Set up in Sydney 20 years ago, developer Third.i has been making big waves on the UK’s resi scene lately. The firm’s raft of luxury schemes – including a hotly-anticipated collaboration with Banda on the Thames – have been lapped up by local and international buyers alike, and the plan is build a billion-pound pipeline of global projects over the next five years. PrimeResi caught up with co-founders Ron Dadd and Luke Berry to discuss the latest buyer trends, lessons the industry can learn from Australia – and vice versa – plus what it takes to deliver a successful project in the current climate.
Third.i has recently set up a permanent base in London, and announced plans to build a significant pipeline of projects in the capital; what attracts you to this market, and are there plans to expand into other regions of the UK?
Ron: At this stage, we’re very much London focused on Zones 1 and 2, but as our business matures in the UK, there’s no reason why that can’t be expanded across other parts of the country.
Luke: London brings us exposure to an international way of thinking about development. It’s such an amazing melting pot of different nationalities, architecture, and leaders of thought in the creation of space and I believe we’re becoming a better developer because of our journey in London.
When you’re developing projects in London, it also opens you up to a deep and valuable pool of capital because a lot of the world’s investors want to invest and retain property in London. London is a global city, the crossroads between the US and Europe and is known as one of the most stable cities in the world.
In the current uncertainty in global economic drivers, we see London as a very stable place to create & develop property in. We do have plans to expand into other regions of the UK however our focus will be Zone 1 and 2 for the foreseeable future.
Ron, your background is in financial planning; how does this inform your approach to property development?
Ron: One of the things that has been a big factor in our success is that I and the other co-founders of the business have very different skill sets and when this is combined with our team we can deliver outstanding results for our clients, partners & projects.
We have all swum in our own lanes over the last 20 years and worked hard to become the best property executives we could be to support each other. My focus for the business has fundamentally been in the finance and operations, Luke takes care of all the sales and marketing and Bob handles acquisitions and project delivery.
The whole development process is a very broad area of expertise. You have to wear so many hats across the whole development cycle and I think my background as a financial planner, where you need to monitor & manage multiple things across a clients portfolio has helped me greatly navigate the property development space.
It’s actually very difficult for one person to be great at all those areas. That’s the strength of a great partnership… If you have highly skilled people who can specialise in the areas that they need to, then you can achieve the synergies you can get from experts working together for the same task.
Luke: Our commitment to each other to be the best we can be at our jobs and or ‘lanes’ is the reason we have a successful business today. I personally believe if we lead by example and be the best we can be for each other, we will continue to attract the right sort of people to join us on our journey and our business will be even more successful in the future.
The Doulton, Third.i’s scheme on Albert Embankment is promising to deliver a set of 28 “world-class” residences; what will set the scheme apart from others in the vicinity?
Luke: What sets this scheme apart is that we have one of the only projects in London with a genuine river frontage that has elevated, never to be built out views of the city’s icons such as Houses of Parliament and Big Ben. It will be very difficult to replicate and when people see the views for themselves, even from the lower levels it will take their breath away.
I also love the architecture and design. Our building offers half floor or whole floor apartments from level 3 up to level 17, all facing the river and sharing an extraordinary view of the city. It’s rare to have a project where almost every floorplan has a great aspect and not compromised views or amenity.
Already we have received phenomenal interest, receiving over 500 enquiries in the first few weeks of launch. This has led to over a third of the apartments being reserved in the 1st week of launch, translating to over £40million in sales at an average of £2,939/sq ft.
An earlier project of yours, Graphite Square in Vauxhall, has been deemed “the fastest selling scheme in Zone One” following a successful overseas sales campaign; are there any notable buyer trends you have picked up on so far?
Luke: The notable buyer trend I have picked up on during the launch of Graphite Square is how many countries around the world see London as such a desirable, safe and stable place to invest in and own property in.
Each of these countries have thousands of ultra-high-net-worth individuals ready to engage with agents/developers to review opportunities in London at any one time and I think this is a great thing for the creation of property within the city of London.
We obviously need to get the balance right and ensure local buyers have a chance to review and secure our properties too, and that’s why you will always see us advertise locally and ensure we get more local buyers into our displays.
I see foreign buyers being more motivated to buy off the plan at a launch and the local buyer waiting until its completed to make a move and this is a trend we want to explore and unpack more.
In Australia it is completely opposite and we see our approach to off the plan sales, with our success in selling locally as a key advantage going forward in London.
Can you tell us about any other forthcoming acquisitions in the works?
Ron: We are definitely in acquisition mode at the moment and are actively seeking new projects in Zones 1 and 2. We have a number of developments we hope to be making announcements on in the near future, once we have exchanged.
How have you found the site sourcing process so far; how high is competition for the best sites at the moment, and are sellers being realistic?
Ron: In development globally, site acquisition is one of the hardest parts of the process. Finding deals that work from a commercial set is the first step in the process and often the most difficult. This has proved challenging in the UK too. Vendors and purchasers’ expectations are not always aligned in the first instance, so it’s about trying to bridge that gap to get a deal done. It’s no easier or difficult in Australia – it’s still a challenging part of the development process.
Third.i has operations in Australia and Singapore as well as the UK; what could the UK development industry and policymakers learn from overseas markets, and vice versa?
Ron: There’s a few things that we have learnt from the UK market, particularly around affordable housing. This is something I believe is coming to Australia. The help-to-buy scheme and affordable housing shared ownership structures is starting to find its way into Australia as well.
One thing we’re able to bring to the UK is off-plan marketing. It’s a lot more mature in Australia, as projects require a high level of pre-sales to start. Typically, to secure bank funding in Australia, they require somewhere between 60-75% of the project to be pre-sold. What that’s meant over the last 20 years, is that the marketing skill set for off plan selling is so developed that we can help bring the learnings from Australia and improve the way off plan homes are marketed in the London market, where the criteria for lending isn’t so high.
The pandemic reshaped the global resi market over the course of two extraordinary years; are there any interesting trends – in terms of a development’s design, amenities or placement – that have endured?
Ron: Buyers are now looking for a nicer environment to work from home from in, as opposed to any massive design improvements. It’s about finding a property in the right price range where they have the space they want rather than a tight apartment where there isn’t enough room to work. At Graphite Square for example, we have around 80,000 sq ft of working space within the building, whilst being in a centrally located area. This has proved hugely attractive to our buyers.
Luke: I think in terms of development design, there’s never been a stronger focus on health and wellness, including balance between being at home and in the office. Maybe the shift to this would have got there eventually, but the pandemic sped the awareness of their importance up.
I think going forward good design will have a larger focus on developments having better amenities with health and wellness being an integral part of their schemes, and that will be a big focus for us on the next cycle of projects.
What are your ambitions for Third.i over the next five years?
Ron: Our goal was to always grow the UK business to the same as Australia, but in half the time. We’ve been in the UK for almost five years ago now, and over the next five, our intentions are to grow to the same size as roughly what it is in Australia. We have some big plans, but we’re confident we can achieve that. Third.i are on track to build a billion pound pipeline over the next five years. In the UK, this includes the acquisition of three additional sites by the end of 2024, which combined will add an impressive GDV in excess of £500 million. In addition, our global team has grown from three to six in the last two years.
What is the best piece of advice you have ever received?
Luke: One thing my father taught me was to never to cut corners. He would often say “There is always an easy way of doing something and whilst you may think is going to save you time/money, it often proves to be more expensive and costly in the long run.
He would highlight “Worst of all, when you look back at the project or the thing you created you would know that you cut a corner and where is the pride in that”.
This is something I try to carry forward personally and professionally with our business/projects and I believe if are going to do anything we need to do it right.
Perhaps the best piece of business advice I received early was to always surround yourself with people who are smarter than you. At Third.i we have some of the most brilliant minds working for the company and I think this is why we are so successful. The moment you think you’re smarter or better at what somebody else does, you’re on a pathway to failure.