Harry Triguboff’s first apartment building went up in Tempe, in Sydney’s inner south, in the early 1960s. It was small, unglamorous and in a suburb nobody wrote about. He had been a taxi driver and a textile man before that, and he was not a builder by training. What he worked out in Tempe, and then repeated for six decades without materially changing his mind, was that apartment development is not a series of deals. It is a factory, and a factory only pays if it never stops.
Everything distinctive about Meriton follows from that. Most developers are promoters. They assemble a site, win an approval, hire a builder, presell enough to satisfy a bank, deliver the project, take the profit and start again from zero, which means every cycle begins with the same scramble for finance and the same dependence on a construction firm whose interests do not match their own. Triguboff refused the model. Meriton built in-house, with its own construction operation, which meant the margin a head contractor would have taken stayed inside the business and the programme on site was answerable to the owner rather than to a third party’s order book. It also meant that when the market turned, Meriton could keep its crews working rather than disband them and pay a premium to reassemble them two years later.
The second refusal is the one that made the fortune. A developer who cannot sell apartments at the price he wants has, conventionally, two options: discount until they clear, or stop building. Triguboff invented a third. He kept them. Unsold stock was moved into his own rental portfolio, and later into serviced apartments operating as hotel suites, which converted a liability into an income-producing asset with a yield attached. The apartment that would not fetch its price in a soft market earned rent instead and could be sold later into a stronger one. A conventional developer in a downturn is a forced seller. Triguboff was never a forced seller, because he had somewhere else to put the product.
Anyone who has run a roastery knows the shape of the advantage. Beans roasted for an order that falls through are a disaster if your only outlet is wholesale, because stale coffee sells for nothing and the clock does not stop. Put a cafe of your own at the end of the line and the same batch simply changes channel. Nothing about the roast improved. The exposure to one buyer’s mood disappeared.
Holding stock requires the thing almost nobody in property has, which is a balance sheet built to carry it. Meriton stayed private and family-controlled, borrowed against a vast portfolio of completed and income-producing assets rather than against the hope of a presale, and ran gearing low enough that a slow year was an inconvenience rather than an existential event. Triguboff bought land through downturns, when the promoters were absent and the prices reflected their absence, and he bought in the corridors he already understood rather than chasing fashionable postcodes. He has been loudly, repeatedly unsentimental about planning authorities, migration settings and anything else that affects how many apartments he can put up in a year, because volume is the only variable that matters in his arithmetic and he has never pretended otherwise.
Six decades of that produced a portfolio of towers across Sydney, Brisbane and the Gold Coast, a hotel business of real scale assembled entirely out of apartments that did not sell on the day, and one of the largest private fortunes in the country, built by a man still turning up to the office in his nineties to argue about floor plans.
Which is the lesson sitting in plain sight. Triguboff never made a famous deal. He made the same unremarkable deal several thousand times, and arranged his finances so that he could afford to be the last one still standing in the room when the price was wrong.
Source: NeTT Business News, “Harry Triguboff and the Meriton apartment empire”
