MARKET PULSE: If you believe the hype from certain quarters, the Victorian market is tough due to planning requirements, including those relating to sustainability. But it just isn’t so, according to one source. The real foot on the brakes is coming from a private sector that is reluctant to commit and engage properly in planning and development consent processes.
The source said it is actually much easier to develop a major project such as a multi-residential tower in Victoria than it is in New South Wales, because in NSW, development consent is only granted based on a detailed design. In Victoria, a mere concept design is sufficient.
NSW also has a state environmental planning policy (SEPP) for sustainable buildings, but Victoria has no equivalent mandatory specifications. Even the apartment guidelines are just a guideline.
Another issue making for a tough market for consultants in Victoria is the state government has been trying to address a 50-year gap in significant infrastructure development in a very short timeframe.
his leaves very little in the coffers for stimulating commercial or residential development, and many developers are choosing not to do what the label on the tin implies and develop, without government incentives.
There’s also a red-hot trend for developers to acquire a site, get a concept created, gain development approval and then flip the site to another developer at a profit, rather than proceeding to building it themselves.
The impact of Covid and the soaring price of construction materials caused by the effects of Russia’s invasion of Ukraine have also played a role in the general state of the Australian construction market. The war has disrupted steel supplies for a start (because Ukraine was a major supplier, and the steelworks had to shut down due to the war) and resulted in higher global transport costs as both air and sea freight re-routed to avoid conflict-affected airspace.
In addition, the price of oil and gas rose, which is a major issue for all energy-intensive construction materials manufacturing which is still reliant on fossil fuels.
Meanwhile there’s a cyclone due to hit Brisbane later in the week and threatening the first Australian Football League match of the season.
Property owners are getting set for potential impact, if not directly then by floods that might accompany the cyclone.
Scape, which specialises in student accommodation including a new 1200 bed project at Marrickville in Sydney’s inner west, has been preparing the ground for some time, doing its own technical resilience assessment in anticipation of insurers clamping down wherever they can see a fault line.
It’s got three assets in Brisbane that might be impacted according to Chris Nunn, general manager ESG and the point of the assessments is to prove that the risk may not be as great as the insurers think.
Nunn has recently expanded his team with the appointed of Mike Case who has a strong buildings data background with CBRE and Buildings Alive and who will work on using AI to train up on inhouse data to answer ESG queries.