Over the last week we have watched the political and economic decisions of the UK send a tidal wave through the markets and governments of the rest of the world, which has served as a foreboding reminder ahead of tomorrow’s election, that the seemingly innocuous decisions made by our own local governments can have the same dramatic consequences for our industry and for our economy as a whole.
I’ve successfully steered BPM through twenty years of Liberal and Labor governments at a State and Federal level because every new economic and political cycle was met with an evolutionary strategy focussed on withstanding external forces beyond our control.
The ebb and flow of governments is perhaps the only constant in the political process. Governments change hands often and effective policy is introduced rarely – but strong leadership still has the ability to create meaningful change.
In an era that was instrumental in BPM’s beginnings, the Kennett Government of the 1990s appeared ruthless, but every decision made was a necessary step toward managing the disarray brought about the previous Cain–Kirner Labor Government. Kennett turned the financial fortunes of Victorians around, his government implemented important economic reform, delivered a number of high-profile capital works projects and laid the groundwork for economic prosperity – a prosperity that was then eagerly enjoyed by the succeeding Labor government in what was of course the next cycle.
This endlessly cyclical nature of politics and economics creates a similarly fluid nature for our industry which means, as business leaders, we have only one true strategy – adapt.
At a Federal level, our next political cycle begins this Saturday. But our next economic cycle has already begun – and it is being driven by politicians who believe they are making small, inconsequential changes to our industry, when they are in fact stacking bigger dominoes and thinking no further than the first topple.
At the behest of the Australian Prudential Regulatory Authority (APRA), our country’s biggest banks have decided to dramatically lower their loan-to-valuation ratio and to cease recognising self-employed income from overseas buyers. The State Government of Victoria is also planning to raise the stamp duty on foreign investment in apartments from three to seven per cent. As a consequence, what was once a difficulty for foreign investors – sourcing the capital to invest in Australian developments – will now prove to be close to an impossibility.
We’ve already seen a large drop in foreign investment and buyer interest but the compounding issues are simple and pernicious: if developers are not developing, builders are not building. The mining boom is over and construction is our greatest economic driver – and it is currently at the mercy of short-sighted political thinking. Instead of a measured and level-headed process that strengthens an economy now and into the future, we are simply seeing ill-advised revenue raising. But we’ve seen similar cycles before.
In 2007, BPM entered the global financial crisis as a luxury developer and emerged a lifestyle brand. We had to adapt, to grow, to evolve – and we had to do it at an unprecedented rate. The impending political and economic cycle will see us progressively moving out of the apartment market and into the hotel space. We will continue to refine our positioning as a lifestyle brand, introducing BPM health and fitness, cafes and retail, but most importantly shaping the desires of an entire generation. There is tremendous unseen effort behind every natural evolution, but with it comes lasting change and new prosperity.
Although the solutions to our current situation may seem infinitely complex, as leaders, we should take each new cycle as an opportunity to remind ourselves that we are at the forefront of a remarkably progressive industry that requires courageous and resolute leadership. And we should take the opportunity to remind ourselves that strong leaders do not ask how they will survive the ramifications of change, but instead set plans in motion to evolve and emerge with more resilience and fortitude than before.
If we are willing to concede that, in our industry, even the smallest decisions can have incredible consequences, then we must also believe that a single vote can still bring about meaningful change.
Jonathan Hallinan is the founder and Managing Director of Melbourne-based property development firm, BPM. Hallinan actively manages a $1.4 billion pipeline of residential projects across Australia and the United States, including vertically integrated businesses in property management, construction and finance.