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Spectre Of Unemployment Keeps Pace At Home

The Australian, Greg Brown - Published April 2015

Shane Wilkinson, founder of Melbourne apartment developer Pace Development, is less than convinced about the prospects of the housing market and the broader economy, with the company putting its interstate expansion plans on ice until the job market looks brighter.

Wilkinson, 41, who was a BRW Young Rich Lister for a number of years and now too old for the category, says the group would be cautious and stick to pockets of Melbourne where planning permits were hard to obtain, making housing scarce.

"There are a lot of job losses that are yet to hit, a lot of car companies are yet to close their doors, there are a lot of redundancies that haven't hit the unemployment numbers yet, so I am very cautious over the next 24 months," Wilkinson says.

"If we do buy sites they will be in areas where I know that (homes) will be bought by the local market and local owner occupiers as opposed to (investors)," he says.

The company, which has a pipeline of between $300 million and $400m, will next month start its marketing campaign for a $120m apartment project in St Kilda, at 181 Fitzroy Street, with the group having already sold half the apartments through word of mouth.

The 160-apartment project, designed by SJB Architecture, will have six penthouses, with a Malaysian-born local already buying two for $4.8m, with the penthouses to be amalgamated.

"Each time we do something we get better at it and this is just an evolution of what we do," he says.

Wilkinson says that there is an oversupply in Melbourne's CBD, Docklands and Southbank precincts, adding that the housing bubble in Melbourne, Brisbane and Sydney had gone "beyond any measure of where it should be" and urging the RBA to be cautious about cutting interest rates further. "It is only the tightly held and high-demand product which won't take a price dip in the next few years," he says. "It's not about just buying sites where you can maximise yield now, it's about really focusing on picking the teeth out of a great site that owner occupiers will actually buy rather than relying on investors overseas.

"I see (the offshore investor market) as being very risky. If something out of our control ­happens, say if regulations change in China, it may affect us substantially."

Wilkinson first went into property as a youngster in 1992, when he bought a home for $113,000, before renovating it and selling it for a profit. About 21 at the time, he says he made the money through a number of part-time jobs. He gradually built up to larger apartment developments, with a seminal project, the 34-apartment Nautica in bayside Sandringham, which won the HIA Victorian Apartment Project of the Year.

He says that the key to success in business is hiring the right staff, of which the company has 60 ­direct employees. "I look for people that have heart. You can teach someone pretty much anything but you can't teach someone to care. That is innate."

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