The secret to success in the booming Melbourne inner-city property market for Kosta Drakopoulos has been not to build big projects and not to take on too much work.
Drakopoulos, 39, has amassed a fortune worth an estimated $60 million, enough to debut on this year’s BRW Young Rich list in position 42 when the list is published on Friday.
His boutique Drakk Property group has been operating for the past decade, building commercial and residential projects in several inner-Melbourne suburbs dotted around the CBD usually valued in the $5 million to $30 million range.
“Construction will be at an all-time high for mid-tier builders next year including us, and if you’re doing projects in the 30-60 apartment range I think you’re going to be OK,” Drakopoulos tells The Australian Financial Review when asked about the state of the property market.
“That 200-plus mark is going to be harder. But the smaller stuff did well in the global financial crisis, for example. People are going to keep going.”
There are growing predictions of a glut of apartments and halving in approvals of new units as banks pull financing and developers pull in their horns.
Drakopoulos is one of an increasing band of emerging property developers who have made their mark on the Young Rich list in recent years, many of which are building apartment projects in Melbourne and finding success in the rapidly changing inner-city suburbs.
Those ranks include Tim Gurner and his eponymous group, which has eight projects under construction in formerly industrial Collingwood and Fitzroy, Luke Hartman of Metro Property Development, South Yarra-based Paul Fridman and Allister Lewison, who has a unique crowd-funding model to fund developments.
Drakopoulos is based in Collingwood, where former factories are being converted to hip apartment blocks, and he also constructs apartments for wealthy family clients as well as developing projects in his own right. Suburbs that he has built in include Ascot Vale and Essendon, as well as Geelong and in Sorrento on the Mornington Peninsula.
But the success that he has had is a far cry from the early stages of his career when at the age of 20 Drakopoulos dropped out of his construction course at TAFE and spent a few years packing boxes in the warehouses of sports brands Nike and Fila. He took a break to work as a concreter with his father but found it too hard and went back to the warehouse.
By the age of 24, and having by then met his now wife, Drakopoulos decided he should try to break into the construction sector. He painstakingly typed out at least 30 resumes on an old word processor and mailed them to potential employers.
One replied. A small family company called F Vitale and Sons offered him an administration job paying $24,000 a year. Drakopoulos took the job and learnt the fundamentals of the property sector, including how to value properties and projects.
Stints as a valuer at Buxton Group and Hickory Group followed, before Drakopoulos later struck out on his own, offering project management and estimating services as a consultant and then studying for his builders’ licence at night.
His first project was buying a block on a busy road in Burwood in Melbourne’s east, for $300,000 on a 90-day contract. Drakopoulos divided it into four shops, sold the first for $500,000 and the remaining three soon afterwards.
He then built a block of 70 apartments in Hawthorn for a client and has been building projects for wealthy family investors and his own company ever since.
Drakopoulos has also set up a construction recruitment website, Profilr, having found paying recruitment agents to be a waste of time and money.
But he will continue to mostly concentrate on the inner-city Melbourne apartment and commercial building scene, and stay disciplined and not undertake large projects.
“General enquiries have quietened down which reflects slower sales. Over the next 12 to 18 months, I believe there will be an adjustment in prices of apartments. The knock-on effect will see fewer projects and tighter margins across the board. But it won’t stop dead, far from it. We will just have to go back to basics.
“But this is old news. We experienced this at the end of last year onwards, but things keep chugging along.”
Story by John Stensholt