The Australian – October 09, 2008

IF there’s one topic Queensland developers might be expected to know a thing or two about, it’s building Gold Coast apartments.

But as some of the old local names fall victim to tough times, one Canberra-based company is showing the glitter strip how it’s done, though in much smaller bites than previously.

Amalgamated Property Group has completed a $900 million string of projects in south-east Queensland in the past four years — including Brisbane’s tallest residential tower — and has a current $1.15 billion workbook in the state.

APG has grown to a similar size as the better-known Sunland Group, but as a private firm it has largely flown under the radar.

In addition to APG’s residential work, the company has completed a number of office buildings — and unlike most developers, it holds all the commercial buildings it develops as long-term investments.

Joint managing director Barry Morris says APG’s investment portfolio currently includes more than 180,000sqm of offices, in Canberra and Brisbane, worth about $700 million.

He says the company used debt for its developments, but was not affected by the credit crisis as its funding was in place for the next five years.

“Having a balance between development and investment gives us cash flows that are not dependent on the development side of the business,” Morris says.

The company has its own in-house construction arm that works only on APG projects.

Morris, a former accountant, and partner Graham Potts, a former real estate agent, formed APG in 2002, although the two had worked together on various developments in Canberra since 1994.

The company made a strategic decision to expand beyond Canberra and considered Sydney and Melbourne but decided south-east Queensland offered more opportunity.

APG moved into Brisbane in 2005, buying the $200 million Aurora Tower project from builder Bovis Lend Lease.

It then bought Brisbane’s 30-year-old Suncorp Plaza office building, which it refurbished and re-let, and has almost completed building a 26-level, 25,000sqm tower next door. Both projects will stay long-term in APG’s investment portfolio.

Simultaneously, APG turned to the Gold Coast, where its debut project was the $85 million Verve at Broadbeach. The project was designed for residents only and sold out in less than six months.

The company then moved on to develop the $200 million Sierra Grand resort and the $120 million Eclipse projects at Broadbeach, as well as the $90 million Element and the $32 million Ivory, both at Burleigh Heads.

The strategy of targeting owner-occupiers hit the mark with buyers, but Morris says conditions have deteriorated in recent times.

“The Gold Coast is struggling,” he says. “The enquiry rate is good but the conversion (sales) rate is slow.”

Nonetheless, APG recently launched the 31-unit Eclipse at Broadbeach.

Its apartments range in price between $2.4 million and $5.7 million, and have 30m frontages — wider than some beachfront house blocks.

APG had planned for a twin-tower mixed hotel and residential development next to the Gold Coast Convention Centre, on the former Volare restaurant site, which it recently bought for more than $20 million, but Morris says that project had been shelved until conditions improve.

In Canberra, APG this week sold out its $50 million Oracle project. Apartments were priced between $299,000 and $585,000 and aimed at investors.