For the love of property (part 2)

In Part 1 of Henry Kalus and Lisa Fowler’s reflections on the property industry, published in last week’s AJN, the duo discussed their love for real estate and the diverse range of projects they have been involved with. This week, they forecast what the industry will look like post-COVID, and offer advice for lessons learnt.

Q What impact did COVID have on the way property was, and can be, transacted?

Lisa Fowler: We did see some amazing things during the lockdowns with clients buying properties sight unseen.

The first time a client suggested this to me, I just couldn’t believe it! And being a lawyer, my immediate thoughts were around what special conditions should be drafted to protect my client.

However, as time went on and lockdowns continued, people became more desperate to secure and/or sell properties, and buying properties without physical inspections actually became something that many clients (and us as lawyers too) found a way to navigate and become comfortable with.

In a way, the actual process of transacting property was well on its way to being COVID-proof before the pandemic hit (phew!) as we had already seen the introduction of PEXA (e-conveyancing platform) and duties online.

In reflection though, COVID-19 and its related lockdowns and restrictions did force our legislation to catch up with technology, and allowed for electronic signing, virtual witnessing and the recognised exchange of many types of legal documents which previously had to be signed in wet ink.

It was often a frustration for our clients, and indeed for us, that certain legal documents had to be signed in wet ink as it really slowed down the whole execution process, and usually at a critical point. Thankfully, the temporary laws around e-signing and witnessing have now been made permanent.

Q What do you see as some of the biggest challenges for developers in the current market?

LF: Years ago, the ability to secure funding was often the toughest hurdle for developers. However, that problem has really been resolved to an extent by the birth of so many private lending (non-bank) firms in recent years. In fact, this has become such a common practice that we’ve established a structured finance and investment practice at KKI which is heavily involved in that space.

Undoubtedly, the biggest issue that I’m speaking to developers about now is the availability and cost of labour and building materials.

Developers have secured land and sold assets off-the-plan, never imagining that building costs could escalate so much in such a short timeframe. It has really become such an issue that developers are contemplating whether they can still deliver projects.

In some instances, they may need to revise purchase prices (on already exchanged contracts), so navigating that issue is proving to be really challenging right now. Fortunately, at KKI we have a collaborative and creative environment with incredible industry knowledge and experience, and providing solutions to challenges is what we thrive on.

Q What advice would you give to individuals who want to get involved in the property industry?

Henry Kalus: The best advice I can offer is to understand risk! I don’t mean to be frightened of it; I mean to understand whether the risks of a project align with your capacity to cope and manage those risks.

My most valuable lessons were learned in the early ’90s, when values plummeted and clients faced insolvency.

Whether I am working on a property project or a merger-and-acquisition deal, the focus is always the same – aim for the upside but protect the downside; and not to be blinded by the bottom line number on a feasibility.

And as with all endeavours, the first thing to do is understand who you are and the value you want to bring to that enterprise. Once you have that part right, decisions are easy to make.

Equally as important is to surround yourself with consultants and advisers who take the time and effort to understand you, and are capable and motivated to help you succeed.

And finally, be aware of the importance of a good reputation!

For more information on Kalus Kenny Intelex Lawyers, visit kkilawyers.com.au

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