October 2015
On 4 September 2015, the State
Government, without warning,
imposed interim planning controls
relating to density and setback that
significantly affects property
development in the central CBD and
Southbank (CBD).
The amendments introduce mandatory built form controls by making, inter
alia, the following key changes to the Planning Scheme:
The maximum site plot ratio (ie. ratio of a building’s gross floor area to the
size of the land) is not to exceed 24:1;
The maximum plot ratio for blocks should generally not exceed 12:1;
Discretionary height controls are now mandatory height controls; and
Towers above podiums must be set back a minimum of five metres to the
street.
These changes have been introduced on an interim basis for 12 months to
allow sufficient time for permanent built form controls to be developed and
subsequently introduced through the normal planning scheme amendment
process.
Comparisons from around the globe
Although the recent announcement has caught many developers by surprise,
the density and height restrictions remain generous compared to other
developed cities around the globe such as Hong Kong and New York. The
below diagram shows the plot size restrictions in Melbourne compared to
other major cities.
These changes are likely to
impact on investor confidence
both in a national and global
context given the lack of
consultation and notice, which
has flow on effects for future
employment, property
investment and housing
availability.
Vision Apartments
Address:
504 Elizabeth Street
Development:
This 67-storey Vision Apartment
complex located at 504 Elizabeth
Street will rise to 226 metres
Plot ratio:
47:1
Source: Architects welcome Melbourne's interim planning, Architecture and Design and
Planning controls overhauled to protect Melbourne's Liveability, The Fifth Estate
Unrestricted density and height restrictions
Prior to the Amendment, Melbourne had effectively no density limits in place
to restrict developments such as Vision Apartments and Tower Melbourne.
Potential impact
The Minister has advised that the interim measures were introduced to
ensure that well-designed housing developments are created within the CBD
area, that won’t result in overcrowding and prevent the city from providing
crucial infrastructure to its residents.
The planning controls do not apply to existing permits or applications
submitted prior to 5 September 2015. They were brought to bear without
notice to prevent a rush of applications in order to thwart compliance with the
interim controls.
However, these policies do not come without the potential for:
A reduction of yields on developments that have risen as high as 65:1 in
recent years;
The likely impact on investor confidence both in a national and global
context given the lack of consultation and notice, which has flow on effects
for future employment, property investment and housing availability; and
The likelihood of distorting the marketplace resulting in a centralisation of
developments outside the CBD areas as developers attempt to circumvent
the height restrictions.
Implications on the 2016 land tax assessment for landowners.
Outlook
The Amendment provides authority for the Minister to accept development
proposals in excess of the 24:1 plot size restrictions. These cases are
considered on a case by case basis provided that the developer offers
something back to the city in terms of amenities, such as parkland.
Further, these interim measures will only take effect for 12 months, whilst the
Planning Department undertakes a broad consultation process to assess the
implementation of a permanent control.
Recent public commentary suggests the housing market is showing early
signs of cooling and there is a risk of oversupply in the residential apartment
market impacted by slowing foreign investor and domestic demand.
The Victorian Government’s recent announcement throws a wildcard into the
mix for owners and developers expecting that the strong run of successful
high density apartment developments will continue unabated. The possibility
of a reality check for the market is now in play.
Tower Melbourne
Address:
150 Queens Street
Development:
This 71-storey Tower Melbourne
Complex at 150 Queens Street
will rise to 226 metres
Plot ratio:
65:1
Samantha Taylor
Executive Director
Ferrier Hodgson
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Peter Sagar
Executive Director
Azurium
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Kate Adams
Director, Valuations
Azurium
+61 3 9604 5155
Brian Sands
Property Specialist
Azurium
+61 3 9604 5600
Henry Lieu
Manager
Ferrier Hodgson
+61 3 9604 5166
Aaron Fisher
Senior Analyst
Azurium
+61 3 9604 5173
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