Finding Middle Ground

“There’s been too many examples in the past where we as an industry haven’t done it well enough.” Monahan says. Hence why the community in some instances are rightfully suspicious of
density.

“You can’t just afford to stuff it up over and over again.”

Monahan, who founded Mosaic Property Group in 2004 and is its director, openly admits that some sections of the development industry have taken the public for a ride.

“I think too much in the past, industry has waited for governments to take the lead on how we engage the community,” Monahan says. The father-of-four who lives with his wife Kathryn on the Sunshine Coast, says Mosaic has developed projects worth about $1 billion since 2012 and has made community consultation a central focus of his company “not just a token vision”.

He points to its luxury, 56-unit development Drift on Coolum’s beachfront. He claims to have spent months consulting with the community before the $52 million project was even put before council, with changes based on feedback including improved landscaping and privacy. Despite a project from another developer on the same land being knocked back previously, Mosaic managed to get Drift off the ground and is now planning a second tower in Coolum.

This mentality, Monahan says, has gone right across the company, with a special unit within Mosaic specially dedicated to talking to communities about projects.

“We still invest heavily from the early stages in trying to understand what the community would want from this development,” Monahan says.

“Their voice is considered before that design is finalised, not after it when the developer is trying to get the community onside so they can get their application through.

”This is what we’re trying to prove as a precedent for other private developers to follow.”

Monahan made his start in property by subdividing suburban lots in the early 2000s, before focusing on a mixture of affordable and luxury apartments.

Mosaic now has a turnover of $250-300 million a year, with emphasis since the Global Financial Crisis (GFC) on places “where people want to live”, he says.

For developments on the Gold and Sunshine Coasts, that means beachfront apartments.

In Brisbane, Mosaic looks for projects in so-called middle-ring suburbs that are two to five kilometres from the CBD, which Monahan calls the “sweet spot” for desirable living.

The company, which now employs 120 people in south-east Queensland, has ambitions to build and manage another $1 billion in residential projects by 2025, including Sinclair, on the East Brisbane site formerly subject to a dual-tower proposal by troubled developer Blue Sky.

Mosaic’s proposal is for 122 units across two towers, 34 units less than Blue Sky’s plans, but Monahan says the units are larger and the twin buildings fitted with more shared facilities.

“We looked at that site a long time ago, including when Blue Sky looked to purchase it initially,” Monahan says. “What was designed for that site (by Blue Sky) was not what the site demanded, nor what the local demand was asking for. The reality is Blue Sky designed a product that is predominantly for investment and rental purposes.

“That’s why their formula didn’t work in the end, because that market had come off so hard in Brisbane in late 2017 and 2018,” Monahan says, referring to the apartment glut which hit Brisbane around that period.

“(Investment and rental) completely evaporated, whereas our (owner-occupier) business has grown quite substantially in this market in Brisbane over the past two years.”

Focusing on the middle of the market was itself a lesson Monahan learnt during the depths of the GFC, when Mosaic reduced its focus on both lower-end and very high-end apartments, instead consigning itself to the centre of the market.

He says Mosaic will continue to alter its strategy, insisting any developer that claimed to have solved the puzzle of market demand was not telling the truth.

“You have to evolve really quickly because the demands of our staff, the demands of the community, the demands of the industry and the demands of our clients are growing at such a rapid rate,”
Monahan says.

And despite the lower margins and greater competition, the development industry faces in south-east Queensland he says Mosaic had no ambitions to try to have a crack at the southern capitals.

“There’s no doubt if we had invested the same resources and money into Melbourne and Sydney in the last eight years, we’d have a substantially more profitable business,” he says.

“However it’s not where we want to live. That opportunity (of Sydney and Melbourne) is coming to south-east Queensland in the next five to seven years.”

Source: Courier Mail Queensland Business Monthly – 28/02/2020