Path less travelled providing big benefits for Queensland developer
Mosaic Property Group founder and managing director Brook Monahan reflects on the unorthodox strategy that’s created a billion-dollar behemoth in Queensland luxury development.
For many property developers, South East Queensland’s insatiable buyer demand and rapidly rising prices would seem to be the stuff of dreams - a once-in-a-generation boom being the ideal foundation for sustainable long-term growth.
But not so for Mosaic Property Group founder and managing director Brook Monahan, who has taken a decidedly unconventional approach to his near-two decades in the property industry.
“My view is that the most challenging part of the cycle to be in is probably the stage that we’re in right now,” Mr Monahan told Australian Property Investor Magazine.
“And that’s because we don’t get as much of a competitive advantage as we typically do at other points in the cycle, because most projects are currently selling regardless due to undersupply and surging demand in certain regions.
“We’ve sold out of everything and have this massive pipeline of projects under construction, but we are competing against many less sophisticated developers who have got access to capital but don’t necessarily have a track record that would suggest they can deliver a good quality project.
“Many new entrants are overpaying for sites and in my opinion, they’ll have to make decisions to compromise or to deal with the fact that they’ve overpaid when it comes time to build these projects, because they will eventually realise that their feasibility doesn't stack up and they can’t get funded.
“What that means then is they are likely to disappoint buyers, so we would much prefer, believe it or not, to participate in a market that’s more challenging, because we are able to derive a stronger competitive advantage with our brand.”
Mosaic enjoys a status as one of Queensland’s pre-eminent development groups, with the vertically integrated company having designed, developed and built more than $1.3 billion worth of luxury apartments and townhouses across the state, and boasts a future pipeline also worth more than $1 billion.
That success, Mr Monahan said, can be attributed to a willingness to do things a little bit differently.
“Some people get into property as a means of creating wealth as their key driver,” Mr Monahan said.
“I went in wanting to build a business, and you don’t go into business for nothing, you do it to make money, but I had a genuine interest in building and had a genuine passion for design and creating buildings that people wanted to buy into and wanted to live in.
“That actually was my core driver first, rather than ‘how do I make money out of this?’
“For the first few dozen projects, we operated off of a much smaller margin than a lot of people we competed with, because we actually took a long-term view to build a brand; not to maximise every single individual feasibility for our own gain.
“I’m not saying it’s the right path, but that’s absolutely the difference between our path and a lot of others who struggle to survive through multiple cycles.
“We have built a brand and a business around people knowing that we would always design and deliver really great projects. The market trusts us to do what we say we are going to do”
Finding success through not following the path of others has been a constant in Mr Monahan’s career.
Mr Monahan studied Ag and Agribusiness at university, and spent a stint mustering cattle on stations in Queensland’s Far North, prior to starting a business in development, design and construction around 19 years ago.
“I had a passion for it and for whatever reason had a knack for it,” he said.
“I had no formal qualifications in construction and development whatsoever, no one led me down the path in my family and I did not come from money, but I always worked really hard and liked working with my hands and creating stuff that I was proud of.
“I always had a strong attention to detail and cannot stand things not being done well. I was the guy at college who always had a spotless room even though I copped a bit of flack for it.
“Having an eye for detail, doing things properly and doing things well has always been a big part of my personality, which I think crossed over well, even though I had a lot to learn about design and construction at that point in time.”
Mr Monahan said at the same time he started his construction company, he also established a series of other auxiliary businesses, including a chain of butcher shops and a meat company, a funds management business business and a legal firm.
He said the lessons learned through setting up those companies, and particularly the challenges and failures he met along the way, helped shape the success and future strategy of Mosaic.
“It was that cross-section of skill-set and experience which I think applies really well to what we do now.” Mr Monahan told API.
“In property development, to be really good at it for a long period of time through multiple cycles, you have got to have a pretty diversified skill set, because it requires you to be good at a lot of different things.
“And if you are weak in any of those areas, it can really bring you unstuck at different points in the cycle.
“That’s why you don’t see many private developers survive and prosper for multiple decades through multiple cycles, and that’s because of the breadth of the skill set required.
“You don’t have to be the best at all of it, but you do have to be pretty good at finance, design, people management, legal, you need to understand planning and delivery, and even if you don’t have your own construction business you need to understand construction and you certainly need to understand the importance of detail.
“And you then also need to understand marketing, branding and sales.
“You don’t often find people who are good at sales, finance and design who also know how to build stuff and are practical with their hands.”
Mr Monahan said a key element of his development strategy was to never get ahead of himself, instead focusing on getting the best outcome for the current projects in the Mosaic portfolio.
Elements that shape Mosaic’s growth strategies include careful analysis of the areas where people would most like to live and underlying dwelling supply, as well as a thorough understanding of what point the property cycle is currently in.
“You are only as good as the current project you are delivering, and if you don’t deliver that well, it doesn’t matter what grand plans you have for the future, as you will come undone pretty quickly,” Mr Monahan said.
And while many developers’ involvement in the projects they deliver concludes at the same time as settlement, Mosaic manages each development for a minimum of 25 years post completion, while Mr Monahan and his fellow directors often invest in the apartments themselves to retain long-term.
“There are certain bits of real estate, and a lot of the real estate that we buy, that is really difficult to replicate,” Mr Monahan said.
“We’ll buy sites that are in really unique beachfront, riverfront or city-side locations, that we just know that we might not get the opportunity to buy a piece of real estate like that and produce a luxury apartment project like it again.
“In a lot of regions where we know that we will build the best product on a piece of real estate where supply is constrained and future opportunities are going to be really challenging, then we will hold product in apartments within those projects because we know over time that real estate will continue to go up in value.
“I’m keeping an apartment in our riverfront project at Maroochydore, one in our new project that we just sold out in Mermaid Beach, one in Burleigh Heads on the beachfront down there and I’ve also got one that overlooks the river in Toowong.
“I will keep property that I think is going to always be in demand and that people will always want to live in, because they will always go up in value.”