Development expert wears more hats than a milliner
Property expert Gavin Hegney shares best the prospects within the Perth and national property markets, provides some insight into his long-running and diverse career, and his investment strategies.
As the author of The Residential Property Market, familiar voice on ABC Radio and prolific byline across the business pages of leading publications, Perth’s Gavin Hegney is a nationally respected and trusted independent voice on all matters property in Australia.
A successful investor in his own right, Mr Hegney’s insight into property development is underlined by a board position with one of Western Australia’s premier property developers. As judge of a major national property development award, he keeps abreast of the latest innovations and design inspirations shaping the Australian property sector.
We caught up with Mr Hegney while he was taking shelter from a temporary COVID-19 lockdown in Perth on a windswept beach in Lancelin, 130 kilometres north of the city, to discuss, amongst other things, his diverse career, prospects within the Perth and national property markets, and the absolute importance of nailing that first major investment – the family home.
Within the property sector you seem to wear quite a few hats - property analytics and forecasting, media, research, buyers’ agent, valuer, board member, to name a handful. In terms of where you are now at in your career, what is your primary focus?
During my time in the property industry, I have been fortunate to have a variety of roles.
The diversity and complexity, along with learning how to set up, operate and grow a business, has given me an appreciation that the industry is capable of catering for all personality types with a wide range of skills. Today as a board member it’s all about making sound property decisions, drawing on experience that has often been gained by learning from poor decisions I’ve made.
I also find it hard to walk away from a person who is making a property decision, particularly a first home buyer. Assisting people to make well informed property decisions will always be a responsibility I’m happy to carry, given my experience.
Although you are Perth-based, you also have national roles that give you broad an insight into the market. Where do you see the greatest opportunities for investors in 2021 and beyond?
To solely look at a local market is to miss the balance and perspective of the national market.
The low interest rates of recent times have decreased the cost of housing by up to 50 per cent. Every $1m of debt cost around $45,000 per year in interest four years ago but today it’s closer to $20,000. That’s where the opportunity is in these market times. Tax free capital gains on your principal residence become very attractive if you wish to live in a home in a location that is an appreciating property. Conversely, it’s also an excellent time to greatly accelerate the repayment of debt.
With regards to the Perth market, which is being widely tipped to experience significant growth, have you identified any specific suburbs/areas that buyers should looking at (perhaps different for first home buyers v investors)?
In a normal market, 80 per cent of buyers are simply buying a home to live in. So, if you know where buyers are trending towards and chasing the property type and location that has restricted supply, you can benefit greatly with growth. This especially true while holding costs are so low.
Where are people going to want to live? Regional areas are very interesting in this regard right now, yet could become situationally dangerous if the vaccine works very well with a strong uptake and things get back to normality.
In Perth, the northern coastal beaches are always sought after and there are a wide range of prices. Higher-end areas ranging from City Beach, Scarborough, Trigg, North Beach extending through to the outer northern beach of Yanchep where there is to be a rail extension look tempting. Along the way there is a new marina with great facilities being commenced at Ocean Reef.
South of the Swan River, a rejuvenation of Fremantle is also underway that is worth a look.
You've told API Magazine that you regard the home as the foundation of any wider property investment portfolio. Can you tell us a bit more about what exactly buyers need to get right to ensure they have the basis for a sound investment strategy?
Often people opt to invest in a second or third property, yet their own home has not been maximised. Sometimes it’s better to buy a better home as a gainer than to buy more investment properties. The ideal principal residence is a desirable constrained location where the building meets your needs, yet sits on a lot that has development potential.
The land appreciation will also be your tax-free financial future.
Is there an optimum number of properties that comprises a successful portfolio or is it a case of 'how long is a piece of string'?
I’ve always favoured a small, select approach to investing rather than mass numbers. This boutique approach has resulted in outperforming the market, especially when balanced with a timing strategy.
You're a judge with the Urban Development Institute of Australia (UDIA), the development industry’s most broadly representative industry association (with more than 4,500 member companies). What does this entail and how do you differentiate between the subjective and objective in the judging process?
Judging has given me great insight into the variety of thinking that goes into a successful project — who has it? who is still learning? It also shows how concepts translate into reality, which is vital to know when making investment decisions.
The Western Australian property development market has been languishing compared to the rest Australia, so to be a successful project in Perth it must be exceptional. So, it is actually that downturn period that has over the past couple of years seen WA projects take out the top national awards. If you want to see the best in innovation in Australia right now, Perth’s new projects are worth a look.
As a board member for property development company Gold Estates, can you share with us your thoughts on the current residential development landscape and some of the challenges facing commercial developers as the world grapples with lockdowns and changing consumer behaviours?
The development industry’s focus rarely changes. It’s about buying the right property at a price that has good profit potential, and the market timing needs to be right. Developing into a market headwind erodes profits. A rising market tailwind creates super profits. Patience, discipline and knowing how to take a risk are essential skills.
Can you tell us a bit about your role at the Salvation Army and whether the real estate industry as a whole has a role to play in addressing issues like homelessness?
Everyone has a role to play and an opportunity to put back in when the situation presents itself. I’ve spent a number of years assisting the Salvation Army, with business decisions and structures that generate the best property results. This has since been handed onto others’ capable hands to continue.
When we take business and investment risks, we often only need a few things to go wrong at the wrong time and we can quickly find ourselves in a difficult bind. We must always respect that that can mean the difference between having a great lifestyle or struggling. I believe some part of all our successes should used to assist those who have fallen victim to unfortunate circumstances.