Real estate and construction has always been a stalwart for the Australian economy. In good times, cranes dot our city skylines.

When times are tough, both State and Federal Government invest in infrastructure to create jobs and boost economic activity. Of course, COVID has changed the rules of the game a little. A health crisis as opposed to an economic one – social distancing, or lack thereof, has seen some sites close down and offices empty, necessitating a change in how the sector has traditionally worked. However, the demand for housing has not abated and for developers, speed to market is as important as ever.

Top trends in Real Estate & Construction

  • Industrial real estate continues to rise
    Industrial real estate continues to rise
    Industrial real estate has been on the rise for years and is likely to trend upwards even further with the focus on local manufacturing and supply chain infrastructure.
  • Supply chain issues the biggest risk factor
    Supply chain issues the biggest risk factor
    Delays in receiving materials strain project delivery and profitability when the cost of inputs spike and presents an increased risk for contractors who place orders at the same time as bidding for work. It's a risk that doesn’t always pay off.
  • A shift away from cities and towards the regions?
    A shift away from cities and towards the regions?
    While overseas migration will be low for a while, our regional areas are experiencing not only an uptick in sea and tree changers, but also investment as industrial and manufacturing hubs.

Issues impacting businesses in Real Estate & Construction

'High consequence' tax payers

The ATO has made no secret of the focus it places on the real estate sector as high consequence tax payers, given the value of widgets being traded and the tax complexities specific to the sector. Add to that the intricacies of indirect taxes such as GST and the differing rules across all States for stamp duty and land tax and it’s easy to see why businesses need assistance to get it right.

Read more about how we simplify tax

Balancing workforce management with COVID

A huge portion of those that work within the real estate & construction sector are not able to work from home and any blanket bans on construction can quickly bring our economy to its knees. With international and state border closures also putting pressure on skills in the sector, it’s essential that employers in this space understand their rights and obligations to their people, contractors and stakeholders when it comes to COVID-safe operations and reasonable directives around vaccinations.

Learn more about making your workplace COVID safe here

High M&A volumes in the industrials sector unlikely to abate

It’s become obvious that real estate investors like industrial products. According to our 2020 Dealtracker, the industrial sector saw the highest volume of M&A activity – continuing a trend that’s been reflected over the last decade we’ve been producing this research.

Read more in our 2020 Dealtracker

Supply chains and investment delays bite

Thankfully the Foreign Investment Review Board (FIRB) returned to business-as-usual on 1 January 2021. Commercial deals are still occurring, however the flow of foreign investment remains stifled while investors can’t travel to visit potential investment sites. Compounding the difficulty accessing international investment are significant challenges with supply chain. The real estate & construction sector is one link in a long supply chain, and with workforces around the world struggling to keep up with demand, those supply chains have become sluggish. Considering lead times have blown well out, it’s becoming increasingly common for contractors to place orders at the time of tendering for big jobs to lock in current prices, ensuring they can meet cost estimates and timeframes. It’s an additional risk many are having to take, but one that can bite if the contract doesn’t come through.

Learn about the range of ways we can help with finance and funding

Build-to-Rent a trend to watch

With the growth in the housing marketing continuing, affordability remains an issue with people delaying when they purchase, or actively choosing to rent as the best option for them. However in recent years, tax policy constraints have impacted the investor market and in many regions there aren’t enough rental properties to go around, leading to increased rents. In other parts of the world, Build-to-Rent (“BTR”) assets are thriving as an investment class.

While it can assist with alleviating the affordable and social housing issue through boosting supply, we’re expecting to see more boutique Build-to-Rent developments designed to capture those life-long renters and advocates of co-living. Getting this off the ground in Australia has required intervention from Government and consideration of tax policy to the sector. A number of the States have now initiated policy specific to BTR developments and it’s only a matter of time when affordability will force the others to follow.

Read more

Innovation can help transform the sector

There is huge opportunity for the sector to embrace technology, automation and innovation to work smarter, not harder. We’ve seen 3D printing, collaborative software and automation in parts of the market, but it’s time to ramp up innovation to not only combat the resourcing and quality challenges faced by the sector now, but to also transform the sector for the future. There are new grants and incentives being released to support research & development, collaboration and innovation – are you eligible for support?

Learn more about our Innovation Incentives team

Not quite the death of the CBD

We know our CBD's have seen dramatic changes, but they are still important hubs for business and idea collaboration and their activity strengthens the local economy. This alone should mean commercial tenancies remain strong, but the utilisation of office buildings may need to adapt – balancing social distancing requirements with more innovative collaboration spaces to entice people away from their home offices.

Watch on demand as we explore key trends in the sector

Opportunities outside of the big city centres

City Deals and Region Deals are funding instruments – joint commitments by federal, state and local governments – to develop industries and elevate communities over a ten year period. With a number of Deals already in place, will we see the role of Deals evolve to help refocus regional centres into manufacturing and industrial hubs as part of the broader Modern Manufacturing Initiative (MMI)? For instance, Geelong has a Region Deal and they are currently investigating how the old Ford automotive manufacturing site can be repurposed to support our national focus on food & beverage manufacturing.

Read more about the role of real estate & construction in the MMI

We cut through the complexity of compliance

The real estate & construction sector is subject to extensive legislation and regulation at the federal level (including the ATO FIRB and ASIC reporting requirements), along with multiple layers of state and territory legislation and regulation. It’s a push and pull scenario when the states use regulation and tax policy to gain a competitive edge on other jurisdictions. Whether it’s tax, audit or risk, we can cut through the compliance and complexity.

Take the Project Trust Accounts introduced in Queensland in late 2020 as part of the Building Industry Fairness Act (Qld) 2017 which introduced a significant level of additional administration for industry participants.

Watch On-Demand Navigating the changes to Qld’s BIFA on demand

Our Real Estate & Construction services

Audit

Grant Thornton’s expert audit approach will help you comply with regulations, and improve business strategies and internal processes.

Tax

We work with clients at all stages of their business lifecycle – and through all their organisation’s major events – to navigate tax obligations.

Finance and funding

Our finance and funding team works to access sources of finance, present your case to potential funders and negotiate a long-term sustainable relationship.

Consulting

Our consulting team supports its clients with hands-on and proactive advice on all aspects of their strategies for sustainable growth.

Get in touch

Sian Sinclair
Partner & National Head of Real Estate & Construction
Sian Sinclair
Learn more about Sian Sinclair
Sian Sinclair
Partner & National Head of Real Estate & Construction
Sian Sinclair

Get in touch

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Sian Sinclair

Brisbane 2032 Olympics & Paralympics

Brisbane has been announced as host of the 2032 Summer Olympic and Paralympic Games, and the world's attention is turning towards an Australian city often not considered given the strong international brand of Sydney and Melbourne. It’s been 125 years since the first modern Olympic Games in Greece. In that time, not only have the Games themselves evolved, but also the role the Games can play as a catalyst for development of host cities has changed. The opportunity for the South East Queensland region is immense.

Listen to Sian Sinclair, National Head of Real Estate & Construction, talk about trends and issues facing the sector right now.

Sale of Box+Dice

Client challenge
Client challenge
Client challenge
Founded in Melbourne in 2005, Box+Dice has grown to become one of Australia's most successful real estate customer relationship management companies, servicing over 1,150 offices across Australia and New Zealand. Once Travis Williams, owner and CEO of Box+Dice, decided he was interested in selling the business, he wanted to ensure he received a premium price for his years of hard work, whilst also ensuring Box+Dice and its people would continue to be supported in the future.
The solution
The solution
The solution
Through initial discussions with Travis, Grant Thornton was able to determine the best way to present the business through the creation of an Information Brief to send to interested parties. Grant Thornton contacted a number of potential buyers in the early stages of the process, as part of a targeted buyer list focusing on companies with complementary strategies. Through a series of discussions, a shortlist of buyers was established, with negotiations held with parties to determine the most suitable buyer for Box+Dice. After a period of consideration and negotiation, the most suitable buyer was selected as they best satisfied Travis’ criteria.
The outcome
The outcome
The outcome
The acquirer, MRI Software, is a global property software company looking to expand their operations in the Asia-Pacific region. From a strategic point of view, the purchase of Box+Dice integrates nicely with their current product offering, and will enhance synergies within the company. MRI was able to pay the premium price, and also detail a clear plan of how Box+Dice will be part of MRI’s strategy going forward, and how they intend to continue to support Box+Dice’s product.
Find out more

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