Shadow Play's Jonathan Hallinan now exuberant, rather than exiting the Melbourne apartment development scene

| May 22,2018

| 3 min read

Jonathan Hallinan hasn't quit Melbourne apartment development market after-all.

He has bought a small Southbank site, just months after securing a gullible Australian Financial Review headline that he was quitting because it was all too hard.

He now claims huge rental demand for apartments in his $300 million Shadow Play tower on Southbank had convinced him there was strong appetite for new development.

The demand for rental accommodation was "the strongest I have seen in my 24 years," he said.

Investors were achieving rents of $670 to $680 a week for a two-bedroom, two-bathroom apartment, a 15 per cent increase on the $600 average rent for the area.

"There is no sense at all that the market is over-supplied."

"The good rental returns on offer is making the apartment market appealing to local investors.

"I plan to return to residential development next year doing smaller 100 to 200 unit developments targeted at the local investor," Hallinan told the Financial Review.

"Then in the next cycle – two years from now – I plan to relaunch the big 300 to 500 unit projects, that others won't do," he added.

The newspaper said Hallinan had an "exuberance."

He has secured 54 Clarke Street, a 597 square metre site wedged between two apartment towers – Habitat at 58 Clarke Street, and The Bank, at 283 City Road - for $8.9 million from local owners who had it listed for the past year through Lemon Baxter.

It reportedly almost sold this time last year at $9 million, according to The Age columnist Marc Pallisco.

"I am pulling out of the residential space," Jonathan Hallinan told the AFR in January.

"Policy makers have repeatedly hit our industry with several regulatory changes, which are now compounding to result in what is likely to be a devastating effect on housing supply and affordability in the long term," he had previously blogged.

"It would appear that our policy makers, who evidently believe that their actions are alleviating the pressures of an over-heated housing market, are, with great success, crippling the very industry that has the power to ease the housing affordability crisis."

Hallinan listed the recent adverse changes:

1. Introduction of APRA regulations on banks and financial lenders which resulted in changes to investment lending, reducing the borrowing power of investors.

2. Removal of the stamp-duty concession from off-the-plan purchasers for investors

3. Introduction of plot ratios to the Melbourne planning scheme, hugely lessening the number of dwellings that could be built on a development site.

4. Implementation of apartment design guidelines, forcing developers to build fewer larger and more expensive apartments.

5. Limitations on foreign purchasers to not more than 50% ownership in a given apartment project

6. 7% foreign surcharge on all offshore purchasers

7. Enforcement of minimum $5,000 FIRB application fees

8. Increase of 5.5% stamp duty fees on foreign purchasers

9. Enforcement of absentee surcharges on purchasers with properties vacant for six months or more

10. Proposed introduction of a new tax on the four banks as part of the 2017 Budget.

Jonathan Hallinan founded BPM in 1995 securing early success with luxury townhouses in Melbourne’s bayside areas.

At its peak BPM had more than 2,600 apartments across 16 projects under development with a combined value in excess of $1.4 billion.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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<h2> Shadow Play's Jonathan Hallinan now exuberant, rather than exiting the Melbourne apartment development scene</h2>

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<div>
<p>Jonathan Hallinan hasn't quit Melbourne apartment development market after-all.</p>
<p>He has bought a small Southbank site, just months after securing a gullible Australian Financial Review headline that he was quitting because it was all too hard.</p>
<p>He now claims huge rental demand for apartments in his $300 million Shadow Play tower on Southbank had convinced him there was strong appetite for new development.</p>
</div>
<div>The demand for rental accommodation was "the strongest I have seen in my 24 years," he said.</div>
<div> </div>
<div>Investors were achieving rents of $670 to $680 a week for a two-bedroom, two-bathroom apartment, a 15 per cent increase on the $600 average rent for the area.</div>
<div> </div>
<div>"There is no sense at all that the market is over-supplied."</div>
<div> </div>
<div>"The good rental returns on offer is making the apartment market appealing to local investors.</div>
<div> </div>
<div class="cq-article-content-media section">"I plan to return to residential development next year doing smaller 100 to 200 unit developments targeted at the local investor," Hallinan told the Financial Review.<br><div>
<p data-gtm-vis-first-on-screen-7770372_137="20332" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">"Then in the next cycle – two years from now – I plan to relaunch the big 300 to 500 unit projects, that others won't do," he added.</p>
</div>
<div>The newspaper said Hallinan had an "exuberance."</div>
<div> </div>
<div>He has secured 54 Clarke Street, a 597 square metre site wedged between two apartment towers – Habitat at 58 Clarke Street, and The Bank, at 283 City Road - for $8.9 million from local owners who had it listed for the past year through Lemon Baxter.</div>
<div> </div>
<div>It reportedly almost sold this time last year at $9 million, according to The Age columnist Marc Pallisco.</div>
<div> </div>
<div>"I am pulling out of the residential space," Jonathan Hallinan told the AFR in January.</div>
<div> </div>
<div>"Policy makers have repeatedly hit our industry with several regulatory changes, which are now compounding to result in what is likely to be a devastating effect on housing supply and affordability in the long term," he had previously blogged.</div>
<div>
<div>
<p>"It would appear that our policy makers, who evidently believe that their actions are alleviating the pressures of an over-heated housing market, are, with great success, crippling the very industry that has the power to ease the housing affordability crisis."<br><br>Hallinan listed the recent adverse changes:</p>
</div>
<div>
<p>1. Introduction of APRA regulations on banks and financial lenders which resulted in changes to investment lending, reducing the borrowing power of investors.</p>
<p>2. Removal of the stamp-duty concession from off-the-plan purchasers for investors</p>
<p>3. Introduction of plot ratios to the Melbourne planning scheme, hugely lessening the number of dwellings that could be built on a development site.</p>
<p>4. Implementation of apartment design guidelines, forcing developers to build fewer larger and more expensive apartments.</p>
<p>5. Limitations on foreign purchasers to not more than 50% ownership in a given apartment project</p>
<p>6. 7% foreign surcharge on all offshore purchasers</p>
<p>7. Enforcement of minimum $5,000 FIRB application fees</p>
<p>8. Increase of 5.5% stamp duty fees on foreign purchasers</p>
<p>9. Enforcement of absentee surcharges on purchasers with properties vacant for six months or more</p>
<p>10. Proposed introduction of a new tax on the four banks as part of the 2017 Budget.</p>
<p>Jonathan Hallinan founded BPM in 1995 securing early success with luxury townhouses in Melbourne’s bayside areas.</p>
<p>At its peak BPM had more than 2,600 apartments across 16 projects under development with a combined value in excess of $1.4 billion.</p>
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This article is republished from
<a href="https://www.urban.com.au">Urban.com.au</a> under a Creative Commons
license. Read the <a href="https://www.urban.com.au/news/84051-shadow-play-s-jonathan-hallinan-now-exuberant-rather-than-exiting-the-melbourne-apartment-development-scene">original article</a>.</p>