Soheil Abedian has made a fortune from Australia’s housing market.
The Queensland developer has built tens of thousands of homes and some of the most exclusive high-rises and luxury developments on the Gold Coast, including Australia’s tallest building, Q1, and the former Palazzo Versace resort.
But after four decades in the industry, Mr Abedian says the growing social divide between those who can afford property and those who cannot is shaking the foundations of this country.
“Currently, we have a massive crack between those who are rich versus those who are poor,” he says.
“Don’t make a mistake, I belong to the 1 per cent population of the world in regards to wealth, and I’m saying that is fundamentally wrong.”
The Iranian-born property developer, who founded Sunland in 1983, says the widening affordability chasm is harming Australia’s future.
And his solution: mandate a portion of all new housing for people priced out of the open market.
Dire need for housing affordability
As he winds up his ASX-listed construction company and returns to private business, Mr Abedian says developers should be forced to set aside roughly 5 per cent of new stock for affordable housing.
“The percentage of every development, no matter where the location might be — the most expensive precinct, or the lowest [affordable] precinct — of approximately 5 per cent,” he says.
“I don’t understand why the board member on BHP or Qantas cannot live [alongside] the person that for the first time they are acquiring a house.”
It’s something he accepts is controversial among his peers, and developers would need to accept it eating into profits.
He says ever-increasing house prices are unsustainable, and the long-term impacts of any new scheme could benefit builders in the long run.
“We have to look at it as society as a whole,” Mr Abedian says.
“If the developers do, for example, 100 units, what harm is it that five of those units will cater for the needs of the first home buyer?
“It should not be only for the privileged few to have access to everything.”
Rare call welcomed by advocates
Setting aside a proportion of private developments for social housing is something advocates have long called for.
A similar policy is known by the industry as “inclusionary zoning”.
National Shelter’s chief executive, Emma Greenhalgh, says it’s refreshing to hear a developer lending their voice to the cause.
“It’s great to hear a developer come forward with the suggestion that a proportion of private development must include social and affordable housing,” she says.
The federal government has recently made tentative steps to investigate the measure through its National Housing Reform Blueprint.
Along with a range of issues associated with the housing crisis, it looks to consider the “phased introduction of inclusionary zoning and planning”.
But there are caveats.
It must “support permanent affordable, social and specialist housing in ways that do not add to construction costs”, according to the federal government.
So, how does inclusionary zoning work?
It’s not too far from what Mr Abedian proposes.
Through land use planning, governments ensure that a portion of residential developments have social or affordable dwellings, according to the Australian Housing and Urban Research Institute (AHURI).
That can be done either through mandates, which can be built into development approvals, or incentives, where the inclusion of affordable housing could reduce costs for developers, or result in some planning rules being relaxed.
Ms Greenalgh says it’s important that the approach is phased in slowly because it can affect land prices.
“We can’t introduce it tomorrow for existing developments, but what you could do is grandfather it so that it applies to developments and land purchases in the future,” she says.
“That will get baked into future land prices.”
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Queensland failure
Inclusionary zoning is nothing new, Ms Greenhalgh says, adding it’s within the power of the federal and state and territory governments.
Schemes are already in place in Sydney, the ACT, and South Australia.
But there hasn’t been as much interest in Mr Abedian’s home state of Queensland, Ms Greenhalgh says.
“One of the reasons why state governments are usually reluctant to bring it in, and we had this experience in Queensland about 20 years ago, was pressure from the development industry,” she says.
This year, the Queensland Greens introduced a bill in state parliament that would have meant one in four new dwellings be set aside for state social housing.
Ms Greenhalgh says this target was ambitious.
“One of the reasons why the legislation didn’t go through, it was a similar kind of model but the figures were really quite high,” she says.
“Figures that are usually done in other jurisdictions can be between 5 and 10 per cent.”
Where are we headed?
With economists pointing to Australia’s housing crisis as a “stunning national fail” and reports of continued declines in affordability, the outlook is grim for many existing home owners as well.
Mr Abedian maintains the development industry can lead the country out of the crisis.
“All my life as, an Iranian-born Australian, I have really looked at the fabric of a society both in my country of birth and now in my adopted country,” he says.
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He says a solution to the housing crisis should be within reach in such a wealthy country.
“We need to have legislation [where everyone] is a beneficiary of what Australia is offering. First and foremost is the human right of shelter,” he says.
“But unfortunately, we are always, every year, dancing to the tune of the rich man.”
He says too many Australians are without a roof over their head.
“How many homeless people do we have in Australia? For every 200 Australians, we have one homeless person,” Mr Abedian says.
“How can we actually continue with that process, to increase more homeless people, and at the end what would the outcome be?”
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