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Persistence pays off for Pellicano boys

Australian Financial Review 19/06/14

 

The Pellicano family are southern developers who saw the potential of Queensland’s residential property markets well before the bandwagon.

Sons of bricklayers Frank and Nunzio, the Pellicano’s have $120million worth of residential towers going up in Brisbane, and with prized land banks in the city as well as on the Sunshine Coast and the Gold Coast, a pipeline of more than $1billion awaits the family in the state.

“We first came here 10 years ago; we just saw it as a market with a lot of potential growth,” joint managing director Nando Pellicano says.

“And it’s all coming off such a low base, so there is a very good value story.”

The family, whose wealth is estimated by the BRW Rich List at $285million, has just launched Trafalgar Lane, a 20-level tower of 147 luxury Brisbane apartments; 70 per cent of which have sold off the plan.

The site was purchased in a deal with receivers last year. In the same inner-city of Woolloongabba, the Pellicanos also have a $38million Quest serviced apartment project.

But things weren’t always so rosy in Queensland for the family. Nando and his brother Antonio, alongside first cousins Michael and Renato, held a board meeting during the days of the financial crisis when funding was scarce and values were plummeting.

On the agenda was the longevity of their Queensland business.

“We discussed whether to pack up tools and go home,” Renato recalls.

“We said, ‘we are not making a return like we always did in Melbourne.’ There weren’t any forced sales but we took a hit; the Sunshine Coast was pretty painful. In the end, we said we would see it through, and we did. You have to plant your flag; you can’t be below the border always flying up here.”

Now that the Pellicanos have an established office in Brisbane and have picked up further development sites, including a 2.1-hectare lot also in Woolloongabba, they are comfortably watching the southern developers try and get in on the market.

There are plenty of southerners who have outlayed cash for sites in Brisbane, from PointCorp and Urban Construct to Melbourne’s Tim Gurner.

Majors such as Stockland have also rekindled their faith in the state, particularly in regional areas such as the Sunshine Coast’s Kawana, where the Pellicanos have a foothold.

“But it’s not so much the southerners, it’s also the Asian investors coming across the border to pick up sites,” Renato says.

He says danger for any interstate or intercontinental developer is the risk to reputation.

“It becomes a matter of where you put your energy, and you don’t want to spread yourselves too thin. We trade under our own last name, so there is a fair bit of responsibility around that.”

Both ANZ Banking Group and National Australia Bank have financed Pellicano’s projects.

“As a builder as well, we control the risk, and, yes, you can look at that as taking on more risk, but then you don’t have the disputes and arguments you would normally have,” Nando says.

The risk is lower in Brisbane, where the market has strengthened.

“We haven’t seen the major jumps yet,” Nando says. “While the Brisbane market is good, it’s not booming, it’s just a good steady market, which is good for everyone.”

“It’s busy, but not crazy busy.”

But it’s busy enough that for the first time in the company’s history, the Pellicanos’ residential construction book value will this year exceed the value of its industrial and commercial activities.

Next on the horizon is the Gold Coast, where the family – in a joint venture with Melbourne-based Zagames – has master plan approval for four towers of 1650 dwellings at the Paradise Resort in Surfers Paradise.

They bought the resort out from the receivers of City Pacific for $41million.

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