SPECIAL REPORT: Taking a long-term view of WA’s development potential is paying off for Sirona Capital.
SPECIAL REPORT: Taking a long-term view of WA’s development potential is paying off for Sirona Capital.
In a landscape dominated by national institutions and foreign owners, local property investor and developer Sirona Capital stands out as an active player in the broader Perth and Western Australian property investment sector.
With a background in real estate funds management and investment banking, Sirona co-founder Matthew McNeilly said the group was focused on developments to create income generating assets and was willing to take a long-term view.
“It’s what I describe as an institutional model rather than a wholesale or retail type model,” Mr McNeilly said.
Since launching in 2010, Sirona has made investments based on several macro-economic themes.
“It’s no accident we have ended up with a pretty diversified portfolio of real estate assets as a result,” Mr McNeilly told Business News.
“We are not beholden to a specific asset class.”
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Sirona’s first investment theme is based on the general shortage of large lot industrial land supply in and around Perth, which prompted its earlier investments in Bullsbrook and Muchea, now held by Sirona spin-off Harvis Corp.
Sirona also has a focus on strategic metropolitan centres and the potential to create urban renewal, which helped drive its biggest investment to date in Fremantle.
Related and supporting themes include WA tourism opportunities, based on Mr McNeilly’s belief that the state offers a unique tourism experience to travellers, and participating in opportunities that create density within greater Perth, in step with current government policy.
Finally, Sirona invests in assets that are resilient and able to survive economic troughs.
“Key to our investment approach is it has to be able to survive cycles,” Mr McNeilly said.
“Cycles in Perth come and go, but they tend to be much shorter and sharper here, so you have to build a pretty robust and diverse business model to, not only succeed, but to survive.
“We have just had as tough a five years as I can remember with significant headwinds in a number of areas, but we have managed to build a business even against those.
Sirona’s biggest project, the $270 million Kings Square development in Fremantle, is under construction and scheduled for completion in early to mid 2020.
The Kings Square development will create 20,000 square metres of office space – leased to the Department of Communities – across two buildings, as well as retail facilities, refurbishment of the 830-bay, multi-deck Queensgate car park, and a new City of Fremantle administration centre.
Sirona’s big investment in the port city (it also developed and owns the Quest Hotel in Fremantle) is being followed by other opportunities.
The Quest Hotel was completed in December 2016 with operator Quest on a long-term lease.
Sirona controls the Adelaide Street shopping centre and has recently agreed the surrender of the lease by Woolworths.
It is aiming to repurpose the building, most likely as further office space.
“My view of Fremantle is [that] taking 1,500 government office workers there will support additional commercial activity,” Mr McNeilly said.
“Many ancillary suppliers will want to relocate near to Department of Communities and there is almost no contemporary office accommodation in Fremantle at all.”
Sirona also has a residential development pipeline around Fremantle.
“It’s a natural progression from what we have done in the commercial space,” Mr McNeilly said.
“My view is people are going to want to live there once the urban renewal has taken hold.”
Mr McNeilly is optimistic on Perth commercial and residential real estate and is scouring for further opportunities now to help meet an improving future market.
“My level of confidence now is probably as high as it has been in five years and we can certainly see that the tide has turned,” he said.
“I think there is a general level of confidence across the market being fuelled by new investments we have seen in mining projects.
“Typically there will be a 12- to 24-month lag before you see that playing out in real estate, but it feels to me like there is better prospectivity around things like population growth than there has been for some time and that ultimately will lead to positive outcomes for real estate.”
