In July 2012, the decision by Minister for Planning Matthew Guy to rezone the Fishermans Bend precinct signaled the start of major redevelopment plans for an area which comprises Australia’s largest inner-city urban renewal precinct.
The Victorian State Government’s recently released Draft Vision for the area encompasses the creation of a new vibrant community containing a mix of residential, commercial, retail, entertainment, industry, transport and community facilities, as well as the use of best practice environmental sustainability to create a liveable community which provides substantial housing and job growth, community services and accessibility options.
With an area of over 250 hectares, this new suburb is expected to accommodate 80,000 residents and provide up to 40,000 jobs. The Fishermans Bend area is strategically located on the doorstep of Melbourne’s Central Business District and benefits from convenient access to significant employment opportunities, a range of community facilities and amenities including the beach and sporting precincts, and existing public transport links.
Highlighting an increasing appetite for inner-city property, investment from Asian sources in the inner-Melbourne area has topped $320 million in the last six weeks. As a new development precinct, Fishermans Bend represents an exciting new opportunity for both investors and developers, although some caution should be exercised when investing in a market with an emerging planning framework.
It is important that investors look beyond the underlying zoning and be mindful of the implications of the new strategic planning vision and the degree of uncertainty created by the absence of a clear structural plan for the precinct.
The rezoning of the entire precinct to the Capital City Zone was supported by a planning framework that provided for a wide range of land uses and CBD-scale building heights in selected areas. Property prices have risen as landowner expectations regarding the development potential of their assets have increased.
However, it has become apparent that the newly released Draft Vision may curtail this potential for particular sites, making intelligent site selection an essential precondition for investment.
There have already been cases where land has been purchased at a premium price inflated by the rezoning and ‘in-principle’ State Government support for development of 30 to 40 storey buildings, only for the Draft Vision to subsequently seek to restrict development to a maximum of four to eight storeys. Nevertheless, there are still major opportunities for investors, with extensive areas of land envisaging tower-and-podium developments comparable to the scale of the adjacent CBD.
The preferred urban form of Fishermans Bend continues to be discussed by State Government and it is therefore essential for developers to conduct thorough and informed due diligence on development sites before purchase.
While the current planning context does create an element of risk for investors, this can still be substantially mitigated by asking the right questions at an early stage. And while some planning uncertainty currently exists, a detailed structure plan for Fishermans Bend is being prepared and there are longer term profits to be made in an area which features a well-considered, integrated strategic land-use and transport plan.
Importantly, as we close in on a State election year, it is worth noting that Fishermans Bend represents the Minister’s flagship urban renewal project and there is likely to be a high level of political support for new development that reflects the implementation of his vision.
Moreover, Melbourne’s population growth continues to soar, while land values in Melbourne’s inner suburbs are maintaining strong positive growth largely due to increasing demand for property with easy access to the CBD, existing public transport networks, high quality open spaces and public amenities, and an enviable reputation for liveability.
In this context, with a little patience and the successful navigation of the planning issues, Fishermans Bend is highly likely to be a winner for the savvy investor.
The State Government is now seeking feedback about their Draft Vision and the Interim Design Guidelines. This provides an important opportunity for current landowners and prospective developers or investors to engage with decision-makers about the future of the area prior to the release of the Strategic Framework Plan in late summer 2014.