We have productive gardens on the roof; we have worm farms downstairs. So there’s kind of this closed-loop system.
SE: So what are the unique challenges for this project? Are there barriers in Australia that might not be factors overseas?
JMcL: So the big barrier here has been funding. Trying to take something that doesn’t even come close to a 20 per cent return on costs is hard. There’s a big red flag in there.
So initially, getting funding was tricky. The fact we sell to owner-occupiers, not investors was tough.
Trying raising equity on something when we say ‘we’re going to ask the residents what they want’ – and that means if they don’t have drivers licences and probably never will, we won’t provide car spaces - is hard. Our planning system has always demanded car ownership and home ownership as a couple.
Our housing system follows the financial system. If you see the impact the banks have had on lending to smaller apartments, it’s been incredible.
Historically we’ve been chasing construction finance or housing finance, but we’ve been put into development finance.
At the moment the cost of equity is about 15 per cent. If we can lower that to 10 per cent we can reduce the cost of housing.
SE: At ANZ (in Melbourne’s Docklands) we’re surrounded by apartment buildings. What we hear is there’s little sense of community – people hardly know their neighbours. What is different in your space?
JMcL: Basically we looked at the day to day tasks people undertake.
Importantly we limit numbers. What we know is that when there’s over 75 people in one building, you can’t remember everyone’s name, their kid’s name, and that builds a sense of anonymity.