Crown Group flags new partnerships as apartment growth beckons

Artist's impression of Waterloo, Mastery - a Crown Group project

An artist’s impression of Mastery in Waterloo.

When most Australians think of the name Crown, glitzy casinos come to mind. But the local success of Sydney apartment developer turned luxury builder Iwan Sunito and his rising offshore ambitions could mean the brand will soon carry different connotations.

The Crown Group chairman, a Borneo-raised architect who co-founded the developer a quarter of a century ago, has unveiled big ambitions to dramatically grow his business using partnerships to take the business platform to the next level.

Sunito, who has toyed with floating the business locally and offshore for some years, says he is now ready to bring in the institutions that can help him make the company into a far larger enterprise by leveraging its development skills and knowledge.

Crown Group, which early on marked itself out from the pack of Sydney developers with a series of architecturally striking buildings, has already forged into Brisbane and Melbourne. It is not only taking on ever-larger projects, but also keeping its distinctive culture.

Infinity at Green Square.

Sunito, who says that Sydney will always be the home for the company, is engrossed in a new wave of projects that will swell its pipeline, while also planning for a future that could eventually propel him into a non-executive post at the developer.

Big international players – who can see that Australia is on the cusp of a new apartment boom – are already in close contact with Crown Group, keen to be part of its next phase of growth.

Crown Group’s distinctive towers and associated hotel brands already dot city landscapes, and plans for what could be a breathtaking expansion may make them even better known.

Sunito harks back to the company’s earliest days when it was active in Sydney with small projects in areas like Bondi, Parramatta, Ashfield, Epping, Homebush, Newington and Pennant Hills. It has since stepped up to larger projects like the 25-storey Arc by Crown Group in Sydney’s CBD and the eye-catching Infinity in Green Square.

It remains one of the city’s most active mixed-use developers, with the $500m, five-tower precinct Mastery by Crown Group in Waterloo being developed with Mitsubishi Estate Asia, Waterfall by Crown Group in Waterloo, and The Grand Eastlakes in the eastern suburbs.

“We’ve grown from a company that was developing one job at a time to growing to a $5bn pipeline in 15 years,” he says.

Sunito puts much stock in having the best designs for his markets and says Crown Group has shifted well into mixed-use precincts, albeit in a different fashion to its rivals.

Waterfall by Crown Group, Waterloo

Waterfall by Crown Group, Waterloo.

Sunito says that Sydney will always be the strongest city but flags that Melbourne will grow into a “few billion dollars of pipeline” and it is also active in Brisbane. But the biggest shift is in developing stock that generates a recurring income and Crown Group will grow its serviced apartment and build-to-rent arms to beyond $2bn.

These are the ambitions that have attracted the big players.

“I’ve got so many groups out there that are knocking on our doors, because they see Crown Group as a company with a platform that can be scaled up rapidly,” Sunito says. He cites the company’s internal capacities as being the key. “We really do want to grow the business to a new level of growth while still wanting to make sure that it’s sustainable.”

Sunito professes surprise that his business has attracted interest from one of Asia’s largest sovereign wealth funds.

But this is the kind of partner that will make the company’s future.

“They’re knocking on our door and saying ‘look, we’ve been watching your group”,” he says.

The interest is in scaling up Crown Group, perhaps dramatically. “We’re talking about taking the company to $20bn, $30bn, like $2bn or $3bn per single job instead of a half a billion to a billion that we’re doing here,” Sunito says.

Sunito says that to fuel growth he is looking at shifting away from fully owning projects and would take on partners to around the 50 per cent mark. The big shift is likely to come on the build-to-rent side where he is already fielding interest. In some developments, Crown could manage and take stakes of 20-30 per cent instead of full ownership.

Images of Crown Group Chairman and Group CEO, Iwan Sunito:

Crown Group chairman and CEO Iwan Sunito.

Sunito insists, however, that Crown Group will not become a mass production company and sees partnerships as about a “transfer of learning” that is within the company.

On the ground he says the company is already targeting bigger builds. He is hoping to lock up a $600m project shortly, and two more projects which will generate $1bn are being worked on. Crown Group won’t be everywhere, he says, but in areas where it can have an impact. Despite the rampant market, Sunito says he will not push prices too much. “I’m always a believer of the middle-priced product because I don’t really live in a glitzy world,” he says.

The developer’s calling card is mid-market projects that offer otherwise unattainable luxury elements.

He is also taking this philosophy offshore. And these markets will help provide an edge at home. In Los Angeles, Crown Group is planning a major tower where it will both sell apartments and do build-to-rent.

“What also excites me the most about the USA is learning about BTR,” Sunito says. “We’ve got a team now fully assembled in the USA that are going to help us in creating our BTR product in Sydney.”

Sunito points to the importance of lenders also accepting the product locally and says this could be a key hurdle for the nascent sector. While in the US such projects can get 75 per cent debt funding, in Australia that can cap out at about 55 per cent.

“You’ll end up with just a handful of developers that have the capacity to develop that,” he says.

Artist's impression of Eastlakes, a Crown Group project

An artist’s impression of The Grand Eastlakes.

The solution is true mixed-use developments like Green Square, where Crown Group has retained a portion of the apartments. “The Americans and the Japanese are looking at it differently,” he says. While the returns can be lower, they are very steady, and perhaps will grow as more people are working from home.

Characteristically, Crown Group is approaching build-to-rent differently and Sunito says it will only work if it is embedded within a broader, desirable apartment and hotel precinct. “I just don’t think that a pure BTR somewhere [in the suburbs] will ever survive, simply because we’re not thinking in the same way as Americans,” he says.

In Indonesia, he also has plans, and is exploring a 5ha waterfront development in Jakarta with the government. “I want to build an affordable condo,” he says. “It’s a live model of Crown Group, which is really more compact but beautifully designed. You don’t have to have the bling bling but that luxury is actually in the nature of the building.”

Like his development company, much lies ahead for the businessman, who plans to get a lot done before even contemplating stepping back.