The anticipated uptick in the resources sector and growth in lifestyle village developments has prompted one veteran builder to re-enter the modular housing market.
The anticipated uptick in the resources sector and growth in lifestyle village developments has prompted one veteran builder to re-enter the modular housing market.
Wayne McGrath admits that launching a venture in a declining industry would not usually be considered a wise move.
“Modular housing has been a fairly depressed market since 2012,” Mr McGrath told Business News.
“But in 2016 I believed the market had bottomed; I saw an opportunity to get back into the modular game.
“The resources sector is expected to pick up next year and there has been significant growth in the over 55s lifestyle villages market – there was a chance to get involved and be in a position to provide a service I believe is needed out there.
“Timing is everything in this business.”
Mr McGrath has spent more than 30 years in the building industry and was managing director of then family business McGrath Modular for 16 years before it was sold to ASX-listed Nomad Building Solutions, now trading as Onterran, in 2006.
Led by Mr McGrath, former McGrath Modular executives Errol Davies and Jason Sjoland are also major shareholders in Modular WA, with Perth-based boutique investment company Wyllie Group, of which Mr McGrath is executive chairman, holding a 60 per cent stake in the company.
Earlier this year Onterran announced it would wind-down McGrath Modular as a result of trading difficulties and tough market conditions.
“We struck a deal,” Mr McGrath said.
“In May discussions were held in regards to purchasing the name, IP, designs.
“That deal was completed in June of this year and then we took over their work in progress with existing clients to finish homes that they had already signed up but had not started.
“So now we have optionality in that we have our existing Modular WA designs and the McGrath Modular designs in our portfolio.
“I’ve got the original team that was with me prior to 2006 and we’re going back to our roots; supplying a quality product, prioritising customer service and a competitive price.”
Mr McGrath said although Modular WA had only been operating for just over 12 months it had already generated a healthy order book.
“Margins aren’t what they used to be, but we’re expecting a fairly solid second half of this financial year,” he said.
“We’ve always been resources-focused and we’re looking to get back in touch with those companies.
“Lifestyle villages wasn’t an area we looked at before but we are currently the preferred supplier for the RSL Care WA village in Jurien Bay; that's approximately an 80-home village, and then we’re also working on a 200-home village in Northam for another developer.
“We’re actively looking for other opportunities in that space and we’re also looking to purchase a site to develop our own lifestyle villages.
“That’s the beauty of having the Wyllie Group involved; it gives us that financial capability to be able to consider that.”
Modular WA’s portfolio also consists of corporate offices, granny flats, government housing, classrooms, as well as metropolitan, regional and remote housing and Mr McGrath said the business intended to average at least 100 homes each year.
“Back in the old days they used to be compared to a ‘stapled-together fruit box’. Modular has come a long way since then,” he said.
“Now once they’re placed on site it’s very hard to differentiate between a modular house and a built home because of the advancements of materials and design.
“There is an advantage in that a home built on site can take up to 12 months to complete, a modular home can be completed in eight weeks.
“But we don’t pretend to compete with the residential market in Perth, as you start to get out of the metro area that’s when our product becomes more competitive.”
Besides speed of delivery, Mr McGrath said another advantage was that the nature of modular construction offered more flexibility for home owners.
“Ninety per cent of these homes are built in regional areas,” he said.
“If you decided you didn’t like living in Jurien Bay you could actually have the home easily picked up and relocated to Bunbury.
“That’s also quite appealing to farmers who may have a farm of 3,000 acres with five houses.
“And as we’re building offsite in our own yard in Wangara, we have absolute control over the product.”
