Two years into a global pandemic, Australia’s property industry is facing into a host of headwinds: supply chain shocks, labour shortages, interest rate rises and geopolitical uncertainty among them. Our panel of industry heavy hitters had some tips for leaders looking at the horizon.
Our powerhouse panel agreed that Australia’s property industry is facing a convergence of challenges. In fact, Buildcorp principal Josephine Sukkar AM noted these challenges were more “multi-faceted” than at any other time in her career. Floods, shipping costs, rising wages, the war in Ukraine all had an impact on construction costs, she noted, which had had risen by between six-and-eight per cent – a figure well ahead of inflation.
Costs will continue to escalate and “feasibility is being squeezed in every single line,” added AMP Capital’s global head of real estate, Kylie O’Connor. “We can’t be stepping back from the cost of construction and if we continue to push risk down we will all pay for that,” Sukkar warned.
Tarun Gupta, Stockland’s managing director and CEO noted that Australia was at an “interesting point in the cycle”. Supply chain pressures are a “live issue”, but he hoped to see some easing of labour shortages as migration flows increase. Australia will remain a safe haven for investment, added Property Council national president and Charter Hall’s managing director and CEO, David Harrison.
How should property leaders prepare for what’s ahead? Focusing on the “old fashioned” basics of operational excellence was a good place to start, Gupta said. Kylie O’Connor wanted to see companies head back to the office. “Leaders need to go into the trenches with their troops,” said Harrison. “True leaders need to talk the talk and walk the walk.”