Sentinel’s Darwin Pitch
December 5, 2022
Well, we’re here in the Northern Territory for a week to see what’s happening. Sentinel already owns the biggest shopping centre in the territory, some student flats and it just bought a pub. And pubs are big business in the NT, for the obvious reasons of heat and thirst but also because of pokies. Endeavour Group is one of the companies that has been active in snapping up pubs in Darwin.
Darwin’s our closest port to Asia, as we know, and there’s been a bit of news lately on mining for rare earths and other critical minerals as well as the big gas projects and defence plans. Sentinel’s also just gone into the modular home market, to provide accommodation for workers who they expect will be headed to the Territory for work.
So, a bit happening away in little Darwin, population 165,000, far from the bright lights of big cities. Here’s Warren Ebert, chief executive officer, of Sentinel Property to tell us about it.
Warren, thanks so much for seeing us, it’s great to see you in Darwin. Maybe we could just get a quick recap of what Sentinel is and does, that would be great.
Thanks, Maria, great to see you here. Sentinel is a privately-owned property syndication business. I started in 2010, first property we bought was on the 15th of January, 2010. Since then, we’ve bought just over $3 billion worth of property. We’ve sold about $1.2 billion, we’ve averaged 19.84 per cent internal rate of return over that period of time and that’s after paying monthly distributions. We’ll buy anything, anywhere, anytime, at a price. So, we always look for things that people don’t like. Now, that may be by location – at the moment, we’re in Darwin because a lot of people don’t like investing up north. By Christmas, we’ll have $1.6 billion invested north of Mackay.
We bought a lot of properties down in Victoria in the relatively early stages of the GFC, when no one was buying down there. We then subsequently sold. We bought a lot of properties in Western Australia when the market was down, we then sold. So, we’re counter-cyclical. There’s another great Warren, Warren Buffett, and he says you’ve got to be fearful when others are greedy and greedy when others are fearful, and that’s what we do, we look for things – we were buying homemaker centres in 2012, which they now call large format centres, when no one wanted them. We were, up until five years ago, we were the fourth largest owner of large format centres in Australia, so, counter-cyclical.
You have certain funds, right? Is that how we would be able to invest in this whole other Warren, alternative Warren…?
That’s correct, Maria. When I started in 2010, it was a pretty bad time and I think a lot of people forget how bad the GFC was. When I was raising equity in late 2009, I remember experienced investors saying, if I can get an 8 per cent return on my money and get my money back in seven years, that’s as good as I could hope. A lot of people lost significant portions of their wealth. So, back then, people wanted to know exactly what they were investing in, so it was closed-end funds. A lot of them invested in open-ended funds in the boom, 2006-2007, and it lost everything. So, they were very focused on, our first property was a Bluescope Steel asset at Acacia Ridge, people wanted to know what they were investing in, that’s what we did initially.
But as a fund manager, that can become difficult because things can happen with tenants and it can be difficult getting finance as the lease becomes a bit shorter. So, over the last probably six years, our main focus has been on open-ended funds. We have an open-ended industrial, which is self-explanatory, the type of assets. We have an open-ended homemaker fund, we have an open-ended regional office fund, so people can invest in a particular sector and last year, we started a fund called NAIF, Northern Australia Investment Fund – now, the government has a Northern Australia Infrastructure Fund, so don’t confuse us with that – and we did that so that we could pay a decent yield, because the last couple of years distributions have been very low, so that fund we started paying 7.25 per cent – because the average age of our investors is 64, so ours is really an income fund.
We’re for high-net worth individuals, we’re not for what people may class as the mum and dad, minimum investment of $100,000, but ours is about paying a monthly distribution.
And what sort of impact are you seeing from this round of interest rate hikes that we have going on right now, is it becoming a little bit tighter for you to sort of expand into buying the sort of thing that you want to buy?
It’s a beautiful time, Maria.
The blood is starting to flow down the streets, I wouldn’t say it’s gushing at this stage. We have seen yields on particularly industrial properties blow out significantly, and I won’t name parties, but a very, very high-quality property in Brisbane that 12 months ago, a 15-year lease to an international company, that would have sold at 3.5 per cent yield easily 12 months ago, they now can’t get 5 per cent. Now, a lot of those larger funds, they would look on a development margin of 10 per cent, very few of them would get 20. The blow out in the yields, they would be losing money, so it’s already started. You’ve seen with a lot of office buildings that come on the market, they don’t sell so they take them off the market. You’re seeing large format centres have held up very well, they’re big blocks of land, main roads, hard to duplicate, but in some sectors, yeah, the blood’s starting to flow.
And are you still as excited about northern Australia as you were? I think six months ago, you were telling Alan that it was boom town.
Yes, I’m probably more excited. It’s hard to get more excited, Maria, but hopefully you’ll get to speak to a number of people up here and the things that are happening up here are absolutely mind blowing. There was a show on Four Corners two weeks ago on what is happening with Defence up here. Now, that’s only a very, very small part of it. Northern Territory and particularly Darwin, boomed from about 2013 to 2017 or maybe a little bit longer with Inpex, which was a $43 billion US gas project. Now, that involved Total out of France and Inpex out of Japan. They were the largest infrastructure projects for both of those countries outside of their homeland. Now, that was one major project, so when that came to an end Darwin got hit very hard.
It’s not hard to work out that when it’s all about one project and you’ve got 5,000 people involved in building it, plus the flow on, and then it’s 500 people to operate it – so it took a big hit and then a lot of people were scared about coming back in. But now the diversity of projects, you know, there are tens and tens of billions of dollars’ worth of projects, whether it’s Sun Cable, which is to supply 30 per cent of the solar electricity to Singapore. A while ago, we met with a group 120 kilometres south of Tenant Creek at a place called Wycliffe Wells, now they’re going to be doing 4,000 hectares of cropping. Their underground water supply is 300 times the capacity of Sydney Harbour, four times the Three Gorges Dam in China.
Now, that went out to an expression of interest from the government, they’re only taking 50 per cent of the water that’s replaced every year. That will employ 150 permits, 1,500 casuals, the lithium mine that started exporting a couple of months ago. It just goes on and on. Not only is it big numbers, but it is very, very widespread, the investment.
Why is it different? I mean, Darwin has that reputation of being boom and bust because of these infrastructure – you just mentioned it, there was a huge boom with Inpex, why is that different now?
The diversity. Where before it has been on one major project, but now there’s a lot of things that have happened in the world which Northern Territory is very important for the rest of the world. You see what’s happening with Russia-Ukraine, the problems that people have getting gas supply. Now, if you’re a person in Europe and you’re wanting a long-term gas supply, there’s not a lot of options. You can either get it out of the Middle East or you’d probably get it from Australia. I know we have good relationships with a lot of those Middle East countries, but it was only a year or so ago, I think Iran, there was threats of closing the Strait of Hormuz, where it was where 80 per cent of the oil and gas comes through. Well, if you’re in Europe again and you’re tied up with that, what happens? So, a lot of the products, of the 27 rare earth minerals that are required to build batteries and for the new electric cars and green in the world, of the 27 rare earth minerals, 21 of them are mined in the Northern Territory. Northern Territory is not just about what does Australia need, but for the world. Now, it was only a few weeks ago that President Biden signed off on an executive order that any rare earth minerals going into the United States, there’ll be no restrictions, no customs.
At the moment, I think 95 per cent of the rare earth minerals in the world come from China and most people would say that’s not an ideal scenario. So what’s being produced out of the Northern Territory is critical for the rest of the world and then you get into the defence. When Prime Minister Albanese went to the NATO conference about two months ago, NATO actually said they want a bigger presence in Asia-Pacific. Well, if you’re going to have a base in the Asia-Pacific, have a look at the map of the world, what country would you be in? Every September, there is a big Air Force – I don’t know what it’s called here, but I remember seeing the headlines in the Fin Review online, it had Luftwaffe in Darwin, I thought, what’s that about?
A terrible headline… [Laughs]
Yeah, but it made me read it. What it was, is it was the first time the German Air Force had come to Darwin for these annual games – not games, whatever it is, I haven’t seen it but I’m coming up next year, but there’s 21 air forces from around the world. So, you’ve now got the German Air Force, the Luftwaffe, coming to Darwin every year. Why are they doing that? There is so much activity up here, until you get up here, Maria, you just can’t believe it.
There must be some old-timers in Darwin who are terrified seeing that headline, I think.
Yes, but it gets the eye.
So what are you doing? You’ve just bought the Casuarina – am I pronouncing it properly?
Casuarina Shopping Centre, you bought that last year.
We bought that the 31st of March this year.
Okay, and I believe that was the biggest transaction in the Northern Territory?
It was the biggest single shopping centre transaction in Australia for over a decade.
Okay, so what’s the investment case behind that?
It’s irreplaceable. Every man, woman and child in Darwin goes to that shopping centre 5.1 times a month. If you’re a retailer and you want to come to the Northern Territory, Casuarina Square is where you go, it just dominates…
The retail sector.
And you cannot build a competitor. If you’re going to build a shopping centre to really compete with it – we’ve got over 200 tenants, you’d have to have 100-150 tenants. I used to travel a lot through Asia and I’ve been to 101 countries and when I’d go to Asia, I’d think why are they always in these damn shopping centres? Then when you start doing your due diligence in Northern Australia, when it’s 36 degrees and 90 per cent humidity, I can tell you, you don’t go swimming unless you really don’t like your kids, because you’ve got the crocodiles and the sharks, and it is just too hot, so they go into the shopping centre. If you go to Casuarina Square, 8:30 on a Saturday morning, you’ll be flat out getting a car park. So, you have to have a big shopping centre if you’re going to spend all day. You just can’t build competition. Now, eventually, it will be the town centre, we’ve just bought the sporting club beside, which is almost a hectare, back in 2016 we bought CasCom, which is an office complex right beside of two hectares, so we have 15 hectares there.
At the moment, we’re getting ready to lodge a development application. There’s already 300 uni lodge student accommodation there, we’re going to put another 100 there, it’s running at 100 per cent, we’re putting hotel… It’s a 50-year project.
So, just on the sporting club, that’s a pub that adjoins – I wanted to talk to you a little bit about pubs, because I find that a really interesting space. I guess the attraction of buying a pub in the place where the average temperature is above 30 is clear, but there’s actually more to it, isn’t there? Because the pokies and the gaming element makes it really profitable, is that right, is that the case?
It certainly does, but we don’t operate the hotels, so we’re just a landlord. So, to us, it really doesn’t make a difference whether it’s a Commonwealth Bank or a hotel, we just get the rental income in this particular case. We bought that to expand our land holding in Casuarina. But about three weeks ago, we did actually buy a hotel at Moranbah, which is about three hours inland from Mackay. It’s interesting, with that we got 40 poker machines. Now, the last sale of poker machines in Queensland was $193,000 each. We paid $8.3 million for the hotel, so the poker machines are actually worth as much as we paid for the whole – but we then sold the lease to someone else and that’s a separate…
And I’ve got to say, I’m not a poker machine person, I think that they are the scourge of the earth, but they are legal. People like to buy lotto, it’s not up to me to tell people what they can do and can’t do, but I do have to say, that I think they do cause some problems.
Well, absolutely. I mean, it’s not an ESG investment. But certainly, you can’t overlook the fact – I mean, the market in New South Wales has attracted investors, the pub market, because gaming and poker machines boost sales and profit and that’s missing in states like Western Australia, I understand, where gaming is restricted to casinos. Do you think the pubs market in the Northern Territory could imitate the market in New South Wales, where it’s the thing to buy?
One of the things you see in a changing market, Maria, is when you get rising interest rates or other pressure on investors, is they retreat to home. And in Australia, the home of the money is really Sydney or Melbourne. So, with rising interest rates and just general nervousness for other issues, the big money is not coming up here. So, while people would buy a hotel if it’s a 20-year lease to Woolworths or Coles, the ABC, yes they would, but hotels up here can only have 20 poker machines, clubs can have 40. Now, in Queensland, I think hotels can have 43 poker machines, I think clubs can have up to 283, so up here gaming wouldn’t form as big a part of your income, so that certainly would have an effect.
It’s a small market, right.
Yeah, it’s a smaller market.
I think that’s Darwin’s problem, isn’t it, that everything about it is small?
There’s only 140,000 people, Maria, in Darwin. The Gold Coast has about 400,000 people. And I think that’s part of the reason that the government is investing. In World War Two, a lot of people forget there was a Brisbane line, the decision had been made, we’ll defend everything below that, above that the “Yellow Peril” can have it. They didn’t get it but I think part of what is happening now up north, that it is a populated perish. There is so much land up here and so much resources, that if we really don’t start to use it, other people may want it. Well, of course they want it, I’m not trying to scare monger people, but I think when we have so much land up here and so much resources, it really is a bit silly not to use it, particularly when you get to Sydney and Melbourne, the traffic and the overpopulation.
I think there’s definitely an element there that Darwin is far more appreciated to the north than it is to the south or the east of Australia, yeah, definitely, I think it’s been overlooked by policymakers.
Maria, a little while ago, about six weeks ago, we brought 50 of our investors up who were in Casuarina Square, and part of that was to show them what Darwin has to offer. I think most people in Australia have never been to Darwin and of the people who have, a lot of them haven’t been here over recent years and a lot of them say, “Oh, it’s too small, there’s nothing there.” So we got our investors up who are all high-net worth individuals, they have to be under ASIC requirements to invest with us, and they were surprised at the quality of restaurants and what really is here. So it’s important for us to get those people up and then they can spread the word.
Do you think Darwin’s anything like the Brisbane of the 80s and 90s, say, when you had retiring Victorians moving to the beachside and cheap apartments? I mean, okay, Darwin has a problem with beaches because you can’t swim in them, but does it have any of that attraction or is it a completely different dynamic, do you think?
You might have noticed, Maria, but it can get hot up here.
For a long time. I think in spite of what those Melbournians may say, we don’t get as many days above 35 degrees in Brisbane as they do in Melbourne, so you can come and live in Brisbane and most of the year it is very, very nice. In Darwin, most of the year, it’s very, very hot. In winter time, it’s 30-32 degrees, you do get a cool breeze and it is quite pleasant and we were up here during COVID times and you saw a lot of southerners, when there was a bit of a break they’d come up here and just stay. It’s absolutely magnificent during winter. In summer time, it is very, very hot, hence they all go to our shopping centre, which is great. But, no, I don’t think you’ll see the retirees coming up here, they may come up in winter.
One of my early trips up here, I did say to Andy Cowan, who’s the investment commissioner of the Northern Territory government, I said, “How will you get people to move up here when it’s so hot?” And most of us, including me, we judge it upon the climate that we have in Sydney, Melbourne and Brisbane. He said, “Well, you have to remember, that there’s half a billion people in Asia who live in the same climate.” When you go to Singapore, I’ve come out of that airport sometimes and when that door opens and that air hits you, it’s like an oven door opening and you’re like, “Gee, can we get in a cab and let’s get going?”
In Singapore, the only difference between summer and winter is whether it’s wet or dry, so Darwin actually has a better temperature than a lot of those Asian countries, and Darwin is in Asia, you know, it’s less than two hours to Indonesia and it’s five hours to Melbourne. So, we are going to see – I think, about 15 per cent of the population in Darwin are from the Philippines. There is a very big Asian population and they are used to the climate, I think that’s what we’re going to see a lot of Asian people come here.
It’s interesting, you mention Singapore, I agree with you. Do you think this thing where Darwin is like Singapore, where retail is all about providing a great air-conditioned experience rather than online shopping, so that retail is actually still about the physical thing of shopping rather than online, do you think that’s still the case?
Maria, what we’ve seen some years ago, online started and a lot of people said it was the end of bricks and mortar retail, but it was the end of bad bricks and mortar retailers. When we had the lockdown, online absolutely boomed and people said, “That’s it, bricks and mortar’s dead.” But when you’re locked up in your apartment in Melbourne and you can’t go out, you will shop online, you don’t have much of a choice. What we’ve seen since it’s opened up, a lot of people who tried online, and I’m one of them, won’t do it anymore, because the shirts turn up, they’re the wrong size, the shoes are the wrong size, they’re the wrong colour. Also, a lot of people, particularly the younger people and girls, it’s socialising, they go out with their friends, they’ll try on the dress, have a bit of a talk and they have a bit of a coffee.
So, the turnover in dollars in bricks and mortar is growing at twice the rate now that online is. Actually, in America, Amazon closed down their first last mile depot warehouse in the Bronx. Federal Express have closed nine of their warehouses, they thought the way it was booming in COVID, it was going to keep going and it hasn’t, it has been reset. So, when you see Amazon actually have bricks and mortar stores, it shows you that online isn’t the be all and end all, it’s an important part… I know, myself, I have a farm not far from Brisbane City and of a weekend, if I want to buy something at Bunnings or Supercheap, I’ll get online and see what they have and then I’ll go and buy it. So you’ve got to have bricks and clicks.
I’m wondering if you have anything to say about the people turning up for the David Jones sale? Quite a traditional retailer.
We, we don’t own – we’re actually buying a shopping centre in Mackay that has Myer in it and we have seen turnover up 18 per cent this year, but off a very low base. They lost their way, you know, and as I said earlier, retailing isn’t finished, bad retailers are finished and you’ve got to keep reinventing yourself. The number of specialty stores, years ago, Myers and David Jones had everything and I saw in the Courier Mail, which is a Brisbane newspaper, a week ago it asked, “Do you shop at Myer or David Jones?” I think it was 93 per cent of people said yes – but they didn’t ask them how often. A lot of people will go there for the Boxing Day sales, or the sales, that is not their main shop – and that’s a question that they didn’t ask. You’ve got so many other specialty retailers that sell everything that Myer and David Jones sell, I think it’s very hard for them to come back.
Right. What do you think about – I know you’ve bought some accommodation for students, I’m just wondering what the thinking is behind that and whether or not it has anything to do with the fact that Darwin has the youngest population in Australia of a capital city?
Maria, the student accommodation that we have is part of Casuarina Square, so that’s how we got it, but since then we’ve been doing a bit more work and even during COVID it was running at 92-94 per cent in Darwin. So, I don’t know what…
Yes, occupancy. It’s now at 100 per cent. We have met with the Charles Darwin University, and I hope they don’t mind me saying, but their intention over the next few years is to go from 2,000 overseas students to 8,000. So there’s another increase of 6,000 students, let’s say that’s at least 4,000 residents. Now, they have to live somewhere, they do tend to live in smaller accommodation, I suppose maybe they like to spend their money on drinks and other stuff rather than accommodation, but there is an urgent need, so that will continue to grow. We’re seeing in – I won’t name the universities in Queensland, but there’s a university on the Gold Coast and they can’t take anymore students at the moment because they do not have any accommodation for them. So, it is continuing to grow. They haven’t come back as strong in Melbourne, and I think that maybe in Melbourne it was because of where they came from that that has been a bit slower to recover and they still have their own COVID problems. But certainly, in Queensland and Northern Territory, it’s come back very, very strong.
What sort of problems are you seeing in terms of developing these assets that you have? I mean, is there a labour shortage here that’s really affecting the construction sector as it is in other places around Australia?
It’s worse in the Northern Territory.
Why is that?
Well, I think, once again, if you’ve got to work on a roof, Maria, you’d probably rather work on a roof that’s 25 degrees rather than 50 degrees.
I don’t know, Melbourne and Sydney look pretty wet these days. I don’t think I would get up on a roof at the moment.
Yeah, probably some of those unionised workers sit at home and still get paid, but that’s another interview. We’re from Brisbane and we see there that you just cannot get tradespeople. The other thing that we have is the finishing trades, while the concreters and form workers, that may be easing off because there’s a lot of projects that aren’t happening because of the cost of funding and construction prices are up 40 per cent-plus. But in all of these flooded areas, the finishing trades, you’ll see the house has been destroyed so you’ve got to pull up your carpets, you’ve got to rip the plaster off the walls, the frame will stand there. So, there’s going to be work for years and years and years of people redoing the wiring, redoing the plumbing, redoing the painting. So, this shortage of labour is only going to get worse because we’ve still got places flooded down south, so people can’t get in there and work. The situation is terrible and it’s only going to get worse. In Darwin, it’s worser.
Even more worse. Where else in Australia are you finding it interesting to invest?
For us, it’s really – if you run a line from Gladstone across, so north of Gladstone, although we don’t own anything in Gladstone because it’s only 23,000 people and those areas are harder to sell, you just don’t… So, even though we’re not selling all the time, when you get a valuation done on your property, that affects the valuation if there isn’t a lot of buyers. So, we’re really Mackay North and I think if you have a look at where the wealth for Australia is being created, Maria, you’ll find it’s Mackay North. I know, as disgraceful as coal is, the Queensland exports this year are $79 billion. We could not survive without it. But then in addition to that, you’ve got the mineral province around Mount Isa, got $360 billion. Now, that was last year before the prices went through the roof.
So, I think Northern Australia, that’s where the growth for Australia is and we don’t have the competition. You have plenty of people who are prepared to buy in Sydney and Melbourne. Back in the old days, there used to be a saying, you don’t get sacked for buying IBM. If you bought the biggest computer company in the world, if it went wrong it wasn’t your fault. I think a lot of investors, particularly overseas investors, if they buy in Sydney or Melbourne and something goes wrong, well, it’s not our fault, they’re the main markets. As I said earlier, we’re an income fund, we’re looking at the high-yield, the high-distribution, so to get that you’ve got to go to the areas where other people don’t want to be. We’re very long in Mackay, Townsville is just absolutely booming…
What’s booming in Townsville, is it industrial properties…?
Absolutely everything. It’s the largest defence base in Australia. One particular property that we have there that does some work on vehicles for the army, as of earlier this year, all the parts they use have to be made in Australia. That was never an issue before, so one thing that COVID has done has made people reassess, well if we’re going to have some disputes with people, should we really be getting our spare parts and things from there? Then, once again, the minerals province, you know, all these things… General Motors was in the Townsville Bulletin a few weeks ago, they’re putting $169 million into a cobalt and nickel refinery at Lansdown Industrial Estate which is 40 kilometres inland from Townsville, then they’ll start making batteries.
So you’ve got all these sorts of things that people just don’t even think of and they’re coming from Northern Australia, Northern Queensland, Northern Territory… They’re not coming out of Sydney and Melbourne. And while these times are a bit difficult and everyone bunkers down in Sydney or Melbourne, it’s a wonderful time for us up north.
And just before we finish, I’m looking at your business card and it’s got NAAS on it, can you tell us what that is?
I thought you’d never ask, Maria.
It’s a company we started a few months ago called Northern Australia Accommodation Solutions. So, you were asking earlier about the employment issues up here and it is pretty bad and there was on the nightly news, Channel 7, a month or more ago, and it had the growth rates in Australia and I think it had Northern Territory at the slowest growth rate and the reason is, there’s no accommodation. You can’t get quality people to come up here if you don’t have accommodation. Now, I spoke to one of the larger builders and I said, “What are you doing about – what about modular?”, “Oh, no, you can’t do that.” Well, what is the definition of stupidity? When you keep doing the same thing over and over again and you expect a different result. We spoke about the shortage of labour, the shortage of materials… You know, the government are talking about the Northern Territory economy going from $26 billion in 2020 to $40 billion in 2030 and that’s 35,000 new jobs.
Well, the multiplier effect is normally three to five. You know, Maria, you come up, your partner comes up, your children come up… 35,000 jobs is 150,000 people. Now, the ABS at the moment says there’s 2.1 persons per household in Australia, so that’s 70,000 houses. Seventy thousand houses over the next seven years, that’s 10,000 a year. Now, they have a terrible wet season here, so you’ve got to have two to four months off, but let’s say it’s only two. So, you have to deliver 10,000 houses a year and you have 10 months to do it in, that’s 1,000 homes a month. 20 working days a month, 50 homes, every working day, for the next seven years – and if you don’t do 50 today, it’s 100 tomorrow.
So, are you building these homes or just – what are you doing?
We’re bringing in modular from overseas.
Now, last week we had some senior people from the Northern Territory government in Asia looking at the factory and when you talk about modular, most people think about dongers. This accommodation is so far from that, a 50-year structure warranty, they’re designed to meet up to 8 on the Richter scale…
Cyclones is nothing, these buildings laugh at cyclones.
If you saw what happened in Indonesia with the earthquake a few days ago, that was only 5.6 on the Richter scale, these buildings are designed for 8 on the Richter scale.
Right, where are they coming from?
Vietnam. Now, we’ve been over to the factory twice. One of the great things, all the senior management are Australian, so we’re not having to explain to them what our requirements are, they’re already doing a lot of work for the New Zealand Government, they’ve built hotels in Christchurch and Christchurch was demolished from an earthquake maybe a decade ago. Six years ago, they finished an eight-level hotel there, it has since sold twice, increased price each time. This is quality that you have never seen. We will bring these over and we’ll truck them down to – whether it’s Katherine or wherever it is and you will have tradespeople onsite for a week rather than six months.
Are you selling these homes or are you renting them out, leasing them out?
A lot of this we’ll do for the government, you know, our main business is in syndication and property syndicates. I said earlier with Casuarina Square, we get every man, woman and child comes to our shopping centre 5.1 times a month and spends $45. So if we get another 70,000 people living in Darwin, assuming 50 per cent of the population growth and they come 5.1 times a month and spend $45, that’ll be pretty nice for our shopping centre, Maria. But Northern Territory needs it, there is so much opportunity and as you would know, investment is mobile. If the government can’t accommodate those investments and regularly we had our prime minister at the Jobs Summit, the way to solve that is increase immigration from 160,000 to 195,000. There’s no accommodation.
I understand that accommodation is not just a problem in the Northern Territory, but also in the rest of the country, especially in rural areas because, you know, they have nowhere to put them.
Modular in Australia, typically, is not cheaper and there has been some done down south that hasn’t worked out well, so people are once bitten, twice shy. So we’ve been very selective at what we’ve looked at. I’ve looked at factories in Brisbane and it is certainly not cheap. It is convenient if a school room gets burnt down on a Thursday, they can have it operating on Monday and if you’re going to, as you’re talking about Maria, the regional areas, you can put them on a truck, take them out there – you know, the problem of getting tradespeople to regional areas, you know, we just discussed earlier how hard it is getting them to Sydney, Melbourne, Brisbane, Darwin, well you try and get them a few thousand kilometres… So, that’s when modular comes into its own. The benefit with Darwin, being in Asia, we have a price benefit that no other city has.
What is that?
It’s about 20 per cent. But with the modular, we’re not really doing it for the cost saving, even though there is a cost saving. There is just no other way that you can produce 10 houses a day or whatever you want to do, we just don’t have the people, we don’t have the materials. You bring this over and you can get that. Because most of the work’s done – now, there’s still work to do in Australia, we’ve still got to put the foundations in and we’ve got to run electricity, it’s not as if there isn’t any work, but the last things that unions should be worried about at the moment, is am I going to lose my job? You know, there’s too many jobs in Australia now, so we’re doing it a different way. We’ve had the government over there last week and this is quality that people just won’t believe until they see it.
Okay, great. Warren, thanks so much for being with us today, really interesting.
Absolute pleasure, Maria. Thank you.
Maria Petrakis | Eureka Report