Buyers’ agency and developer Momentum Wealth has braved Perth’s patchy apartments market with a new syndicate, raising $6.5 million from investors for a 40-dwelling project in Highgate.
Buyers’ agency and developer Momentum Wealth has braved Perth’s patchy apartments market with a new syndicate, raising $6.5 million from investors for a 40-dwelling project in Highgate.
While many developers are shying away from project launches, managing director Damian Collins said the decision to launch the syndicate, known as the Silk Oak Fund, followed sustained inquiry from clients.
It also coincided with the closure of one of Momentum Wealth’s previous apartment syndicates, at Carine Rise, while construction is expected to start before the end of the year on a 36-dwelling syndicated project in Samson.
The new Highgate project is proposed for Wright Street and will be assessed by the metropolitan central development assessment panel in coming weeks.
Mr Collins said Momentum Wealth would continue to sharpen its focus on development opportunities in 2016, depending on client support, but the agency would continue to be selective about the projects it chose.
“It’s got to be a premium product, and it has to be in the boutique space,” Mr Collins told Business News.
“I don’t see us going into the hundreds of units in the city-type space, but we’re really trying to provide premium boutique projects that have not only good buyer demand but are also going to make investors and our team feel proud we’ve built that and really improved the community in that location.”
While Mr Collins acknowledged current conditions in Perth’s apartments market were not exactly conducive to new development, he said the sector had evolved rapidly in the 10 years since Momentum Wealth was established. “If you look at the market over that period, it has been a mixed bag,” Mr Collins said.
“There is certainly more life in a lot more areas than there was 10 years ago, but (apartment development) is still very much in its infancy.
“In those days it was more a villa/townhouse market unless you were right in the city.
“If you were in the suburbs, there wasn’t that much apartment stock.
“There have been some good zoning changes over the past decade which have helped that, some local councils have been quite proactive, others less so.”
He said Momentum Wealth had ambitious growth targets for the next five years – aiming to triple its turnover and inch closer to revenue of $100 million per year.
“The good thing about our business model is we are not just a syndicator and we are not just focused on residential, we are going to move our focus for the clients where the best opportunities are,” Mr Collins said.
“We don’t have to keep doing deals and we are very selective about the properties that we choose.”
On the commercial side of the market, Mr Collins said clients were continually inquiring about investing in well-leased retail assets, which were seen as safe investments at any point in the property cycle.
“Residential is probably at the bottom, but demand is really strong on the commercial side for anything with a tenant,” he said.
“Not office, but in terms of retail or industrial, with interest rates so low there is yield compression.
“It’s a strange market, rents are coming down, but investor demand is very strong so you’re often still competing on well-leased properties.”
