Building faster, cheaper housing

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My perception is that China has been using its buying power or withdrawing its buying power as a means of punishment. So I think many industrialized countries, especially those that are intensive in manufacturing, are going to lose a lot.

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Alan Kohler (0:40)

People ask me all the time, how come we don't do more prefab housing construction in Australia, building the things in factories and putting them up on site? They do it overseas a lot, but not here. Why not? Well, a construction firm named Built Group has joined up with the owner of Bunnings, Wesfarmers, to create a joint venture called Built Living, which will do just that, make precast concrete apartment parts that get assembled on site. To run it, they've hired Dale Connor, the veteran of Lend Lease, the construction and property company, and he's the CEO. He is this week's That's Business interviewer to talk about, what's it going to take to make prefab construction work in Australia? What are the lessons from overseas?

Also, by the way, what's the impact of the collapse of Bathla on Australia's housing industry?

Here's Dale Connor, the CEO of Built Living. Well, good day, Dale. Thanks for joining That's Business.

Dale Connor (1:36)

Thanks, Alan. Great to be here.

Alan Kohler (1:37)

Now listen, just give us a sense of what you're trying to do with Built Living. What's the plan?

Dale Connor (1:42)

Yeah. Built Living is what we call design for manufacture and assembly. It's all about trying to build off-site what traditionally has been built on-site. But today, on-site means things that take a lot of time and cost a lot more money, and especially in the housing space, that's becoming quite prohibitive to having mid-rise, high-rise dense apartments being built.

So our goal is to provide a product which can be delivered 50 percent faster, and 20 percent cheaper than the current market.

Alan Kohler (2:15)

Were you thinking about prefab construction when you were at Lend-Lease?

Dale Connor (2:18)

Prefab construction was certainly something that we did look at Lend-Lease through things like cross-laminated timber and bathroom pods and other things. But since joining Built, there's something that the founder and owner of Built, Marco Rossi, has been investigating heavily for the last couple of years, traveling the world and especially through Europe, and seeing that design for manufacturing or assembly as something that is a tried and true approach to dealing with medium to high-rise density in residential.

Alan Kohler (2:51)

Now, getting on to what Marco Rossi actually found when he did his trip, but people have been talking about prefab as being the answer to, you know, housing construction costs for a while now, but it's never actually worked. So why didn't Lend-Lease do it? That would seem to be an obvious thing for Civil and Civic to do, but it never did, right? Why not?

Dale Connor (3:07)

Historically, in Australia, a couple of things, Alan. One is the sheer investment. So as you say, it does take a Lend-Lease or a Built and a Wesfarmers in what we're doing at Built Living to come together and really commit the level of investment needed for the capital cost, for the cost to create the facilities that will then create that offsite manufacture, whether that's steel, timber, concrete, cross-laminated timber. So there's a large investment.

Then that investment needs solid pipeline. It needs a real guaranteed, whether it's guaranteed or you can see the market really being able to take on your product such that you can stand back and go, there's years in front of us, not only making the product efficiently, but being able to sell it. And I think the size and the scale of the market in Australia has been a limiting factor. But equally, there's both policy and perception, and making sure that policy, regulations, building codes, et cetera, are geared for the acceptance of off-site manufacture and inspecting things in the factory as opposed to on-site traditionally.

And that perception of making sure that the high-quality product you're making in a factory is understood by the marketplace and bought by the marketplace for its quality, as opposed to some other perception.

Alan Kohler (4:27)

Are you saying that Lend-Lease didn't do it because the inspectors wouldn't, that the regulators aren't ready for it? I mean, the thing about business is you've got to take a risk sometimes. You have to make the investment.

Dale Connor (4:39)