The COVID-19 pandemic caused fundamental changes to how individuals, businesses and governments operate. Restrictions and lockdowns forced people away from the CBD and into the suburbs, while builders and developers bore the brunt of the financial costs associated with delays and material shortages in the property and construction sector.
However, as we begin to understand the economic and societal consequences of COVID-19, the time is ripe to take advantage of those opportunities that can help lead us out of this pandemic and kickstart our recovery.
Despite the numerous challenges that remain, including inflation, supply chain disruptions and the war in Ukraine, the Victorian property market remains strong. Following the recent Victorian budget, which provides billions of dollars to be invested in state infrastructure, developers, builders and landowners have a golden opportunity to capitalise on these unique economic conditions.
Fortunately, we don't have to look far beyond Melbourne's Hoddle Grid to find attractive prospects for urban renewal and growth. Areas like Fishermans Bend are primed for development as people return from the outer regions to live and work in Melbourne.
As part of a wider strategy to revitalise this traditionally industrial area, the Fishermans Bend Framework was published by the Victorian Government in 2018. The Framework aims to transform Fishermans Bend into a mixed-use area that is "a thriving place that is a leading example for environmental sustainability, liveability, connectivity, diversity and innovation". The Framework's long term strategic plan is to host upwards of 80,000 jobs and 80,000 residents by 2050.
In order to facilitate this strategic shift, Amendment GC81 introduced a series of permanent planning controls to the Melbourne and Port Phillip Planning Schemes in October 2018. Our Victorian Team acted for major landowners and developers with key interests during this time, and have first-hand experience with these changes.
Key among the new controls was the 'Infrastructure Contributions Overlay' (ICO), which was applied to all four precincts in Fishermans Bend, Montague, Lorimer, Sandridge and Wirraway. While acting for various parties during the process, our Team's submissions to the Panel were that an ICO was simply not the right tool for Fishermans Bend. Critically, the effect of the ICO was to prevent any and all subsequent development of the area by restricting planning permits until an Infrastructure Contributions Plan (ICP) is put in place.
ICPs are best applied to metropolitan greenfield growth areas, not inner city industrial precincts. This is because the valuation of land in urban areas comes with added complexity that is not experienced in greenfield areas. The ICP model is not suitable for areas like Fishermans Bend where whole sites will be acquired and it is too difficult to capture the value of site specific improvements or the numerous tenancies which exist within many of the landholdings. In particular, the level of site-by-site research and analysis required to achieve this is clearly impractical for an area as dense and complex as Fishermans Bend.
At the time of Amendment GC81, our Victorian Team advocated for a Public Acquisition Overlay (PAO) approach. In this way, land could be reserved for public purposes without unnecessarily constraining development opportunities. This is common practice for areas similar to Fishermans Bend and provides for a much more efficient and fair process.
With the exception of a small number of landowners and developers who have had their planning permits progressed through the Standing Advisory Committee process, four years have now passed since Amendment GC81 and, for the most part, developers are still hamstrung by these planning controls while the opportunities in Fishermans Bend remain unfulfilled. If the PAO approach had been adopted, as our Victorian Team had advocated at the time, the land would now be ripe for development rather than clouded by uncertainty caused by the lack of an ICP.
The property sector is key to the national and state economy, supplying more jobs than mining and manufacturing combined, and it will be a crucial piece in our COVID-19 recovery.
It is time to revive development and rejuvenate Fishermans Bend.
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.