Australia's top developers acknowledge impact on potential buyers after Opal, Mascot Towers apartment defect news

Australia’s top developers have acknowledged the risk that buyers wary of high-profile defects could turn away from even the best quality units.

Sydney’s property market has been rocked by news of unprecedented building defects over the past year with hundreds of residents evacuated from the Opal Tower at Sydney Olympic Park and the Mascot Towers at Bourke Street. Meanwhile, another two separate apartment blocks in Alexandria have also raised concerns.

While experts have previously tipped buyers would become increasingly wary of new builds, developers have weighed in on the impact to industry. 

Stockland chief executive Mark Steinert agreed there was a risk the recent apartment woes could tarnish large developers in the minds of some consumers.

“I think there’s always a risk of that,” the head of Australia’s largest residential developer told Domain on the sidelines of a Property Council lunch in Melbourne recently. 

“The more probable [outcome] is a flight to quality, where people are going with trusted brands.

“Typically when markets are more challenging or when you have an issue like that, consumers become that much more discerning about where they focus.” 

He backed apartments as a “reliable” form of housing, if they were built and designed correctly.

“What some of those building faults are illustrating is some of the product has not been built necessarily as well as it should have been,” he said.

“I’m sure out of this you will find disclosure documents will become the norm, and strata corporations will have to get engineering reports and independent reports and verification history of who the builder was, and who the architect was and who the developer was.

“Ultimately the people who deliver these projects have an obligation to build a safer product.”

Mirvac has taken the uncommon step of enabling apartment buyers to meet the builders of their new homes at its St Leonards Square project in Sydney’s lower north shore. 

“We recently had a settlement night for the St Leonards customers and they were able to meet our St Leonards Square construction crew team,” Mirvac chief executive Susan Lloyd-Hurwitz said after a topping out ceremony for the project. 

“The team had nearly 150 years of Mirvac experience between them.”

She highlighted the importance of developers and builders adhering to stringent processes.

“At least 70 per cent of the value in a built structure lies out of sight, placing the onus on the builder and developer to do the right thing when nobody is looking,” Ms Lloyd-Hurwitz said.

“So much of a building’s integrity, and a company’s for that matter, comes down to the people behind it, whether it’s the architect, the supervisor or the tradie.”

Frasers Property Australia residential executive general manager Cameron Leggatt said while his company had seen a pick-up in inquiries and sales post-election, there was “no doubt” buyers had become more cautious.

“They’ve obviously seen some of the stories about Opal … they’re maybe a little bit conservative and a little bit nervous about making the decision,” Mr Leggatt said. “There’s more nervousness in the market about transacting.”

July was the strongest sales month nationally this year for the Singapore-backed developer, he added, with most of the strength recorded from the eastern seaboard, and the Burwood Brickworks project in Melbourne’s east had almost sold out with just six apartments across four buildings remaining. 

Mr Leggatt said the greater industry felt the effects of the building defect news.

“There’s no doubt that we see flow-on effects from it and we are seeing it in the sense that people are asking more questions, they want more details around how we are managing it. We can talk to our track record and experience,” he said.

“For a company like ours, there’s robust and stringent processes … it can get the buyer a lot of comfort but there’s no doubt having issues like this … makes them nervous about the process.”

Lendlease residential global head of product and sales Ben Christie said the developer had not seen a decline in interest in its products despite the defects news.

“It’s our experience that in a risk-averse market, buyers naturally gravitate towards a quality product. We’ve not experienced a decline in interest in our properties,” Mr Christie said.

With Elizabeth Redman