Property Investor Warns Against Assumptions of Endless Growth

James Logan, founder and director of Roofbuddy, cautions against the assumption that the property market will continue to rise indefinitely. A seasoned property investor and developer, Logan shares insights from his extensive experience in a recent interview, emphasizing the need for a realistic perspective on current market trends.

Insights from a Seasoned Investor

Logan established Roofbuddy as a marketplace connecting homeowners with quality roofers, aiming to enhance the roofing experience through innovative solutions. “The trade industries have been neglected in terms of innovation,” he stated, highlighting the significant opportunities for efficiency improvements through technology in largely analogue sectors.

His journey into the property industry began with a background in residential construction and property investment. After starting an air conditioning company in his early twenties, he quickly transitioned into property development. “I was doing investing and developing property from about a year after that,” he recalled, noting his academic foundation in economics and marketing, which proved invaluable in his entrepreneurial endeavors.

Logan’s approach to business is notably aggressive compared to many of his peers. “I think a lot of business owners experience diminishing utility in seeking the marginal unit of income,” he explained. While others might settle for stable income, Logan consistently reinvested profits into expansion. His air conditioning business reached a turnover of approximately $15 million annually before he transitioned to Roofbuddy.

The State of the Property Market

Logan’s perspective on the property market reflects a broader trend in New Zealand. “We’re in a multi-part correction where the underlying value of properties is either stagnant or dropping,” he stated. With inflation on the rise and incomes under pressure, he believes expectations of perpetual growth may need to be reassessed.

“There was a couple of decades of massive price inflation,” he noted, “but not a lot of improved quality in the underlying asset base.” He asserts that the housing stock remains inadequate despite the debt-fueled buying frenzy that has characterized the market in recent years. This situation may prompt a necessary shift in how both investors and homeowners view the market.

Logan’s investments include around 20 properties in Dunedin, known for its reliable rental returns from student tenants. He also developed 15 luxury villas in Indonesia, noting impressive short-term rental earnings. “The unit economics on those were fantastic,” he stated, pointing to a construction margin of double the investment costs. However, he acknowledges that this once flourishing market has tightened significantly.

As the property landscape evolves, Logan remains focused on sustainable growth. His ongoing projects include a home on Great Barrier, intended to serve as an intergenerational property fostering an outdoor lifestyle for his family.

“I’ve spent at least 10,000 hours doing water sports,” Logan shared, illustrating his commitment to balancing work with personal interests. He resides in Ōrākei, Auckland with his partner and children, emphasizing the importance of lifestyle choices in his real estate decisions.

Through his journey, Logan advocates for a more measured approach to property investment. “Perhaps we can now move on from the expectation that the property market is going to continue to increase perpetually,” he concluded, urging both investors and homeowners to adapt to the current economic climate.