Affordable Housing, Social Entrepreneurs – Grollo? Thommo?

This weekend The Australian wrote up two property developers – Victoria’s Daniel Grollo and Queensland’s Ian Thomas – and their social entreprenurship.

Government Scheme Not The Answer

“A government-sponsored scheme will not ease the housing shortage. Affordable housing requires

• government action
• industry response
• the spark of entrepreneurial activity to make a meaningful impact”

Morris Kaplan, writing on Entrepreneurship for The Australian.

Daniel Grollo’s grandfather Bruno built Melbourne’s Rialto Towers in 1986 and now the Grollo family construction company, Grocon, has reportedly agreed to build the 161 unit Common Ground homelessness facility at cost.

The innovative Common Ground approach to ending homelessness has already been successful in New York where it has reduced street homelessness in the city by 25 per cent since 2005.

The development, on the edge of the Melbourne CBD, a partnership between the State Government and Grocon, would provide a home for up to 120 people, with the support of health services, training and employment help on-site.

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Queensland’s Ian Thomas is aiming to create Australia’s first affordable housing industry as a for-profit social entrepreneur.

What Exactly IS Affordable Housing?

‘Thommo’ believes this term – used by pollies, talk show hosts etc for many years,

“conjures up images that are counterproductive to attracting entrepreneurial activity and capital..

When you mention ‘affordable’ everyone thinks cheap shit boxes…I believe affordable housing is six times the average person’s working salary.

On this basis the home should cost around $210,000 ($35,000 x 6 = $210,000), be environmentally sound and beautifully finished. Something that has never before been seen in Queensland, or for that matter in Australia…

The construction techniques are scalable…(eg) a modular roofing system…high quality…low cost…

Thommo maintains…”If you say you can buy an average house for this price, people say you’re nuts. (Yet) you could put one of my houses on Sanctuary Cove and it would easily fetch $800,00 – 900,000..

He says that apart from an innovative approach to construction, the key to affordability is to keep ongoing costs down… his time as a developer convinced him that only as a business could a project become sizeable enough to solve the problem of housing affordability.

How Do You Produce Affordable Housing?

Thommo continues

“It can’t be done as non-profits – not in 100 years. Government can’t do it either. Public housing costs the taxpayer and spec builders can’t get into the affordable zone.

“We can and will deliver the first five affordable housing projects of a minimum 250 homes within nine months.

“We’ll then be in a position to roll out at least another 20 projects within 18 months – with absolutely no cost to the taxpayers.

“You need the entrepreneurial spirit, the know-how. You need to be able to face down councils and bureaucrats. You have to have a bullocking attitude; that you’re not going to be slowed down.”

He says he wants to create the model for affordable housing projects out of his Kingaroy development. “My goal is to work hand in hand with the council and its officers to produce well-designed affordable housing. The plan is to reduce planning delays and infrastructure costs to bring a project to market at around $200,000. The first requirement of affordability is land cost.

“Governments, both state and federal, have enormous tracts of land; much could be applied to affordable housing. It would take 48 hours to get rezoning.”

He says progress in structural engineering, combined with new and proven building materials (such as innovative lightweight claddings) and purchasing power, will drive costs down.

“(But) we need the town planning process to be streamlined.

“The strange thing is that it will generate more profits than I anticipated. The key is systems. When you’ve been building as long as I have you know how.

“I’ve systemised everything — from the planning, the design and the construction techniques. Even the suppliers can be systemised.”

Thomas bemoans the current state of the credit market. “It’s so frustrating. We have this project here and it’s ready to go to completion. These days the banks are saying: get everything lined up and then we’ll look at your proposal.”

He says he is seeking an investor-funder. “This particular point in Australia’s history is the most perfect time to be doing this, except for the funding.”

Sounds logical, feasible but the timing is awful – or is it?

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I’ve had heard two separate recommendations for Prebuilt houses recently – high quality prefab. For permanent or holiday living, these houses can be easily transported and installed in urban, regional and remote areas – ‘design led, value driven and eco-friendly’.