Project profile: Naisoso Island
When Bob Lowres bought a Fijian island, he already had a vision to share it. But how did he bring together the government, the bank and the public to make the Naisoso Island project a viable development?
Bob Lowres is a retired property developer. Or at least that was the plan when he moved to Fiji in 2004, having handed the daily operations of Relcorp, his Brisbane-based property company, over to his team. With wife Libby, he was set to see off his working life in the glow of a Pacific sunset.
It only took a few weeks’ saturation of sun and sea for Lowres to realise he needed another challenge and began to view Fiji as an opportunity. “After six weeks I was going nuts and I didn’t want to retire,” he recalls. “I said to Lib, ‘why don’t we buy a little island, and put a bure on it and some guest villas? It’ll be fun.'”
After mentioning this to his architect, Lowres learnt of a sliver of an island close to the airport that had been ‘under contract’ for several years. The feature that made his ears perk up was that it was freehold, as only 8% of Fijian land is not owned by the Crown. It sounded like the perfect place: good location, good for property ownership. Lowres decided to investigate Naisoso Island.
The battle for Naisoso
“The previous person had it under contract on and off for about 10 years and he could never raise the money to settle, or never had the money to do the development,” explains Lowres. “He seemed to attract 500,000 [dollars] or a million, and he’d give a percentage of it to the owner, and take an option to get approvals and do this and that. He did it about three or four times but was never in a position to settle. People develop an attachment to something they’ve got no hope of ever buying—that was him.”
When the other would-be developer heard Lowres had put Naisoso under contract, he raised a caveat. Lowres had done his homework, however, and knew the old contract wouldn’t stand. “I knew the property was correctly terminated. People abuse the court system hoping that they’ll outlast you and that commercially you’ll make a decision to walk away because it’s all too hard. Well they picked on the wrong chap because I’m like a cattle dog with a bone: once I make my mind up you won’t get it off me.”
Fortunately, the court battle didn’t slow Lowres’ plans for Naisoso. “Because I knew that it was correctly terminated and we would win, I just kept going with all my approvals and surveys, so it didn’t hold me up.”
Funding the development presented a different sort of problem. When Lowres began Relcorp Fiji he had not yet become a Fijian citizen, which meant it was a non-resident company restrained by a borrowing limit. Added to the constraint was the fact that the Fijian Development Bank (FDB) had previously been burnt by busted tourism ventures, which made it reluctant to lend such large amounts of money to a foreign project.
“Under the charter here I couldn’t borrow 75 million; they could lend me 60 million so there was a 15 gap,” says Lowres. He then sought endorsement from ANZ Bank, which has a significant presence in the Pacific, to propose an unprecedented lending arrangement.
ANZ had undertaken due diligence on Lowres and Relcorp and found them to be not only credible, but Naisoso Island to be a profitable long-term project. “ANZ said ‘we’ll lend $40 million in Fiji as ANZ Fiji, you guys [FDB] put in $15 million to cover the amount that this non-resident company can borrow here and ANZ New Zealand will top up the other amount’,” explains Lowres. “So although it was only ANZ and FDB on paper, it was actually ANZ Fiji, ANZ New Zealand and FDB.”
An unexpected bonus from the collaboration was that FDB could align themselves with ANZ, the major tourism funder in Fiji, “and learn from their processes from the monthly meetings, the board reports, the cash flows, the ‘what if’ factors,” Lowres adds. “So their risk management got much better because of that.”
Sales and sensibility
When Lowres bought Naisoso Island, it was 45 dense hectares of date palms and long-bladed grass, its most promising features the beach facing the Pacific Ocean on one side and a riverfront opposite the mainland on the other. Add to that its proximity to the airport and its advantages became clear. “The quicker you can get to your destination, the quicker you start enjoying your holidays,” says Lowres.
Lowres split the island into three main zones: one for resorts, one with apartments and the prime land for residential housing. The freehold status means that unlike other tourist accommodation available in Fiji, the Naisoso resorts have no restrictions on how long they can have people stay, meaning holidaymakers can enjoy the Fiji lifestyle for several weeks or even months. The private land Lowres set up as a neighbourhood with strict design guidelines both as a nod to traditional Fijian architecture as well as in keeping with a high aesthetic standard.
The go-ahead with funding also meant that Lowres could take on the island as a whole. While sales were strong from the beginning—”at all times borrowings were covered by pre-sales,” he says—a smaller amount of capital would have meant rolling out the infrastructure to different subdivisions in smaller stages. The island now has power, water and sewerage systems in place, as well as a bridge connecting it to the mainland and its main roads.