From Raw Land to New Communities: The Reality Behind New Housing

In this episode of Fraser Coast Property Brief, Glen Winney speaks with Trevor Groeneveld, Managing Director of GHG Development, about what it really takes to turn raw land into a finished residential community.

Trevor shares his journey from civil construction and infrastructure contracting to property development, including the growth and sale of ITS Pipetech, and how that experience shaped his approach to major projects.

The conversation focuses on Christensen Ridge at Ghost Hill, a 400-plus-lot residential development in Hervey Bay. Trevor explains the challenges behind developing steep, rocky and vegetated land, from engineering and approvals to drainage, sewer infrastructure, finance, presales and rising costs.

This episode gives listeners a practical look at why land development takes years, why finished lots are becoming more expensive, and what needs to change to improve housing supply across the Fraser Coast.

Transcript

SPEAKER_00 0:01

Welcome to the Fraser Coast Property Brief, the podcast where property, development, and business leaders share what's really happening across the Fraser Coast. Each episode brings you insights into local projects, market trends, and the people helping shape the future of our region. Welcome to the Fraser Coast Property Brief. Today my guest was Trevor Grunefeld, Managing Director of GHG Development. Trevor has built an extensive career across civil construction, infrastructure, property development. He's founded the and grew ITS Pipe Tech before overseeing strategic sale to Downer in 2016. And since delivered successful residential and industrial projects, including Ascot Park in Port Macquarie, and now home to 300 families. And Trevor, together with his development partner, Biagio, is now developing Christian Ridge at Ghost Hill in Harvey Bay. So major residential development with more than 400 lots presents a significant challenge with slope, rock, vegetation, drainage, sewer, and other infrastructure. So welcome Trevor to Property Brief.

SPEAKER_01 1:13

Good morning.

SPEAKER_00 1:19

Tell us about your career from civil construction infrastructure to developer. And a few racing cars in between.

SPEAKER_01 1:30

And bikes. Probably not dissimilar to yours in some respects. Started in the construction industry very much on the tools. Got into from sort of house sort of related construction into civil works in my early 20s, which was pretty much local government related type stuff. So it sort of got us into that space, but still on the tools as a small but growing business and built it up over the years. Lots of mistakes along the way. Secret to success, I think, is just more mistakes and failures. But built a very good team. That business ended up being in the civil space, mainly pipelines, and got to a size where a lot of corporates took an interest in the in us. We actually never advertised the business for sale and ended up selling it to Downer at the time we sold. We had offices throughout Australia, a couple of hundred staff, fairly significant revenues and a good recurring revenue stream and a good product line. But one of the things I quite enjoyed about that business is we we innovated a lot. We brought in a lot of new products, a lot of technologies around uh pipelines and and related infrastructure, which uh are quite prominent now in the industry today in Australia. Um seems like a distant memory because I've been out of the game for the last sort of ten years or so. But uh no, it was uh it was an exciting journey, but uh can't say they was unhappy to step away from it in the end because uh there's a lot of uh pressures when you've got significant sort of headcounts and uh geographical base and so on. But uh that's it.

SPEAKER_00 3:19

Alright, so successful um business. Why go to development? What attract you? Do you become a property developer? And where there's a lot of capital tied up and uh not not great cash flow.

SPEAKER_01 3:34

Well, that's that's chunky, I'd think to say that. But uh no, it actually started by uh when I was actually still in the construction game, um, just doing some I had a friend time who was uh banker, a financier, and uh they did a lot of second mortgage loans and second second mortgage lending, and I got into that just basically putting in cash essentially for a second mortgage um funding, and uh that sort of grew to taking active participation in uh in a development as a development owner, and uh and I quite liked the I quite liked it. So um, and uh yeah, we took on that uh project down there in Port Macquarie, Ascot Park, and um from being just basically an investor uh to project owner and um getting my head around making the development work um and again a lot of mistakes um and uh a lot of learning, but um I quite I actually really enjoy the dynamics of property development um and uh I just wish I'd started some years earlier.

SPEAKER_00 4:46

That's the problem. You you want to start early, but you don't have the capital to do it, you've got to do the other hardy art. So you're still based in Port Macquarie. Why Harvey Bay? What made you and Biagio come up to Harvey Bay and start a large land development here with you know no affiliation to the area pre previous to that?

SPEAKER_01 5:07

Um well look, we'd we'd met with some people that encouraged us in terms of taking a look at the site. Um we like the dynamics of the growth, the fact that um there's a lot of similarities in with Port Macquarie and Harvey Bay in terms of Harvey Bay's relevance to Brisbane as a centre, like with Port Macquarie to Sydney. Um we saw I could you know I saw the growth down there, and uh seeing it up here, um it was good to see the engagement of the council up here from very early on and how they'd put the infrastructure in around to enable growth. Um and uh yeah, there was no reason not to progress with it.

SPEAKER_00 5:51

Alright, so Christian Ridge, um you know, fairly famous site in Harvey Bay, the old Christian family been here well over a hundred years. Um the old drive-in site, which I remember in the 80s, wraps around Christian Ridge wraps around that. Um so you'll have over 400 residential blocks, you've got a gated community in the middle of it. Um so what type of community are you trying to create up there? What's your vision for Christian Ridge?

SPEAKER_01 6:19

Um, I think the vision we share. I mean, remember, this is development that's um that's being done with a uh a business partner, Biaggio, and the two of us are very much involved in it. Um but I think it's always been roll-out of development that um that leaves a good legacy in terms of uh completed projects. Um, you know, you it's uh so it's it's great in terms of the location, it's elevation, there's um it's situated well. Um so to be able to um even drive into it now to see the first 42 homes of the first few stages going in, to drive through the estate and go, you know what, this uh this looks pretty damn good.

SPEAKER_00 7:02

Yep.

SPEAKER_01 7:03

So um I think it it's good to have a site that allows you to have a slight point of difference. So a bit of slope, elevation, views, cycleway beside it, it's got a lot of natural attributes.

SPEAKER_00 7:16

Nice sandstone retaining walls, the steps down the hill. Yep. So let's get into the reality of development. You know, it all looks very easy and quishy from the outside. Subdivision looks nice when it's finished, but how do you progress through it, you know, and try and come together when you've got road services, you've got engineering constraints, you got rock, um, you got some vegetation need to protect it, you've got drainage issues, obviously, because of sloping land. How do you get your head around that and start getting the reality of the development going?

SPEAKER_01 7:52

This is a loaded question because you're intimately aware of a lot of the challenges we've had in there. Yeah. Look, uh I think when you start, you know that there's going to be challenges. Um I think there's uh there's an acceptable level of risk when it comes into projects like this that you're confident that you will find a solution when you get to it in some at in some places. There's the surprises that you don't see coming, um, and uh some of those have been in in the newspaper recently. But um uh for the most part, I think you've got to have a team around you that has the ability to manage the challenges, and uh Biaggio and I have been fairly fortunate in um in having a good team now from an engineering, planning, you know, sales and marketing perspective. Where's a good team? Yeah, that's that. Uh um and just deal with them as you go.

SPEAKER_00 8:48

Yep. So the question we always get asked, you know, from the mum and dad consumer, um, and they just can't see it from the outside. Why does land development take so long? It's just several years between somebody saying I'm going to do a development here and somebody settling the land and starting to build a house. Uh walk through a little bit of that process and explain the big delays and uncertainties in doing a development and just why it takes you know sometimes years.

SPEAKER_01 9:20

Um I'd probably put it down to approvals, right? So, and and as you're aware, there's there's multi-levels of that. So we need um we need state approvals, we need um main roads approvals, we need local government approvals, we've got environmental um challenges to work through, uh drainage concerns, um, and they all take time, you know. So you've also got the challenges of uh local government that are struggling with, you know, particularly in areas like this, with the uh with growth. Um I think it's difficult around the employment market at the moment. Council needs more staff. Um, and uh and every time there's an application that requires an amendment, um, that has to go back to engineering, that then gets resubmitted. We've literally just come from a meeting with council uh discussing the the Southern package, um, where we're going to be in a teams meeting next week uh looking at the overall layout to get connectivity. And uh there's challenges there. So uh all of this takes time.

SPEAKER_00 10:28

So sometimes the approvals can actually take longer than the physical work in stages.

SPEAKER_01 10:32

If we look at Christensen Ridge North, that's 100% been the case.

SPEAKER_00 10:36

Yep. Yeah, you can be nine, twelve months at least just getting approvals.

SPEAKER_01 10:41

Yep. And uh and and uh and sometimes it can be the fault of the developer in terms of the delays. Like if we don't provide a hundred percent answer that's easily understood. There's yeah, information requests, uh each one of those delays further. So um but in this case I think uh because we did suffer some delays from our very first stage through, um, it's primarily been around um uh council having the capacity to deal with it along with uh dealing with a few downstream neighbour complaints.

SPEAKER_00 11:15

Yep. Which, you know, all development has to make the pre and post-development flows the same, you know, they can't worsen anything downstream. So there's that much regulation in development now that you know things don't go wrong anymore. So um, yeah, but you have to go through so many hoops just to prove that.

SPEAKER_01 11:35

Well, there's hoops that sometimes you don't even realise.

SPEAKER_00 11:38

Like I know. Yeah.

SPEAKER_01 11:39

We've uh we recently got an inquiry from uh from federal on uh why did we not notify them um of uh some pre-works that have been done on our delivery on our project down in New South Wales. Exactly. Yeah. So um anyway, there was another month's worth of work and responses, but uh no one even knew from state, local council, um, ecologists, you name it, locally that there was even an obligation. So um that hasn't affected us up here, but that's an example of uh of things you just don't see.

SPEAKER_00 12:18

Yep. So let's get into the finance side of it. You know, land development requires substantial capital um before any sales income. So, you know, like with your delays and things like that, you could be two years before you get your first stages in. Um so how do you finance development? You know, what sort of pre-sales do you need and do you have to stage it to to actually make it work? And and how do you deal with all that in you know, you know, environment where there's rising interest rates, a little war going on in the Strait of Humus, and um just governments decide to change all the rules in the middle of all that. So it's a it's a high-risk game. So how do you deal with the finance side of development?

SPEAKER_01 13:02

Look, if you uh I think if you need to put it really simply, um you've pretty much got to be prepared to cash fund the land acquisition up front, ideally. Yep. Uh you can't always do that. Um, but in an ideal scenario, you need to have the equity in the land to then not have the cost pressures associated with delays. Um again, you can't always do that, and but that's your ideal scenario, and then you can sit there with uh with the land owned, not incurring uh massive costs, um, and then you can leverage that land along with your pre-sales, compliant contracts, and so on, to then bring in uh ideally a level one um funder, um where you can get better cost to capital. Um but uh but then that also uh requires uh a track record, like a bank is not going to look at a developer that doesn't have runs on the board, no matter what equity is in if they haven't proven they can deliver.

SPEAKER_00 14:07

Yep, yep, they go in a very high risk category. So uh with banks, um, you know, talking about just normal banks with tier one lending, um what sort of pre-sales are they chasing these days?

SPEAKER_01 14:19

They're basically 100% debt cover. Right. Um and uh in terms of complying pre-sales, um that's a real challenge up here um because of the validity periods um of contracts. Yep. I think um you'd know more specifically about it, but but we've had a few challenges there with um getting sales locked in early, and then I think there's a three-month um validity period.

SPEAKER_00 14:45

Yeah, it's only 90 if the bank get um, you know, uh like a pre uh sale um approval for their contract for the buyer, they'll only allow that for 90 days, then they've got to go back out and get a new valuation and do it all again and talk about the thing. So the problem is we're selling 12 to 18 months in advance. Yep. So you either got to get a cash contract at that point, um, or if you're trying to sell something subject to finance, they can't go unconditional until 90 days before the end of the development, which is a very tricky thing. So it's always a fine balance between the cash contracts and pre-sales, and then you get people saying they won't get a house for two years, but sometimes they need to sell the current house to buy the new one, so they either got to go and rent for a year. Um it it is the that is the hardest balance, I think, in in our side of it, you know, because we know what you have to to get and what the bank requires. Um and it's very hard to tell buyers that want to get in and say, no, we we can't give you a subject of finance contract because the banks and development just won't let it.

SPEAKER_01 15:54

Well, and I think that comes back then to like as a developer the relationship you have with your funder.

SPEAKER_00 16:00

Yep.

SPEAKER_01 16:00

And uh in this case, uh up here, uh I think we've got a very good bank on board and um and they understand some of those challenges. Yeah. Um, but I think also having a fairly low uh uh loan-to-value um also helps, obviously. So which comes back to that having uh equity position up front takes a lot of the pressure out of um funding appetite uh and also the ability to get better funding as opposed to having to go to the second tier, um which uh a bit more risk appetite, but a lot more expensive.

SPEAKER_00 16:34

Now people know why all developers are old because they need that time to get the actual cash to spend. What are you trying to say? Um another thing in the market people are saying, you know, across Australia, and you know, and this and it's coming up here, it's the next trend coming. Residential lots are getting smaller, but the price keeps rising. You know, why is this happening? You know, what what is the change in market, especially since COVID? You know, like we've we've seen significant drop in square metres, but the price has probably gone up 70% in the last four years. So what's what's causing that? Is it the cost of the land, is it cost to do the development, is it the trend that people are wanting smaller blocks?

SPEAKER_01 17:18

All of the above.

SPEAKER_00 17:19

All of the above?

SPEAKER_01 17:20

So um it is all of the above. So our um our actual direct out-of-pocket expense per lot um uh has gone up quite significantly from when we started this project, for example. Yeah. Uh the recent uh straight over Moz Donald Challenge. That drove prices up um things like Ashfeld, you know, 30-40%. Yeah. Um, and uh we can't go and increase the cost of lots on that either. So that's uh we're absorbing that, and uh we have to. But uh so cost of uh delivery, uh council contributions, uh, all the permits required, uh they all cost. Um and there isn't a reduction in the number of uh agencies that require responses, all of which require a consultant to prepare the plans, to prepare the reports. Um so it's um I think it's across the board. Getting back to lot sizes, um, I think one of the drivers for smaller blocks um comes back to housing affordability. And the reason is is that you don't need a thousand square meter block to put on a 180 or 200 square meter home, right? And the big cost is uh is the cost per square meter to build a home. So, you know, some time ago you might have been at sort of fourteen, fifteen hundred dollars a square meter to build a home, you're now two, two and a half thousand, right? So for to package something up uh with house and land, uh it makes no sense to put in a thousand square meter block to put on a two hundred and twenty square meter home because we're also buying in Globo land where obviously we are looking for yield, um, and uh but we've still got to build the roads, still got to build everything else. It makes no sense to put bigger blocks in when the average house size is is a certain size. And uh and then that comes back to affordability.

SPEAKER_00 19:27

Yeah. I've talked about it before with previous guests, and you know, we keep building these 220, 240 square meter houses, four bedrooms, all the rest of it. Our average household in Harvey Bay is 2.1 people per house. So we're not even building for our demographics. A, the older demographic, you know, is a couple, the kids are left home, and and B, the younger demographic trying to get into the market, they are totally different to our age group where you know you wanted a big backyard and you quarter acre and you played cricket in the backyard. They don't want any of that. They don't want to mow lawns on a weekend, they don't want to go straight down the beach or do activities.

SPEAKER_01 20:07

Well, you look at the change from from when we first met with you, yeah, and um, and what the what we were looking to deliver that we felt the market needed. Um, and all you need to do is have a look across stage one, yeah, right, in terms of lot size and you know width and depth, um, versus in a few short years, what's taken place, and it's not so much um that that's something that we've driven, it's more also what the builders who let's face it are looking at you know we're tailoring blocks essentially to what the larger project builders are requiring. Um so the lot the change in lot size and presentation, you know, benching, slope, all of that, um, is uh is basically targeting the the or tailoring to the requirements of the builders.

SPEAKER_00 20:59

And you know, we we deal with a lot of the big guys and metricons and corals, all the rest of it, you know. Their model is city, sunshine coast, everything like that. So all their plans are based on 400 square meter lots in Sunshine Coast and zero alignment one side, or um, so it's easier for them to bring that model up here than they're trying to get the developments to fit their model rather than do a whole new range of housing just specifically for this market. Yeah. Yeah. And about sh when I started real estate, which is a long time ago, I used to be selling. You're eager than me. Yeah, I am. I used to be selling uh things like Harvey Bay Heights and Tropical Palms and that. So I was selling the finished blocks for about $36,000 a block, you know, where we're ten times that now. Um now the actual council contribution per block is thirty-four thousand eight hundred. So it's nearly just what the one council fee is is as much as a single block used to sell for back in the uh 90s. Yeah, it's incredible how much. Change, you know, and they wonder what affordability issue is. It's a lot of it is government policy. So getting into that government policy, we've got higher interest rates. Um, you know, inflation comes through just recently again at 4%, so now they're getting nervous again. Capital gains tax, um, they're changing all the settings there, they're just taking away the borrowing out of the supers. Uh there's debate about never negative gearing. What impact does that have on developers and investors committing into new housing projects going forward? Do you do you see it as a risk uh with all these government changes, or do you see that some of this negative gearing policy will actually drive new housing?

SPEAKER_01 22:42

Um when you look at Harvey Bay, I don't see it as a huge risk here. I mean, it's obviously preferable that you're not having to deal with any uncertainty in the marketplace because uh it drives a lack of confidence, which is uh which is never good. Um I think the changes that are coming through will be affecting other areas way more significantly. Um but uh up here I don't really see it having much of an impact in terms of what we're delivering.

SPEAKER_00 23:16

Yeah. So ours is more population driven. You know, like in the established areas, people moving around they lose the advantage of the capital gain in that. So better. Someone can sell their property in Brisbane, and come up here and we've still got about 2,800 people a year coming up here, so we still need about a 1,200 housing products every year. So that's not gonna change for next decade. So we might wrap it up in a sec. But last question is the Harvey Bay outlook. Looking ahead five to ten years, uh what do you see the outlook for the residential development market looking like? Um, you know, is there it going to be a different product? Is it gonna be easier to deliver housing? You know, what what sort of communities do you see coming here? What's the next trend?

SPEAKER_01 24:04

Um not having a crystal ball, the um the trend I believe is to look at uh what's taking place on the Sunshine Coast. Um and uh as the best as the best indicator of what will occur here, and from what I can see, uh we're probably running about five be five years behind the change in product that's being presented to market. Yep. Um, and a lot of it's driven by increase in densities and so on, as well as affordability. So, you know, you can have a look at what's happening down there in terms of like townhouse. Um I I think in terms of aged care, over 55 type product, um, that'll continue because there's a demand. Um in terms of lots, um, there's probably more I I don't think there's look it's it's gonna depend on what uh what what product in terms of homes and dwellings. Um you can go to the um southwest parts of Sydney and see what's happened down there in terms of lot sizes. Yeah. Um I'd like to think that a standard uh lot size in a development up here always maintains a size 400, 450 or more square metres. Um and uh try and still maintain some a blend of larger lots also within developments. But um for us we probably look at uh where Sunshine Coast is trending to get a feel for what the market would trend up here.

SPEAKER_00 25:40

Yeah, it's always been a case where we've been following Sunshine Coast 10 years behind us. So it's it's funny, like when you do this game for a long time. Um you know, I tried to put a development side in for clients back in about 2007, 2008, there were 400, 450 lots. Council absolutely were never going down that small, took it to appeals court to stop the development. Um I was in council a few weeks ago. Uh it was a bunch of with a client putting in lots about 600 square metres, council said, it's not enough density. We need them smaller, we need 15 people per hectare in our new gentle density town planning scheme. I said, Well, you know, so it's a complete flip from one side to the other because the urban sprawl is costing, you know, our rates going up because we can't afford to replace the roads every 20 years and we're not using our sewerage or our water to capacity because we only got 10 people in the street where they want 15 people in the street. So um I I've seen the dramatic change coming from government first, you know, and they're stopping sites down in Sunshine Coast for not being dense enough constantly. So um it's not just developer-driven, it's government-driven from the start, changing the town planning policies. The developers are actually trying to produce what their clients want.

SPEAKER_01 27:04

So well, 100% is the case, you know. Like if you uh look at our development, um if the demand was there for a 600-square meter block or an 800-square meter block, that's what we'd be delivering.

SPEAKER_00 27:17

Yep.

SPEAKER_01 27:18

It's not. You know, so so the demand is going smaller lots, um, and uh and it's not and it's not developer-driven, it's market and builder-driven.

SPEAKER_00 27:28

Yep. Yeah, it always is, you know. You can develop whatever you like, but if the market doesn't want it, you're not gonna do it, you're not gonna make any money. So uh that's what uh people don't understand. You usually get an insight into the market, then you provide what they're asking for, not the other way around. Yep. Yep. All right, we might wrap it up there. Thanks, Trevor, for your honest insights and developments. Um, Kristen Ridge has been a success so far, and you're just about to go over the crown of the hill and come back down the uh south side of uh of Ghost Hill into uh towards Chapel Road. So look forward to that over the next couple of years, and uh thank you very much for your time and check us out on all our different channels. Thanks, Drew. Thanks, mate.