Buildtec sees bright future in Adelaide property
With a 50 year legacy in construction and development, there is no doubt that Buildtec Group has become a leading light in South Australia’s property industry.
Established by Tony Carrocci as A.S. Carrocci Building Co in the 1970s, the company quickly built a reputation as one of Adelaide’s most innovative residential builders, delivering high-end custom houses and house and land packages across the City of Churches.
In the late 1980s, the company’s offering evolved to include commercial construction, a strategic shift that helped set it on the road to becoming one of South Australia’s top vertically-integrated construction and development firms.
Today, Buildtec’s suite of capabilities spans from detached housing, multi-storey residential and mixed use developments, high-tech industrial warehouses and shopping centre projects, with the company having delivered more than $500 million of developments across Adelaide.
And while that’s a strong foundation to build from, Buildtec managing director Anthony Carrocci said becoming an interstate or international juggernaut was not necessarily part of the company’s plan.
“We set a target about 10 years ago, with some advice handed down from our father; ‘hit a level that you’re comfortable with, and just maintain that’,” Mr Carrocci said.
“We probably hit that about two years ago - we have a decent workforce, we employ about 24 people, which for Adelaide is not a bad sized-construction-development business.”
Buildtec’s current scope of work is around 70 per cent residential - detached housing and apartments - with the remaining 30 per cent being industrial and commercial developments.
One of its current flagship projects is Norwood Green, an urban infill project that is regenerating the near-city suburb.
At Norwood, Buildtec is partnering with Catcorp to convert a former industrial precinct into a $120 million apartments and townhouses development, which will be complemented by a new ALDI supermarket and a range of hospitality venues.
Another project that has elevated Buildtec’s standing in recent years is its 354 Bowden precinct, a joint venture with Development & Advisory located on the corner of Fourth and Gibson streets.
Designed by architecture group, Hames Sharley, the 354 Bowden will comprise five apartment buildings, with the Buildtec JV having an end value of around $100 million.
Mr Carrocci said diversification was a big part of the company’s strength, with few of its competitors providing the full suite of services from land acquisition, planning, design, development and construction across both residential and commercial projects.
“There are builder-developers in the residential space and there are builder-developers in the commercial space,” he said.
“Whereas we transcend both and compete in both spaces.
“It gives us economies of scale and it also gives us more flexibility around outcomes.
“Sometimes you can look at a project slightly differently instead of wearing one particular hat.”
That experience is particularly handy in Adelaide’s apartment market, with the city’s notoriously steady median dwelling value providing slim margins for many development groups.
“In the apartment market, you almost need to be a builder- developer to make it work,” Mr Carrocci said.
“There have been a few people that have tried to be pure developers in the apartment market but we just don’t have the capital growth and the feasibility to make it stack up if you’re not a builder-developer.
“A lot of our better projects have been where we have partnered with government or community housing providers and unlocking sites that the rest of the market can’t get their head around or can’t do.
“In Adelaide, you do a reverse feasibility because you know that the revenue is not going to go up. So you work backwards and make sure you can make money out of it, because in the apartment market, the rates per square metre has been negligible over the last 10 years, relative to other states, yet construction costs have gone up.”
While Adelaide’s property sector, like most in Australia, had been affected by COVID-19, Mr Carrocci said Buildtec would continue to seek opportunities for growth.
Mr Carrocci said a structural shift to apartment living was in its nascent stages in Adelaide, with momentum starting to build and a recent oversupply of product being absorbed by the market.
“As a percentage of population, we’ve got quite a large over-55 demographic, and they are just realising now that they want to move into apartments,” he said.
“Adelaide has never really been an apartment-dwelling city, that’s why it’s probably taken that extra decade to become the norm.
“We had urban infill rezonings go through about five years ago and every man and his dog became a property developer.
“That led to a short-term oversupply but a lot of that has been absorbed now.
“The banking Royal Commission wiped out a lot of the so-called developers, and now COVID has created the perfect storm for someone like us to sit tight and be patient for competition to drop off to deliver new apartment projects, as demand increases naturally.”