David Harrison, industry titan, Charter Hall chief and Property Council national president, is famed for his shrewd leadership and long-term view. As he stares at the horizon, what does Harrison see?
As managing director and group CEO of a company with a portfolio of 1,500 properties and $53 billion of assets under management, Harrison is a skilled captain. And after more than three decades riding the waves of real estate, Harrison doesn’t lose much sleep.
“But I tend to sleep well,” he says. Despite the current lockdown in New South Wales, Harrison believes Australia will manage the ups-and-downs ahead over the next few years and remains calmly confident in Australia’s place as an investment safe haven.
“We’ve all done it tough, and in New South Wales it looks like more tough times are ahead. But demand from foreign investment capital is as strong as I've ever seen it,” he notes.
“There’s significant levels of demand domestically from mum-and-dad investors right through to industry super funds. Generally, we’ve got a significant excess of investment demand across all sectors, and that’s driving strong growth in pricing, even with the challenging backdrop of COVID.”
There are, he admits, some choppy waters ahead. Australia’s population has fallen for the first time since World War I, and Harrison expects a “hangover” ahead as we manage a migration deficit. Similarly, state government tax hikes are a headache, acting as an investment disincentive when Australia needs to step up development to address affordable housing and last mile logistics challenges, he says.
While Harrison expects GDP growth and inflation will increase by “relatively large percentages off low bases” over the next three quarters, he is not “too concerned” about longer term inflation. “Wages growth will have to rise hard before the Reserve Bank reacts,” he observes.
“Productivity improvements from technology are deflationary. Flat screen TVs are cheaper than they were 20 years ago. We're not going to have zero interest rates forever. Neither will we see cash rates jump back to two or three per cent. We are in a relatively benign period for the next decade.”
Harrison was elected national president at the end of March, supported by The GPT Group’s Bob Johnston and Brookfield’s Sophie Fallman as vice presidents. This marks the beginning of another chapter in a 33-year career that started on sales sites and in the back of auction rooms in Nabiac on the New South Wales north coast.
With real estate developers for parents, property is in Harrison’s blood. After studying property economics at what is now the University of Western Sydney, Harrison went to work for Raine & Horne under the tutelage of Max Raine. After a short stint as a valuer, Harrison ran the firm’s commercial division. He took an equity stake when Raine & Horne Commercial was bought out by Hong Kong-based First Pacific Davies and then later sold to Savills.
When he joined Charter Hall in 2004, it was a small private real estate fund manager. It listed on the ASX six months later and has since matured into Australia’s largest property group by funds under management. Charter Hall is not only a REIT itself, but also manages three other listed AREITs.
“Charter Hall is one of the few companies that can say we are in a better position than we were pre-COVID,” Harrison says proudly. What does the future look like for Charter Hall? In the world of funds management, Harrison expects larger players to “get more of the pie”.
“As we've seen with the two ‘big Bs’ – Blackstone and BlackRock – the dominant investment managers across sectors will get bigger and bigger. The number of managers that big pension funds and sovereign wealth funds use will shrink.”
With an incredible instinct for the market, Harrison has a single word of advice for ambitious property professionals starting out: Preparation.
“Do your preparation before every call with a customer and for every internal meeting. Do your thinking around the subject matter. Don't just turn up and babble on. It’s not hard – everything you need to know is on the Internet – but there are no shortcuts,” he warns. “Those that put the work in will get the dividends.”
Harrison also urges property professionals to take what he calls a ‘plus-two view’.
“Every time you have a conversation with a customer, once you’ve got through the subject matter at hand, ask two questions about their business. This shows you are interested in them, and you’ll learn something new about their business. It’s pretty simple.”
David Harrison will be sharing more insights into the decade ahead at The Property Congress from 25-27 October. Registrations are currently sold out, so join the waitlist to be the first notified as more tickets become available.