As the coronavirus epidemic slows down global trade and grinds on economies, there may be an upside for WA according to the head of one of WA's biggest apartment developers.
Fresh after posting a $6.6 million profit from July to December 2019 Finbar managing director Darren Pateman said despite global uncertainty he predicted Perth could benefit in the long-run if governments started spending big to get their economies back on track.
Finbar’s Pelago apartments in Karratha
"It’s incredibly difficult to predict or adequately prepare for possible impacts because this is really uncharted territory. At this stage, we’re undertaking fairly standard scenario planning for the possibility of operating in softer economic conditions," he said.
"In the long-term, however, we see only good things for Perth.
"We’re confident overseas governments will seek to stimulate their economies through infrastructure spending and that will have very real benefits for WA.
"For Perth property, we’re optimistic that any short-term impacts will likely be offset by the longer-term benefits of Australia being seen as an even more attractive destination, particularly among Asian buyers."
Finbar's half-year profit jumped nearly $5 million from the same period in 2018 thanks to revaluations of two properties in its portfolio.
Finbar's Fairlanes tower in East Perth revaluation resulted in a $6.2 million increase to the property.
The company's Pelago residential properties in Karratha added $1 million to its value but the commercial aspect dropped $495,000 in value.
Finbar’s Civic Heart will be its largest ever project. Credit:Finbar
The Karratha property became a focal point for the Pilbara town's tanking property market during the resources downturn but was now worth $56.82 million.
Mr Pateman said commercial remained a tough market in Karratha but that was no different to Perth and other parts of the state.
"That said, in the last six weeks we’ve seen a noticeable increase in commercial leasing activity in the town so we’re hoping this will be reflected in valuations moving forward," he said.
"Despite the downturn that was experienced in Karratha, Pelago remained effectively fully occupied and over the last 12 months we’ve been able to increase rents in line with greater demand."
Mr Pateman said the property would continue to perform strongly and he was optimistic about the Karratha's future over the next five years.
"The outlook suggests Karratha could soon be in a similar position to where it was seven years ago, with high demand but a lag in supply," he said.
"We are very bullish on Pelago moving forwards and feel it’s well-positioned to benefit from the tightening market."
Back in Perth, the company is wasting no time with its Civic Heart property, just weeks after WA Planning Minister Rita Saffioti swooped in and approved the controversial development after years of planning stalemates.
Mr Pateman said the project had already attracted 5000 enquiries and Finbar was hoping to have a soft project launch within weeks.
"Our capital management is focused on ensuring we break ground this calendar year. Civic Heart is a large project with a big basement so we’re expecting it will take some 28 months to complete," he said.
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