One of my business partners has just moved into a unit around Canning Highway. It was a Pindan development (they went bust) built by BGC. There were a lot of delays and paperwork fluff ups, the latest being they had given NBN the wrong address which doesn't exist and therefore their internet is "up in the air" LOL.

BGC has now stopped pretty much all new home builds due to no labour (poor old Len Buckridge who died worth $8bn not the $4bn reported, God rest his soul, was a tight arse and they don't pay well is part of that problem), increasing costs and a huge backlog after the WA government gave hand-outs. I am also building and had about a 4 month delay on a now 18 month build.

Now Finbar is a slightly different proposition but the general lack of trades in WA is a huge issue. A lot of workers ghost the boss when he phones to find out why you didn't turn up Monday and the company never hears from them. Of course, they have a new job that pays more as the youth of today has zero company loyalty LOL.

Materials have been an issue but improving and with cost of raw materials and sea freight dropping significantly, that part should wash out.

One benefit is that the WA real estate market is going very well from a low base so relative to 12 - 24 months ago you would have to think price increases would have been put on units that haven't sold which would give a better margin. Higher interest rates will be an issue for investors but in my locality a lot of interstate and overseas buyers are buying unseen in one to two days of listing at over ask. They are mainly investors and with sky high rents in WA the yield is very good.

So hope that helps a little and someone can tell you the normal margins.

Hi Brains Trust,

Wondering if there is any industry standard for rough margins on apartment developers? I have been a keen follower of WA based Finbar (ASX: FRI) for some time. The share price has lagged since I took a very small stake back in the mid $1.50's, but has consistently floated between $0.60-0.80 ( I should note that I averaged in many more times within the $0.60-0.80 range so the initial parcel, less all the dividends since is probably closer to break even on a whole).

I understand that particularly in WA labour shortages are presenting headwinds for the likes of residential builders, and that ultimately the cycle is counter-cyclical at first glance with interestt rate rises, the FIRB foreigners fees, but Finbar has consistently held the $0.60-70 range for what seems like forever.

I feel that the market has somewhat forgotten the company - and its most recent H2 FY23 results for the first time had the interim dividend scrapped and a short term loss, which again, my rose tinted glasses feels makes the company fly under the radar even more.

There are several large pipeline developments due in FY 24-25, and I am wondering if anyone has a rough rule of thumb on what could be a reasonable profit margin % to apply on company sales?

Directors own a large portion of the company and although arguably gift themselves shares they have consistently reinvested and soaked up shares throughout the years, which I feel instill a larger confidence in the company than some of the other ASX "no hold" directors. I feel the large pipeline of developments, notably the large civic heart in South Perth will take the market by surprise in 1-2 years when the cashflow comes in. Would be great to work out a rough profit margin.

Beyond these large projects I suppose their pipeline is only as good as the joint ventures and land that becomes available, so that creates some uncertainty as there is a somewhat lacking pipeline beyond the 4 or 5 large projects in the works. Keen to hear anyone else's thoughts?

With the rental crisis here in WA, and availability at a low I can't help but wonder provided we don't have too hard a landing these next 1-2 years, surely alot of these apartments will have buyers eventually. Not sure if this is outweighed by the interest rate hikes off-putting purchases. There is also the indicated lack of pipeline developments in apartments overall from what I read - given the labour shortages, planning laws and I do wonder if there will be a supply crunch these next few years that will be advantageous. I for one hope for greater density, as Perth lags the likes of Melbourne, Sydney, and other developed countries due to the lifestyle and what people are 'used to'. With cost of living and infrastructure becoming more difficult I do hope we start to urban fill and go upwards , which in turn i believe brings more concentration of associated services, restaurants, immigrants etc. who are used to the hustle and bustle.