andrew takes us through what Universal Homes has experienced over the last year in property development and some of the key factors that have changed the property development game recently. He also discusses what we may start to see happening over the next year or two as a result of those factors.

If you'd like to know here more from Andrew, connect with him over on LinkedIn. https://www.linkedin.com/in/ajcrosby/ 

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Transcript

Stacey: 0:55

Kia ora koutou and welcome to the property collective podcast brought to you by Relab. I'm your host, Stacey Fairclough content manager here at Relab. In today's episode, I'm joined by Andrew Crosby CEO at Universal Homes. Andrew takes us through some of the key factors that are influencing property development this year and the changes that we may see happening in the next year as a result of those factors. Let's get started. So, Andrew, to start us off, can you tell us a bit about your career so far and what drives you to working in property?

Andrew: 1:37

Whenever I wanted to work, I never, well, first what I wanted to do is become a pilot. So I tried to get in the Air Force, but the black budget of 1991 with Richardson meant they shut down the university cadet scheme at Wigram in Christchurch and canned that idea. So then I didn't know what to do, so I went to university, did architecture. I was useless at that and then sort of changed into a property degree. And then, pretty much since then have been working in property development with a few sort of sideways moves into IT and hotels and bits and pieces. So that's that background. Yeah, I just wanna build new houses as possible really, that's the, that's the driving approach and wherever I get to do that is, is the, is, you know what I'm aim for?

Stacey: 2:24

Can you give us an overview of Universal Homes? What Universal Homes does and what they aim to achieve?

Andrew: 2:34

So Universal Homes, was started in 1959 by a guy called Bill Subritzky and he became a proper developer slash evangelist. So he became a sort of religious sermon, so he would've been interesting character. He built about sort of 15,000 houses in the sixties and seventies. So we built basically Universal built Henderson and Avondale. And then other various parts around, mainly, mainly Auckland, but also around the country. Uh, we would've been the second biggest builder in New Zealand after Fletchers in those years. And then he sold to Chase Corp. Chase Corp was a private equity firm in the eighties, case Chase Corp went bankrupt. Universal was an asset along the toll road that got ended up getting sold to Singaporeans, and then they ended up selling onto a Chinese entity, which is my board. Now, the Universal Homes is actually owned by, Chinese government. You Google far enough. But the board that I operate under is called China Merchant shekou. Shekou's a little suburb in Shenzhen, which is across the border from Hong Kong. And it was a first free trade area in China in 1978 and China Merchant Shekou was set up to be the first capitalist sort of thing that China did. So my head office has built basically what has now become Shenzhen, so they started it off. and they own other businesses around the world. We're doing a mixed use development in Belarus. They're doing an inland, they're doing a Port City thing in Jabuti and I think we're doing a$6 billion piece of land in Hong Kong, which we're a third share of. So that's the board. And in Universal Homes, we are a little while property developer down in New Zealand, so we're not a group home builder. We buy land design houses, build them, sell them, in that order. In the recent generations, we've been doing somewhere between 200 and 400 houses a year. At the moment we have one large development at Westgate, which will be 1500 homes. We're about 300 in, hoping to get to 200 a year just outta that development, which would be quite difficult to achieve. We've built a thousand homes at Hobsonville. Hobsonville Point. So we are one of the first builders there. So we built a thousand homes there. At the moment we've got another 90 apartments under construction in Northcote. We've got some other stuff in the future coming up in Northcote and Milldale. Um, Owairaka, some of it's Kiwi build related.

Stacey: 4:59

Awesome. And, so Universal Homes do they work from the start to the finish of the whole process in development?

Andrew: 5:06

Yeah. From farmland to fence posts. Yeah. So we do, so Westgate probably one of New Zealand's largest projects where we are doing everything. Whereas most large land developers will cut up sections and sell'em to home builders. We're doing the home building as well.

Stacey: 5:22

A lot has been happening in the industry at the moment, particularly with MDRS, lending, changes, restrictions and increasing costs, I guess the list probably goes on. But what are the main factors that are influencing yourself in universal homes at the moment to maybe, I don't know whether you are adjusting your approach rearranging your thinking around, development and design?

Andrew: 5:49

Well, not that we want to, but, there literally, this government has forced so many changes down the throats of councils that no one knows what's happening at the moment. It's just, it's just one represent government Institute of New Zealand. We had a seminar last night on the national policy statement on, I can't remember what it's called, on plan changes.. There's a national policy statement on urban development. There's a new medium density residential standards, which basically suffocates whatever the councils have put decades into working about. There's productive land, there's wetlands. My god, it goes, it's like I'm doing a submission every week. So really the government has just turned in and then, and there's still the resource management act which they're pretending to reevaluate as well. So the, the amount of change in town planning in the last few. Especially this year in the last two years has been unbelievable. It's just, and basically all it's done is it just adds costs. Every time you change stuff, it adds costs. You might think you're making it easier, but the plan change to meet needs to residential Auckland Council have now come up with proposed amendments or proposed way of dealing with it by saying, do your three houses on a single site. That's fine. That's what the government says. But for anything larger, we now got all these extra rules. So ironically for anything four plus units in Auckland, according to the current council documentation, which is out for consultation, it's gonna be harder, which means more expensive to do developments larger than four units. We project that for every 20 units we could have done, we'd probably only be able to do 17 or 18 now. So, and that just adds to cost. And, you know, council have got good reasons for doing this because they're worried about greenery and, and a whole of other issues. But, you know, government blanket rules are pretty shortsighted in my opinion. And it just change after change, after change. So, So, as far as adjusting, you're only careful not to adjust too early because things changing so dramatically. Ya know there's small, small scale developers are already doing, putting consents in for medium density residential standards, getting them approved or close to being approved. So that all sort of works. But, yeah, for larger developers it's just getting harder. And then you've got transport, Auckland Transport and NZTA, getting anything done out of them. It's just so time consuming and they keep changing the rules. And you know, each time they change a road, well, we've gotta change the rain garden or change the way we do something. It just means thousands and thousands of dollars in fees. So yeah, lots and lots to moan about. Lots, so, so changing our business model, what we have done is Universal Homes would've been primarily single family homes until 2012, and then we went to Hobsonville, we started off at single family. But we quite quickly went into Terrace homes. So, you know, 80% of our product two years ago was Terrace Homes. Now we're moving into three story walkups and more apartment product as well. With the current market that probably will die, we'll probably go back to more terrace homes. Cause usually when the market dies, ironically, people go towards less density, not higher density. Cause you can't justify higher construction costs. So apartments will die. More people will be doing terraces, some terraces will die. More people be doing single family homes. Big subdivisions down south, which had a whole lot, two and three story proposed terrace houses will end up being single family homes for all.

Stacey: 9:11

So it kind of goes in this massive cycle of going round and round to each development type. Yeah, we've been doing, webinars and different content around the medium density roles and I feel like we could do a webinar every week for that. Which is quite interesting. But it is a lot, there's a lot to take on board, do you have any advice for smaller developers who might be trying to get a handle on things at the moment?

Andrew: 9:36

yeah, join the Urban Development Institute of New Zealand cuz we're putting out regular information. There's a good group of planners there who doing stuff for free. I mean, last night we had a good hour session on, on this sort of stuff. And yeah, just try and keep up to date. The problem is that even the medium density residential standards, if you've got a qualifying site, you can do that now but for anything larger, it's gonna be not until 2024 that the rules are fully embedded between now and 2024. Council have said they'll be taking more and more emphasis on the proposed rules, but it's really, Yeah, it's, it's, um, I hate to say it, you just have to pay more money on consultants to try and figure it through and stuff as quickly as possible on the rules that are current at the day. I mean, one of the obvious things that's gonna happen with the medium density residential standards has nothing to do with new houses. It's all about existing houses will get wider. In affluent neighborhoods where views and outlook are our priority because of the height in relation to boundary rules are much, much more lenient. You'll see houses getting wider. If you walk down Mt Maunganui beach and all those mansions on the beach front, you'll see them instantly getting wider. Because it's cheaper to go wider. And the most, most valuable real estate is where you've got a sea view or a park view or an ocean view. And you can go much closer to the boundary. And that's what people will do. So, no one who owns a home in Auckland, unless you're on a cliff or on the edge of a park that won't be sold or on the edge of the ocean. All views are up for grabs now, especially around places like Remuera and Glendowie, St Heliers, you know, anywhere with a hill. So, yeah, it's gonna be interesting. So advice to small developers join unions. You get to hang out with a whole lot of people from various capacities in the industry. And you get to get to know this stuff for free. And yeah, just, I mean, it's interesting now cause even, even with this National policy statement on productive land and plan change. There's two of them, some of the future urban land, especially in Takanini, cause there's a whole of flood zones, might be put back, might be excluded from development. So people paid a hundred dollars a meter for land that might even worth$10 a meter. So you're really taking it's, it is interesting. It's interesting. The unity plan took about three or four years to kick in before anyone saw any value uplift from what the were, And I think the same will happen with this medium density stuff as well, because especially if they're in a down market.

Stacey: 12:13

Do you think that people will delay a lot of their developments at the moment? Because if everything changing or do you think people just go. Just try.

Andrew: 12:23

Nah, the market's crashed, development stopped. So if you're not, if you're doing government developments, that's different. But as far as private development, that's stopped. So what I mean by that, that means anyone who bought land in 2021 now has something worth a lot less. If they went and got it consented, the consent might be useless and worthless. The market was still hot till about January, February this year, so a lot of projects kicked off based on that. So Terraced Homes, they'll be finishing between now and the next few months, and apartments might not finish till the end of next year. So this thing's got a long tail. so, even with these price drops that have happened, it could be, you know, you don't, you don't see developments slow down for another, potentially another year. But new projects pretty much, I guarantee have stopped and now it's not, every project we're starting some, we are doing some, The big guys will do some cause we just gotta keep trading through. But most people will simply not be able to get finance from a bank cause nothing will stack up. So it's interesting times. So, not to be doom and bloom, but yeah, private property development has stopping dramatically. It's just, there just seems to be a lot underway cause it's still under construction. Because, and the main reason is people, you know, the most improved property developers have to get pre-sales and then have to get bank funding, and then they start construction. People like us and Fletchers etc, don't need that. We just make a decision. So our decision on Northcote was, it's tough, it's tight. We can worry about that in 18 months time, really. But most developers don't have that luxury. But you know, there's pockets. Some people will still do things and set a new price and still get stuff off the ground. I mean, it doesn't, it doesn't stop. But I'm just saying there's a lot of, um, yeah, there's a lot that will stop. There's a lot, there's a lot of risk out there at the marketplace, especially builders who have purchased lots and lots of sections and outlying areas. Sales. How do they pay for those sections?

Stacey: 14:23

Yeah. Do do you think there's any positives that are to come out of, out of these changes eventually?

Andrew: 14:30

I actually think the Unitary plan was perfectly fine. and now council have hit back to the government. You know, they're fighting government and council are fighting. They hit back with regulations that make it harder than an the unitary plan plan to develop. So there's no positive there. You can get three houses on a site, but you can't subdivide without a resource consent. So they need to fix that little issue up. And there's no design controls you're gonna have a lot of disgruntled neighbors. And they won't really know until something starts going up next to them. So yeah, look, I don't, I believe in less government intervention. It's my fundamental theory on things, even though we're doing stuff with Kiwi Build stuff, but you know, now they've raised the kiwi build, price caps and some of'em look above market, so they're thrown that out as away as, as well. So especially for apartments. So, Yeah, but look, when the people come back to New Zealand and the immigration starts flowing the other way, and we need more houses and stuff, we will all deal with it and, and, and sort it through. But, I think there's a little bit of pain ahead.

Stacey: 15:36

What's the difference between three story houses versus terraces?

Andrew: 15:41

Look, a, a house is just a standalone house. Just think of a section or a piece of land and you stick a house in the middle of it, right? And one story, two stories, three stories. A terrace house is where you've got a piece of land and you stick two houses together and they share a wall, so it's a sand alone and then a terrace, and they join together and they share a wall in the middle, and that makes duplex. And then if you've got three houses joined together, then it's you, you know, it's a terraced home. So, that's the difference. It's about the same money to build a terrace house with a wall between the two different terraces as it is to build a standalone house with its own wall because the standalone house might have extra money on windows and things like that, but the terrace house has to have a bit more complicated design to protect houses in between. The reason you do terraced houses is cuz you can get more houses on the site. That's the fundamental reason you can pump more properties in. So that's what I mean by a terrace house. and then apartments, obviously where you're splitting it, horizontally. So you have a, a single level dwelling and you might have three levels of those. A terrace house. You could have a terrace house, which is one level or two levels, or three levels, or four levels or or higher.

Stacey: 17:00

Do you often split those across one site? To, provide a variety in your projects?

Andrew: 17:08

Yeah, so in West Hills, the first 94 houses we did was a mixture of standalone and duplexes and only a few terraces. And we sold those down. But that was in 2018. There wasn't a great market. So the second stage we pumped and it was along more of an arterial road as well, the second stage. So we, we just pumped a lot more terraces in. It's all terraces, a lot of two, two bedroom terraces, about 60%, which were a bit worried about. But they all flew out. They sold really well. Cause they first homeowners like those and investors. But we don't have many investors. And then for our stage that we're currently building, we've got a mix of terraces and duplexes and I think there's a couple of stand alones. And basically the reason for the mix was, dunno what the market's doing. Let's just hedge our bets both ways. But you know, we made the decision on what we're building at West Hills now. So we started building one year ago, or just end of last year, but the decision of what we're going to build was done at least a year or 18 months prior and that was in a different market. So you make a decision on one market and then you get two years later to build it. Some developers, depending on what you're doing, if you're doing, you know, some developers buy these brownfield sites in town and they can, they can put the same product on there and they can start building within, you know, sort within a year or eight, nine months after they first even looked at the site. But that's, that's very difficult in green. That's very difficult in sort of the scale that we do.

Stacey: 18:34

And how do you find the difference in costs between two and three story terraces and then compared with going up to the three story walkups?

Andrew: 18:43

Okay, so there is a cost. So the number dynamics sort of worked like this say two story, house of a hundred square meters, two story terrace of a hundred square meters might cost$3,000 a meter. If you squeeze that a hundred square meters into three levels, so you know, 33, 33, then that might cost$3,500 a square meter. And I'm making the numbers up a little bit. And the reason being is that, when you go higher, there's extra scaffold costs more. It's three levels of scaffolding. You gotta scaffold everything. You have to put more bracing in the lower ground floor, which could quite easily mean that you have to jump to a steel portal. And if you're doing a skinny four or five meter white house and you want some, you wanna ranch slider in a door, there's not a lot of places to put bracing. You could a real horrible, real skinny door, which some people do. So you get, you have to put a steel portal to allow for the bracing on the, on the lower level. So that adds extra cost. Yeah, just things are higher and more expensive. So typically it is cost more to build a three and a two story. And then similarly, it's more to cost a two story than a one story. And also just bear in mind that you've got more stairs as well, so you've got less usable area in that house. Cause we take it up in stairs. Stand alone, single family, single dwelling, single level house. There's no stairs. So it's less common area and common area sort of wasted sort of space. And then, and then the jump from three level terraces to through three level walk up apartments. There's another considerable jump, maybe another thousand. You know, now we're talking 4000, 4 and a half thousand dollars a square and I won't get into the dynamics of the cost cause it depends what you include or exclude. But the main issue there is not only do you have an intensity wall vertically, you also have intensity walls horizontally. And so then you're making decisions, Should I do it out of wood? Should I do it out of steel? Should I do it out of concrete? So you're juggling all these decisions where you really would think about that for two level. And also at three level, there's more weight. And that could impact your foundations and piles. So we just had to cough up about 1.5 million that we weren't expecting on piles in Northcote. It had to be screwed 13 meters into the ground. Cause the geotech came back a lot worse than we expected. So, yeah, so it is, that's why, that's the fundamental reason. And then if you go higher than that, it's more cost. Again, in our experience, the most uneconomical buildings to build are four, five, and six story. Because they've got all the extra costs with higher rise commercial type construction, but they don't have enough units to justify the sort of the land value and the construction cost. But what you'll find if, if in the down cycle is apartment stop first and those apartment sites will do nothing or turn into terraces. There'll be terra sites which turn into duplexes or do nothing, and then there'll be duplex sites that's turned into standalone, and there'll be standalone truly, which turns into standalone single level. So this happens every cycle all around the world. You, you have a situation where less density is the only financially feasible.

Stacey: 22:00

Is there an oversupply of homes?

Andrew: 22:05

Yeah, of course there is. Excluding people living in motels and all the social housing stuff, which I just had breakfast with Patrick Dougherty this morning. You know, they're building 4,000 houses this year, so they'll get on top of that eventually. But there's no occupants. If you try and rent a place in Auckland now, there are no tenants and there's still thousands of houses coming on stream. You know, I mean, we've got 200 of them under construction that moment. So you just look around outside, you see buildings are still getting finished. You look at a building, it might have 50 homes. So there's 50 families that are gonna move into those. Where are they coming from? They're renting now, or they own a house that's gonna go on the market. So the true measure of housing demand, occupant demand, it's not how many investors are in the marketplace. It's not house sales, it's ours got nothing to do with it. It's, it's occupants. And, and if if houses aren't selling and houses aren't renting very fast. Cause of lack of demand. There's not actually, not enough visit people to fill these houses. So we've got too many houses. Plus there's, it's getting worse cause migration is negative 12,000. Um, all the people have been saving up for their OE for four years, will finally bugger off now. Um, and probably most people who were gonna come home already did during covid, although that changes. So yeah, it's interesting times. Dunno much about the south island. I just can't believe there much stuff gets built in Christchurch and it gets built, so who knows. But Auckland certainly, there's just, there's too much. There's too much product. Remember that the CBDs got nine living in it either. There's all that CBD product, you don't really hear about that much. So, you know, we need the tourists back, we need the immigrants back. We need this English language students back. We need all that stuff. So is there reasons for the crash? Well, 2018 was a really difficult market by the end of 2019 it got slightly. Because interest rates were coming down. There was, there was a bit on the horizon and a lot of US developers had slowed down building in 2018 and 19. So there was a bit of pent up demand. Remember immigration was running at, what was it, running at 70,000 or something like that, net migration. I can't remember, a huge number and then Covid hit. I thought it was all gonna turn to custard, but the opposite happened. Interest rates plummeted. Everyone bought houses, everyone bought batches. They also bought cars and spas and, and, and everything else. And so that were the good times for 2020 2021. And now we've gotta pay the piper, you know, inflation's out, out of thing. Interest rates have skyrocketed. We had a false amplified situation during Covid. And now we've got the that way and now we're going that way. And how long we go that way? I was thinking that interest rates look like they were slowing down, but the last two weeks in America has scared everyone cause that's their inflation's just gone through the roof and they keep rising rates. So who knows how much pain there is, but it's not gonna say like this, it's gonna, it's gonna come back up. And everyone sees a plateau there's no such thing as a plateau inproperty. It will, it will feel like a plateau for many people, but it will come back up. It's just, we went too high. Now we're gonna go down too low and it will pop up. I mean, it's not getting cheaper to build. There's been rampant inflation, 20, 30, 40% in building a house over the last year and not for, and some for the reasons that people don't expect. In 2018, 2019, in 2020, there was no inflation in construction cost and you could do competitive deals, then it all hit and not only has stuff gone up in the price, but you can't do as many competitive deals with, with builders. That's the main reason for big spike. But we're seeing steel and concrete and all those things are thinking a bit better, freights being improved a little bit. So the, the construction cost escalation won't keep going. I think that's plateauing. It might even come back a little bit. But typically what happens is, it doesn't come back too much cause people just go bust. So countering that. A lot of developers have made a lot of money in the last couple of years, so as long as they didn't overextend themselves, they're in a quite a good position. Fortunately, some of the ones I've talked to they're just gonna spend two years on the holiday and come back with a the market improves. Look I've been through, I've been through a few of these things now, I was in the gfc in America. And you go from the doing, you're busy all day long to literally doing nothing. If you're a developer and nothing's feasible. There's nothing to do. Zero. You gotta get creative. And that means looking at existing assets and all stuff. But the good news is houses are so expensive to build that, that the land value is less relevant. So, But I've been through, so it's tough. Everyone's, I think, Yeah. Cash is king. Yeah. Yeah. Best time to buy a house. Absolute best time to buy a house. Absolutely. Without doubt. The best time to buy House I've ever seen in my life. There's just no competition for most stuff out there. And you can just, you'll, if you do enough offers, you'll strike a good deal. And, and you know, I sell new houses. but you know, my question for people is, was your first car, a brand new car? You know your first house does not need a brand new house. Go and buy a house that's been decimated by the politician's tax penalty, right? The house is built before March 21 it has tax penalty now go by one of those, a brick and tile unit. And strike an amazing deal now and then spend every weekend doing it up. You know, stop drinking your lattes and you have avocado on toast and all that stuff. Get your sleeve rolled up, do some painting and some carpet and all that stuff, and build equity that way because there's just no competition for properties and that flips on a coin that before you wait, you wait too long before you know.

Stacey: 28:03

Any suggestions for small developers in the next couple of years?

Andrew: 28:08

I mean, there'll be plenty of you out there that are looking at this medium density residential standards and figuring out how do I capitalize on this? You know, so that and that's, that's got a hundred percent certainty now. Cause if your site has no qualifying matters, you know that's not a flood zone or climate change or this sort of stuff, you can do that now. Still a bit. I'm not sure about the subdivision side, but you can, you can, you can do that now. So that's, I'm sure a lot of small developers are looking at that stuff. Here's a single family site. I can do three houses as of right. Let's pump them in. So there'll be new duplex models And there's also another way of doing it. You can buy a site, for example, and then cut it into two, and then on each of those two, build three. So you can very quickly go from one site to six. Manipulating the rules a little bit. So, I mean, I don't really have much advice for small developers apart from a lot of'em will be looking at that. You know, I'll give you, I'll give you an example of, of something. We sold a house,$834,000 in February. That same house we sold effectively for$730 a month ago. And they're not flying out the window. Okay. Sales have been dead for months. Some companies out there have not had a sale since March. So, it's interesting out there. And so it's a good time to buy. So my board said to me, Well, if you can't sell these damn houses Andrew, go and buy some land. So we're looking for land. So I've found 30 million bucks, which we're gonna go and buy some land 15 on land. Some desperation deals, hopefully. And then 15 million on deposits for land that were built in 25, 26, 27. And, you know, we'll look at anything over about 10 units, but our sweet spot is sort of 15, Small developers. Yeah, well if you already own a land that you overpaid for, can't do much about that. And unfortunately the, the price has already dropped. It just won't show up in the data for a while. But if you, you know, it's the old real estate heal, time heels in real estate, so you just have to hold and wait it out, find some other angles. There's always people come up with new ideas, so next generation's wealthiest, multimillion dollar developers will be figuring that out, right now. They'll come through this and they'll be the next generation.

Stacey: 30:24

Do you think you'll see, a lot of people that have looked at their site now, their, just the property they own now and be like, Oh, maybe I can go and do something with this. Do you think we'll see a lot of like mum and dad developers starting up and things like that? Or do you think it's too, too tricky to, to enter?

Andrew: 30:52

Well, there's companies out there advertising to these people to become mom and dad developers, you know, there are builders that will tell you what you can do on your site and then you can play developer. Development is, is, is it's risky business. It is risky business. You got enough money to build these things and are prepared to hold them cuz you can't sell them to make a profit. Then that's fine. But most people, you know, you look at grand designs, you've got anyone just building their own house that have enough trouble. You amplify that when you're building full sale development projects. Okay? It gets hard. It's hard work. So unfortunate. Well, not unfortunate, but what happens in booming markets, everyone sees people doing it. A small builder builds one house at a time, all of a sudden does duplexes, and all of a sudden he's got 10 units and all of a sudden he's doing 30 houses, right? So he grows, grows, grows, gets bigger and bigger to all the crash. Everyone sees their neighbors doing it they decide to build a house, play property developer architects do people in the industry do. And when you're not managing things very well and your costs are going up, but the sale prices are going up faster, it doesn't matter. Okay, But Warren Buffet. Buffet said when the tide goes out, you'll see who's naked. Okay? And if you're an experienced property developer, it's gonna be brutal on you unless you're rich enough to be able to take, the good or the bad. So my suggestion is, if you pre-sell it, then you might spend a couple hundred grand on some plans and stuff and try and pre-sell the property and then get it built. That's fine. Then you run with the risk of cost exceeding your set price cap. Because yeah, it, it's, it takes a bit of doing and, yeah, you'll see a lot, you know, a lot of fly by night has disappeared during these times cause it's just too difficult. So yeah, you gotta be very careful doing that. You just might as well just sell the house, sell the site to a real developer. See what get out there.

Stacey: 32:45

Yeah. And where are we in the market now, do you think? I think that we're in a, at the bottom of the Nike tick. Do you agree?

Andrew: 32:56

Oh, I think we're in prime buying. So that means close to maximum blood bath. But this might go on for six months to a year cause there's still product getting finished coming onto the marketplace. There's some developers quietly going under some builders, quietly going under. So we might be a bit early. But I wouldn't be, if I'm buying a house now, house price in Auckland would've gone down 20% So the time to get in is to start now and hook something up the side of Christmas or after Christmas. Don't try and wait until next window thinking it's gonna get worse. The data might show it getting worse, but the people have already jumped in and, and start to buy. Yeah. I mean, I don't know. Look, we're a trading company. We've gotta build houses. That's how we make our money. So we've just gotta see ourselves through this. Would there be any correlation to the cookie cutter standard boring development in the slow state of rails, are buyers looking for more individual, unique architecture. Look, human beings are greedy, okay? Human beings are greedy in this market. People are going after the lowest cost. Yeah, sure. They say the most value and all that sort of stuff. And what looks good, they're going after the lowest costs primarily cause that's all they can afford. That's all the bank will give'em money for. So they all buy the shitty looking stuff. Some of us might be guilty of that. We're a little bit more boutique and we do a hundred units. We make sure, you know, every four or five looks like completely different developments. we pay for that privilege. But some stuff in crisis uses a lot of stuff, looks exactly the same. A lot of it sold to. Is, God knows he's gonna rent it, but maybe they'll find rental for those and then those people will move out of other suburbs. So our buyers looking for more individual unique architecture. But when the market's tough, when it's tight, when it's really vibrant, people take what they can get. When the market crashes, they'll take whats cheapest. I guess, does unique architecture sell, I guess, and, you know, different, It depends what market you're in. There's only so much you can do, really. So I find that it matters at the fringes of cycles, but not at the top or the bottom and now I'm not talking about, obviously you're building houses and St Heliers in Auckland, with sea views or Hernebay. That's, that's complete different market. That's something I dunno much about. And of course it's all about architecture and views and, and, and prestige.

Stacey: 35:20

And what's next for Universal Homes?

Andrew: 35:26

Well, we just, we got 30 million spent on some land and some land deposits and, got to, finish these houses in Westgate. Start another a hundred next year. Finish these houses in Northcote. Start another 50 of those next year. Start, in Milldale. There's about 70 odd going up there in the next, in the start of the next. Some of it's market dependent. Some of it we'll do anyway, and then some in Owairaka as well. So there's plenty on, and, and really pulling the trigger. Well, we've got everything we can build at the moment that we've got consent for we're doing. So we haven't stopped. We're waiting on bloody consents. But, will, some of our projects we're planning to start next year depend on sales. Yeah, they will. Yeah.

Stacey: 36:11

And that's a wrap. Thanks to my guest, Andrew Crosby from Universal Homes. This was a great session talking about the current property development market. And sheds some light into what we can expect to see over the next year or two. Thanks so much for tuning in. Mā te wā.