Tom Hedley, a one-man building boom

It’s hard not to notice the mark of property developer Tom Hedley on the Cairns skyline. Of the half-dozen cranes that dot the city, more than half carry the Hedley Group logo. Elsewhere in the region, Hedley is responsible for projects in Port Douglas, Palm Cove, Trinity Beach and Townsville. He entered the BRW Rich 200 in 2005 when he was estimated to be worth at least $500 million. His operations span construction, investment and hotels.
In 2006 he sold a parcel of hotels to the Coles Group in exchange more than $300 million in Coles shares, but critically retained the freehold over 30 of the buildings. When Wesfarmers began to stalk Coles later that year and approached Hedley for his stake, he forced the group to lift its scrip component in the deal to maximise rollover relief. Today he is probably worth closer to $800 million.

Eureka Report made a number of attempts to meet Hedley while on assignment in Far North Queensland. Hedley initially told us that he “wasn’t much interested in media” but we wore him down after a number of requests and he agreed to meet us on a Saturday evening 12 kilometeres out of town at the Red Beret Hotel in Redlynch (the first pub he ever owned). After a brief chat about the state of property market and the day’s race card, he granted us the following interview.

The interview

James Frost: Could you tell us a little about your first foray into property development?

Tom Hedley: I started out here actually, in Redlynch, not so long ago – just around the back streets, probably about 15 years ago. I started building town houses and the market accepted it nicely and then from there I grew from that to doing high-rises in Cairns and high-rises in Townsville. We do as much in Townsville as what we do here these days, probably even more. Townsville’s a great market, it’s growing fast and we’re happy to be a part of it. So in 15 years we’ve grown from that to where we are now '¦ we probably produce about 800 properties a year in Far North Queensland.

What sort of advice do you give your son about investing in property?

My son is 22 and what I try to tell him is to look for opportunities. When I started – and my background was in building and construction – I looked for opportunities like a block of land on a hill. Now that might be a bit scary for 99% of people but if you can bulldoze a platform and build a house then you can add good value. I could seize an opportunity and by using backhoes and other machinery all of a sudden you’ve got 300% return on your money. I tell my young fellow to do the same, because there’s a lot of property out there that’s hard for a lot people to produce.

Can you make money out of buying and holding property or do you need to get into development to make a buck?

No you can certainly make money out of buying and holding property. Around the CBD there’s a lot of blocks of land with old houses on them and if you can get in there and combine one or two together and get yourself a decent size block of land and collect the rent for a while then that’s another good tip.

Your group has a number of projects under way in Cairns CBD. Are you banking on a shift towards city living?

Oh, definitely. City living’s only just started here in the far north and we’ve been behind that push. Most of the places built in the city over the years have been just hotels whereas now we’re doing residential development and we’re doing quite well. The public can’t get enough of it.

Any more CBD developments in the pipeline?

Oh yeah, probably five at the moment. To start this next year.

You’ve also got a number of developments in Trinity Beach, between Palm Cove and Cairns. Can Trinity Beach can become the next Palm Cove?

No not really. Trinity Beach is more owner-occupied. There’s not a lot of holiday letting or short-term accommodation there, so no. Trinity Beach is more for owner-occupiers.

How are your developments in Port Douglas progressing?

Port Douglas is popular with the Sydney and Melbourne crowd, as we know, but it’s a little bit slower at the moment. If Sydney and Melbourne are strong, then so is Port and it’s a bit more complicated than that down south. Our property, Lagoons@Port, is going good. It’s holding value and they are well priced. They’ve been well received and we’re about two months off completion but we would just like to see the sales pick up a little bit.

The latest big development in Port Douglas is the Balé resort. Do you think they’ve been experiencing any problems with sales?

I’d say for sure. Yeah, for sure. They’re going for a million-five and up. At that price point I’m glad to have my stock on my books and not theirs.

We’ve seen a lot of acquisition activity in listed property over the last 12 months. I’d find it hard to believe that your organization hasn’t been approached in this climate?

We have been approached but we are on our own journey. We’ve got some pretty exciting stuff coming up which I can’t comment on. I really think we’re going to be some bigger and better stuff happening for the Hedley Group.

Where do you see Cairns and Far North Queensland in five years?

Well, I don’t really believe the statistics. I reckon there’s twice as many people coming here. They say there’s 3500 people coming here a year. Now I reckon the statistics are five years behind. I reckon there’s at least double that coming into this area in Far North Queensland. It would have to be on the takeup and tight vacancy rates that we’ve seen. In five years’ time, I see another 20,000 people here, easy. Cairns Hospital is one of the biggest hospitals in the state now and it’s the amount of children that are born there every year is incredible. I’ve been actually looking in the [Atherton] Tablelands the past eight months and it’s magnificent up there. There’s plenty of rainfall, the climate’s right and the prices are right. So I see a big shift towards the Tablelands and when that happens, the roads will be upgraded and everything else will follow.

Is there anything else you’d like to say?

Well, I haven’t been to a lot of places in Australia, but from what I see and read and watch I don’t think you can get probably any better than far north Queensland. I know we have the hot summer, which is a bit of a concern for southerners and we don’t want to hear about cyclones every year, but that’s the only negative. It really is a great place. The infrastructure’s keeping up with the region and the rainfall’s good which is important, so we really haven’t got a lot of negatives here.

Last question, Tom. Can I buy you a beer?

Yeah (laughs). No worries.