Staying the same is going backwards. 24/09/12

Sometimes you have to take time away from cutting deals and building portfolios and do a little something for yourself. That Philosophy lead me to Sydney this weekend for the 2012 Tough Mudder competition. A 20 kilometre run littered with obstacles like fire and ice baths, and huge jumps into ponds, and crawls through tunnels. Not to mention the two rounds of 10,000 volt electric shocks and what can only be best described as a crawl through a “mile of mud” literally. Thanks to my team and a very positive attitude we managed to run the course in a respectable time and got through every obstacle put before us. In hindsight the decision to participate was not really the wisest, but then life does begin outside the comfort zone.

The following day was spent in recovery, and by this I mean catching a ferry from the south shore to Manly to eat a spectacular lunch by the beach and try to get feeling back in the body. The ferry ride gave me the opportunity to take in the sights of Sydney, which is something I have done many times, however this time was a little different. I noticed the way the city had spread itself along the coast line on both sides of the harbour. How the accommodation and homes of Sydneysiders were most prolific along the cliff edges and shorefronts along the way. The size, height and designs of the apartments really hammered something home to me this weekend. Something that I had greatly ignored on my many past trips to Sydney. They have evolved in terms of an apartment lifestyle much better than Melbourne, and as a result are far better poised to deal with tough economic times. Let me explain why.

Sydney as a city is somewhat larger than Melbourne. Split into two sections by the Harbour. There are a number of high rise buildings on both sides of the city and the actual city itself stretches for quite some distance. That’s a lot of offices, apartments, hotels, Cafes and other assorted businesses that operate and thrive in this bigger than Melbourne city. It takes a few people to run those businesses and as such these people probably wouldn’t want to live that far from work, as most of us don’t.

Like any city the location of housing in proximity to CBD generally drives price, and availability is at a premium. The resolution for this problem is to build as many separately titled properties on what were previously single titled pieces of land as possible. In short, multi residential. And the best way to get a high number is with high rise. For the most part it pleases those looking for a home close to city but willing to compromise by not having land or a standalone property. However there are a number of people that feel this development somehow cheats them of value and lifestyle. These individuals feel the need to fight the development and limit the number of properties developed in any given area, as they are convinced it detracts from the feel or the essence of what the suburb once was or should be.

There are arguments for and against when it comes to development, and I agree that when the density gets too high too quickly there can be issues with infrastructure and quality of living based on increased load in the area. The reality is though, that expecting inner suburban areas to remain the same just because you want them too is a pipe dream, and so it should be. The only way a city grows is through increase in business. Be it corporate, manufacturing, or whatever may present. The more of these production and administration based buildings and businesses that develop in the CBD the more people required to work there. The more people employed in these buildings, the greater number of smaller businesses like Cafes and food stalls required to service them. And so on it goes. None of these people want to live too far from work. So what happens next?

Unfortunately by denying the ability to develop high rise in the inner suburban areas, you limit the workforce in the CBD. No workforce, no commercial or big business investment. No commercial or big business for the CBD, no increase in employment or revenue. And that’s the way the city goes. Unless you plan to expand and grow your businesses in the CBD and beyond, there will be less money around, and you can’t develop the businesses without the manpower and somewhere for the manpower to live.

This takes me back to Sydney. Look at the suburbs that run along the Harbour. Look at the number of high rise apartments over 3 storeys. Learn how the urban spread should occur, and accept that the world that existed when you bought your three bedroom Californian bungalow in Coburg has more people in it now that need a home close to the city. And make room for them. In the end you will be richer for it, the city will be richer for it and everyone will benefit. Or dig your heels in the ground, tell development to go elsewhere and accept that there will be no progress.

As a buyer, maybe it’s time to embrace the fact that land just means more mowing and work. Maybe you don’t need to be painting fences or repairing weatherboards or doing gardening. Is it really that bad that you are entertaining your friends in your alfresco area, and the alfresco happens to be 10 storeys up with views of the CBD?

Someone smart once said the only constant in life is change. Maybe it’s time to accept that change and see your City benefit from it. Just a thought. As always negotiate hard, but fair. Have fun and buy well.

Garry McPherson

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