Part 3 – How Maha Sinnathamby Sold Springfield For 50% More Than Valuation

 

How Maha Sinnathamby went from Sydney taxi driver to Australia's 49th richest person.

One of the jewels in the Springfield crown is their Brookwater estate.

Maha tells the story of how a group of politicians, councillors and dignitaries first visited the estate prior to the first blocks being released.

One of the councillors asked Maha what the first lots would sell for.

Maha suggested a price between $90,000 to $150,000, to which the group burst into laughter.

House and land packages in neighbouring Ipswich were selling for roughly $80,000 at the time.

Brookwater lots had also been previously valued at $60,000.

Maha was surely dreaming if he thought he would attract such as premium price for his lots.

Yet soon after this meeting, the first lots were successfully introduced in Brookwater for $90,000.

One of the councillors later told Maha he laughed all the way back to his car… yet two years later he bought a lot in the estate for $250,000.

And blocks were fetching as much as $600,000 each just prior to the Global Financial Crisis.

So how did Maha sell lots for 50% more than their originally valued price? And how did they attract more people into the area to make the commercial aspects of Springfield viable?

The story starts in August 1999.
 

Attracting More People Without A Commercial Precinct

Maha and his partner Bob Sharpless had just signed an agreement with Delphin that staved off the banks and gave Delphin development rights for the residential lots in Springfield.

Part of that agreement involved an escalating royalty clause which in essence meant Maha and Bob would receive a greater slice of the profits for each block of land sold over a certain price range.

Once the Delphin agreement was finalized, Maha and Bob worked on increasing land values and attracting more people into the area.

But how?

They had plans in place to build a grand city centre with universities, shopping centres, hospitals and a CBD twice the size of Brisbane's.

Commercial developments like these would surely bring in more people.

But these options weren't viable at the time because Springfield didn't have the required population base to sustain it.

It was a chicken and egg problem.

Springfield needed a huge population base to make their city centre viable. Yet people wouldn't move to Springfield in their droves unless an established city centre was already in place.

Maha and Bob had to find another way.
 

Lessons Learnt In Perth

Maha first learnt what it took to sell property in Perth.

He had originally moved to Perth in 1971 in search of engineering jobs.

His brother was already living in Perth and Maha lived in a room in his brother's veterinary practice.

Unfortunately WA's mining boom had gone bust thanks to a depressed world economy and there was little engineer work to speak of.
Rather than give up and move back to Malaysia, Maha hit the streets and eventually landed a job as a commission only real estate agent.

It was his first introduction to property and a moment that would change both Maha and Queensland forever.

Maha worked tirelessly to learn about property and his charismatic nature meant he was a natural salesman.

In 1976, Maha finally decided to go it alone and move into property developing.

It was a brave move but over the next five years he was able to grow his new business, Murdoch Constructions, from nothing to a $7 million company, employing 48 people at its peak.

His company had grown big. So big that financial advisors told him the only way to grow it bigger was to take it public. But a disastrous IPO saw Maha's empire crumble.

He lost everything and decided to pull up stumps and move his family to Brisbane to start fresh.

At about that time a young Engineer named Bob Sharpless approached Maha for a job. Maha was broke at the time and had no job for him. If Bob wanted to work with Maha, he would have to be paid on results only.

Bob, wanting to learn the secrets behind property developing from Maha, agreed and the two of them headed to Brisbane together to start a fresh.

They rented a small two bedroom house which doubled both as the headquarters for their new company and accommodation for Bob at night.

When Maha left Perth his solicitors told him, “They have taken everything from you, but they can't take what is in your head.”

Maha put that knowledge to work and after a few successful deals, managed to climb up the ladder again and back into the black.

Not long after, Opossum Creek came on to the market.

Faced with the question of how they could attract more people into Springfield and boost land values, Maha's decades of real estate experience told him the answer was to simply ‘add more value'.
 

A Golf Course Estate?

While the idea of creating a golf course estate in Springfield had been discussed, the idea didn't really take off until mid-1999−around the same time as the Delphin partnership had been agreed upon.

David Henry, the project manager who first introduced Maha to the ‘big idea' of creating a master-planned city, had a relative who worked for Macquarie Group and he'd been told the company was moving into golf course developments.

They had partnered with the legendary Greg Norman, also known as ‘The Great White Shark', and created Medallist Developments specializing in golf course design.

Could this be the solution they were looking for?

A world-class golf course would be expensive, but it would be cheaper to run than say a hospital.

It could also make the area more desirable and attract more people. Their research suggested a world-class golf course hadn't been built in Brisbane for over 30 years and golfers were desperate for a new course.

Maha was keen to pursue this option.

But they had no experience in golf course developments. What's more, Macquarie were willing to finance the construction but it came with a hefty interest rate.

They just averted financial disaster with one bank. Did they want to tempt fate again with another?

Bob was unsure, but after listening to Maha pitch the merits of a golf course development over and over again, eventually agreed.

Springfield was built upon the idea of design excellence so excellence is what they would pursue with a world-class golf course estate.

And while it would be costly to build, they were certain a golf course would lift land prices and bring more people into the area.
 

Adding More Value

So construction started on the Brookwater Golf and Country Club as Delphin developed the surrounding residential lots.

But Maha and Bob knew there was more work to do.

If they wanted to make Brookwater more desirable, the area would also need to be a showpiece of architectural beauty.

So they hired an in-house architect and offered free architectural service to builders so that each individual house could enjoy maximum environmental sustainability according to its site.

They also purposefully built the first display homes on the steepest lots to showcase how architectural beauty could be achieved in some of the difficult terrains in their estate.

People were bowled over by the Greg Norman designed Brookwater Golf and Country Club when it was finished. And they fell in love with the exquisite display homes, gorgeous parks and luscious tree lined streets that surrounded it.

So when the first lots in the Brookwater Estate became available, they successfully sold for $90,000… exactly 50% more than what they were originally valued at before the golf course.

And prices continued to climb, reaching as much as $600,000 a lot before the Global Financial Crisis hit.
 

The Tipping Point

Today the Brookwater Golf and Country Club is a world-class, 6505-meter, par 72 gold course. It was named by Golf magazine as Queensland's best public access golf course for the sixth year running in 2011 and is regularly placed in Australia's top 30 courses.

And it proved to be an important tipping point for Springfield. As more people moved into the area, Maha and Bob were able to find the commercial partners they needed to make their master-planned city vision a reality.

They joint ventured with the James Fielding Group and later Mirvac to build Springfield's ‘Education City', a unique 18-hectare learning community that hosts a range of early childhood educational providers, school and private learning institutions. At the heart is the University of Southern Queensland.

Adjacent is Springfield's ‘Health City', a 52-hectare health campus containing a public and private hospital, and every kind of health facility from physiotherapy to alternate medicine.

A $220 million Tier 3+ Polaris Data Centre opened in Springfield in 2009. Polaris delivers primary, secondary and disaster-recovery data centre capabilities for all levels of government and the private sector. It represents the largest and most advanced purpose built data centre in Australia.

The Orion Shopping Complex houses Big W, Woolworths, Aldi and over 110 speciality stores and restaurants. Construction on Event Cinemas, Target, Coles and around 80 additional retail stores will be further completed in 2015. When finished, it will be the largest shopping centre in Australia.

The Queensland government also invested in new roads and a $1.2 billion rail network, opening up Springfield to the rest of Queensland.

Today, the area is home to roughly 28,000 residents and 8,700 students. Around 8,000 people are employed in its CBD.

By 2030, the population is expected to grow to 105,000 people with a job creation target of 30,000.

Roughly $10.2 Billion has been spent to date on Springfield's development with the final development cost expected to be $32 billion.

Springfield has since won the prestigious FIABCI Prix d'Excellence Award for World's best Master Planned Community in 2010.
 

Lessons Learnt

Value adding has been a cornerstone of Maha's success in property. It's one of the great secrets behind wealth creation in any field.

Today, BRW Magazine lists Maha as Australia's 49th richest person with an estimated worth of $840 million. Publisher Global Indian Origin lists Maha as one of the world’s 100 most influential Indians.

His partner Bob Sharpless, who hitched his wagon to Maha's in Perth, is also listed at 182 by BRW with an estimated worth of $265 million.

With Springfield only half way through completion, their worth is expected to grow even further as the project moves along.

Both men started with little money but had a vision and knowledge of property development − proving it is possible to invest and profit in real estate starting with no money.