The Weekend Australian
June 7-8, 2014
By Kylar Loussikian
BEFORE it was home to heirloom vegies and single-origin coffee, the Grounds of Alexandria, in the inner-city Sydney suburb, was a food factory, churning out Four’NTwenty pies by the pallet. Indeed all the recently finished apartments, now selling for an average of $600,000, were industrial facilities. That’s well known.
But what isn’t often discussed is where the next round of apartments could go. Looking into the development crystal ball would certainly make it easier to buy that derelict shopfront and cash in when the developers roll up. Unfortunately, were it that easy we could all be multimillionaires.
So where can we expect apartments to be built in the next decade? Some areas are easier to pick than others.
Construction at Fishermans Bend, an industrial area in Melbourne’s inner west, is expected to begin in the next few years after the state government announced the project last September.
Michael Fox, managing director of Little Property Group, forecasts his company will be one of the first off the ground with a 900-apartment development in the Sandridge precinct, one of four in Fishermans Bend along with Wirraway, Lorimer and Montague. According to the state government’s urban renewal plans, the area will eventually house 80,000 residents and 40,000 new jobs, making it one of Australia’s most densely populated suburbs.
Fox says the government is sure to announce further areas like Fishermans Bend “in the not too distant future”.
“My gut feeling is it’ll be the old inner-city industrial areas,” he says.
“Draw a ring around the CBD, and it’ll be Cremorne near Richmond, Collingwood and probably out towards Brunswick East.”
Carolyn Whitzman, a professor of urban planning at the University of Melbourne, says most development in Australia is undertaken by the private sector and government planners have been reluctant to direct it.
“Private developers make up around 96 per cent of projects, and they have their own trigger points,” she says. “State planning hasn’t been particularly strong in Australia.
“Unfortunately the state governments, who make the big planning decisions, like Victoria, NSW and Western Australia, they say ‘this place is open for development and we’ll rezone’, and then land starts trading hands and growing in value.”
Whitzman says that the situation in Queensland is a bit different because there is stronger local government.
But she says European and North American cities are better at capturing some of the increased value from the rezoning process.
“They use that revenue, captured through increased property tax intake, for instance, and use it towards a set of things like parklands, new schools, community centres, affordable housing, better public transport and other things you need when you have higher density,” she says.
A resident of Brunswick, in the city’s inner north, Whitzman says development there and in Footscray is also inevitable.
She says development could stretch up towards Coburg Station and along other rail routes, particularly along the Cranbourne and Packenham lines out towards the dearer eastern suburbs, as developers look to high value projects and existing transport infrastructure.
In Sydney, inner-city industrial suburbs have already undergone development, and new apartments will be driven by infrastructure projects, according to Matthew Tiller, LJ Hooker’s national research manager.
He says the West Connex project, from Parramatta to the southeast through the inner west, and the new airport at Badgerys Creek will spur development.
“Work there will be in the longer term, as airport construction nears completion, as the train line gets put in,” Tiller says.
“The first beneficiaries will be the current major centres like Campbelltown, Liverpool, even Penrith, because they already have transport and the amenities in that Badgerys Creek catchment.”
But the lack of inner-city infill sites will mean areas with existing apartments becoming increasingly dense.
“If you look at the Sydney CBD, 20 years ago Grocon completed 2 Quay Street over Paddy’s Market, and that was the tallest residential building, around 165m,” Tiller says.
“Now we have the Greenland Centre (on Bathurst Street), and that’s 20 storey higher, so it’s one more storey each year.”
Other small industrial pockets farther out from the city could also be redeveloped. Light industrial areas across Sydney’s north shore, particularly along the Pacific Highway, are already being converted as bulky goods retailers and residential developers move in. Sites in Brookvale and Warriewood could also be in for a change, as nearby high-density residential areas slowly encroach on older industrial sites.
The real question for Tiller is what families will choose in terms of lifestyle, location and cost.
“Demand for houses will always remain because families will want that back yard and space, but affordability will be a problem,” he says.
“Families may have to stop looking for houses in their preferred inner and middle ring and either look at outer suburbs, or look at apartments if they are more interested in location or prefer an inner-city lifestyle.”