Building scion behind new granny flat design push
MELBOURNE: The scion of a building empire builder has sought his own path via the accessible housing/laneway housing/granny flat route.
Real estate heir Janusz Hooker wants to use the network created by his grandfather, housing pioneer Sir Leslie Joseph Hooker, to sell east-coast Australia’s landlords a granny flat he has designed, and is tapping the country’s wealthiest families to fund putting it in their backyards.
Hooker, who owns the master franchise behind LJ Hooker’s 350 real estate agencies, is starting with the company’s Sydney franchisees to sell OHOME, which costs about $250,000 all up for a two-bedroom, 60-square-metre housing unit, and promises 150 days from order to delivery.
Like other modular housing products shipped complete from a factory overseas, the product – which Hooker says could go in the more than 1 million compatible backyards nationally – offers a way to boost delivery of much-needed extra homes when the domestic industry can’t build enough.
Capacity limits in the local home-building sector leave a glaring shortfall between demand and supply. The most recent Australian Bureau of Statistics figures show 173,367 housing completions over the four quarters to March, well below the annual 240,000 figure required to meet national cabinet’s 1.2 million new-home target over the five years to June 2029.
This is the hurdle the LJ Hooker chairman wants his new product to overcome. He has the product and capital. All he needs is access to land.
“The next housing frontier is in the backyards of the homes Australia has already built – latent housing supply,” Hooker said.
New methods of construction bring new risks. A factory needs a constant supply of orders, which is tricky given that property development is cyclical.
Hooker said this was not a problem as the Scandinavian Industrialised Building Systems factory in Malaysia’s Penang that he’d contracted to produce the OHOME modules made modular products for customers around the world and was globally diversified.
But for ordinary Australians to be able to buy these homes in large numbers, they need Australian banks to be comfortable lending on housing made out-of-sight overseas.
Risks around delays and cash flow that were a problem in home-building, a business with razor-thin margins, were even greater when it came to offshore construction, one Australian manufacturing boss said.
“You can’t have someone make something in a factory and it sits there,” the person said.
“You get delays on projects all the time. What is critical is making sure everyone is thinking through cash flows.”
Hooker also said a local bank – which he declined to identify – had resolved the risks around construction finance, and would make progress payments based on stages such as completion of the OHOME module’s frame, when it was a sealed unit, when it was shipped from Malaysia, and when it arrived at the port in Sydney.
“I had to figure out the financing in order to have a solution at scale,” he said. “If I couldn’t crack the financing … it wasn’t going to be solved. Money makes housing work.”
And then there’s the ownership question. Individual landlords can buy an OHOME by extending their existing mortgage, but Hooker said the product aimed to tap the one resource many suburban landlords had – land – and did not rely on them having the cash or equity to pay for it.
He said he had family offices and high-net-worth individuals willing to put money into property trusts that would fund and own OHOMES sitting in private backyards and pay rent to the individual landlord to do so.
It’s effectively a land lease model whereby a trust – or OREIT, as he calls it – will enter into a 40-year lease with a home owner to use their backyard.
“You get 25 per cent of the net rent which, in an instance where it’s 600 bucks, it’s $110 a week, scaling up with CPI, and at the end of 40 years, you get the OHOME free and clear,” Hooker said.
“We’ve got hundreds of millions of dollars wanting to invest in something that’s got an attractive return while also making a difference to the housing crisis, while also solving for the key and essential workers.”
Hooker, now 56, who won bronze in rowing at the 1996 Olympics, bought the real estate agency business back from Suncorp in 2009 in a $67 million deal. After the death of his grandfather in 1976, family members – none of whom was actively involved in the company – sold down their stakes in what was then a listed company with a range of activities including land development.
Following a hostile takeover of LJ Hooker in the 1980s and subsequent collapse, Suncorp acquired the real estate network in 1989.
Landlords will be able to buy OHOME modules in sizes starting at one basic 20-square-metre unit that functions as a bed, living space and desk.
A separate 20-square-metre “wet” unit is plumbed to provide a kitchen and bathroom, and the modules can be combined to reach the NSW and Victorian maximum-sized granny flat of 60 square metres or the Queensland maximum – depending on local council – of 80 square metres.
Because it is a modular product, the individual units don’t have to sit in a line and can be configured into different shapes to fit on different sites.
The OHOME digital platform could check individual residential sites across the country for their compatibility in terms of titling, zoning, lot size, planning overlays, setback requirements and access, Hooker said.
“It assesses a single address in seconds and a whole suburb of several thousand lots in minutes,” he said.
“An agent in any of our 350 offices can type in an address and hand the owner a one-page report.”
The REITs will also be driven by a social purpose to own and offer affordably priced rental accommodation to key workers in suburban areas where such housing was vastly under-supplied, Hooker said.
“What’s owned in the OREIT will be offered to key and essential workers,” he said.
“The teachers looking after my kid in kindergarten or the nurse looking after my dad in the nursing home can’t live anywhere near the communities which they’re serving.”