Recently Urban Melbourne sat down with James Tutton for a thoroughly interesting, jovial and at times colourful interview on all things urban. A man whose credentials are impressive as they are varied, chief amongst them is co-director of property development firm Neometro.
James joined Neometro four years ago to drive the development and commercial side of the business while maintaining its strong design integrity. James is the entrepreneur behind the immensely successful Moonlight Cinema, pioneering the outdoor cinema business in Australia and eventually selling it to an ASX listed corporate group in 2006.Our People: Neometro Developments
We begin by asking James: what challenges surround increased density and appropriately sized urban development?
The inefficiency is evident. I'm not a planner, just a guy with a BA in Philosophy, however to me it does not seem like rocket science. It makes so much more sense to build housing which is in immediate proximity to infrastructure, transport, employment, education and everything else. You go out there and look at broad acre developments; this is inefficient in the context of environmental issues, in context of community happiness, transport issues, hospitals etc. It goes on and on and on.
You then look at towers and think... well? I'm not saying towers are wrong, they absolutely have their place but it's about finding an appropriate balance. One of the things if find quite challenging is that you can have a precinct in immediate proximity to rail infrastructure etc. earmarked for medium density development in an area where there are ostensibly progressive thinkers, who then take developers to VCAT with the view that oh no you're evil, you're creating homes for people. That's so hypocritical!
It's the core of a real NIMBY culture which is just is not that positive. It's generalising but some of the views coming out of the Greens have been completely at odds with sensible environmentally focused planning. It can be madness.
Will planning zone reforms coax Neometro into markets beyond its established inner Melbourne footprint?
I look at Brunswick and think absolutely, there are opportunities there. Although can you afford to do an apartment development in Dandenong? No, that's the economics being what they are.
We love Brunswick; there's a lot of poor quality development there although my view is the poor quality development is not a reflection of demand. There's a lot of demand for high quality development from a buyers perspective.
Can you elaborate on why outer ring locations such as Dandenong or Frankston are difficult apartment market from a developers perspective?
It's a mixture of factors. Let me begin by saying inner city sites carry a higher land price therefore you need to get density to pay for it - a $6-7 million dollar slice of land requires you get yield by height. Construction costs being what they are dictate that lower density dwellings such as townhouses are not possible for the site. Should you go to Dandenong, the economics are that the land is cheaper and therefore building townhouses is more efficient in that context, and also meets the level of buyer demand.
I look at Frankston from a planning perspective and think why isn't there fast train and medium density housing in Frankston? It's an absolute no brainer and would entice property developers, but I don't think its going to happen.
Is Government investing public money via schemes such as Revitalising Central Dandenong a worthwhile pursuit?
Not my view as a professional, just my lay view but there's a tipping point where things become viable. I mentioned Frankston in the sense that I feel it's very underpriced from a residential perspective because there is no quality public transport infrastructure through to Melbourne. It's just my two cents worth but like Dandenong there is an amount of stigma attached in a social context which has an impact on prospective buyers.
Long term and with further investment it's highly doable. Box Hill for instance is now in its own right more of an economic hub and on top of that it's closer to Melbourne which is attractive to potential apartment buyers. Whereas in Frankston the rail line is not that workable which limits connectivity to Melbourne, although the beaches are beautiful and it has the infrastructure that goes with a small city.
What would make a property developer venture into outer suburbs?
Should the factors that we've discussed become reality, from Neometro's perspective we'd also need to have the comfort that people would recognise what we offer. Even in Fitzroy where we have a design literate audience, some people come along and say Neometro is selling product for x thousands per square metre and the bloke down the road is selling it for one thousand dollars a square metre less. On top of that Neometro's apartments are proportionately larger, because that's just what a nice apartments need to be.
The guy down the road has a dog box; you apply the lower per square metre rate and the fact is that it's smaller - the actual quantum in dollar terms between one apartment and another becomes significant. Around here (Fitzroy) people look at that and understand it - 'I'm getting what I pay for' - that's the key.
But when you hit outer suburbs such as Dandenong, do you have a buyer group who actually understand the variations of quality on offer? That's a challenging thing, I'm not saying they don't, I'm just not personally convinced there is that market.
During this week, part two of our chat with James Tutton will focus on B Corporation status and what it means, inner-city issues plus Neometero's current and future direction.