How do you adapt as risk becomes reality? It’s a question that occupies the mind of CEO Cameron Holt as he pursues an aggressive growth strategy at AVID Property Group.
Earlier this month, ASX-listed Villa World agreed to a $293.6 million takeover deal as AVID looks to expand its house and land business.
AVID has been on the hunt for assets since Investa sold its land development business to US-based fund manager Proprium Capital Partners in 2015.
Holt says the acquisition brings together two strong performing and complementary businesses, both representing around 7,000 lots – although AVID’s nine projects are larger in scale and value than Villa World’s 25.
Among AVID’s $3 billion portfolio of broad acre and medium-density, residential and industrial projects is Harmony on the Sunshine Coast, which will be home to 12,000 people and Queensland’s first linear park.
“AVID’s is a story of growth. We have new owners and a well-capitalised business,” Holt explains.
While Holt has his sights set on growth, he is also cautious about the property industry’s fundamentals. The Australian Prudential Regulation Authority’s decision to loosen home loan restrictions, the Reserve Bank’s interest rate cut and the “post-election bounce in sentiment” are all positive signs, he says.
“But we are waiting to see this convert into extra sales. We are just not seeing the activity we need to say we are confident in the industry’s future and the economic wellbeing of the country.
“If we don’t see demand improve, we can expect a quiet period for the construction industry – which is a worry given our contribution to the broader economy.”
Holt admits he is “natural-born worrier”.
“We work in an industry that is high risk and high returns. And I’m not a natural risk taker, so I worry a lot. But lying awake at night prepares you for possible risk mitigation strategies and gives you the chance to explore different ways to do things.”
AVID has a growing list of case studies of this approach in action. At its Brentwood Forest project in Queensland, for example, an unviable commercial development evolved into small lot house and land offerings – the Tempo Living Homes collection – not previously available to first home buyers and investors in the area. AVID laid out the case for the long-term benefits to Ipswich Council, and the model has since been adopted throughout the growth corridor.
“How do I flex our strategy to adapt as risk emerges as a reality? This is a question I continually ask myself,” Holt says.
“We learnt a lot from the global financial crisis. Coming through that taught us to be flexible. Our business has become adept at having alternative strategies in the top drawer for when something goes wrong – we do a lot of work preparing for plan B, C and D.”
AVID is currently exploring co-living, student accommodation and prefabricated housing, which Holt predicts will accelerate over the next three years as “we look for more affordable housing options and typologies”.
Build-to-rent is also on AVID’s radar. “We are not aggressively pursuing it, but are watching the market with a great deal of interest. We can see build-to-rent providing returns and more affordable housing. It’s well suited to Australia, but there are a lot of issues to be confronted.”
Holt is a champion of urban densification, which he says can address housing affordability, connectivity and liveability in Australian cities. While the demographic shift to apartment living is well advanced, the cultural shift will take time, he says.
AVID plans to increase its stock of medium-density, multi-residential developments in middle ring suburbs where there is ongoing demand for quality apartments. The Rathbone in Sydney’s Surry Hills is the developer’s first foray into this market, with a $60 million terrace-style project on a vacant 990 sqm block.
AVID’s strategy is also underpinned by a commitment to diversity. Forty-three per cent of AVID's executive team is female, and women account for 53 per cent of its workforce.
“We’re very focused on diversity, not just gender diversity, but also on diversity of thought, age, background, culture and opportunity,” Holt explains.
Holt started his career as an urban planner in local government, something he looks back on with fondness. “It was a solid foundation for a career in property,” he says, although he admits he found the “friction” of local government “frustrating”. He later “dabbled” in private property development before moving to senior roles with Mirvac and then Investa Property Group in 2006.
“I found the move into the property industry enlightening. Everyone was moving together in the same direction, producing a tangible outcome – something they could point to – and I found that very satisfying. While I don’t need a monument to me, I have always enjoyed being part of that.
“And seeing the smiling faces of the residents we’ve created new homes for is a real joy. I’ve done this for over 20 years, and I still get up each morning and like going to work.”