Master Builders Association ACT executive director, Jerry Howard.

Master Builders Association ACT executive director, Jerry Howard. Photo: Graham Tidy

The ACT Land Development Agency's biggest auction of residential land is set to shake up Canberra's property industry as local builders claim the size of the project will leave them sidelined.

Bidding in the May auction could exceed $100 million and trigger three times that amount in infrastructure work including roads and a shopping centre.

Stepping on the high wire of big land auctions from where it has had spectacular spills in the past, the LDA hopes to draw a major developer into the new Molonglo subdivision of Denman Prospect.

Graphic for story about Denman Prospect in Molonglo

Graphic for story about Denman Prospect in Molonglo

Already the date has been put back a month to complete documentation.

ACT builders could partner with a listed company but Master Builders Association ACT spokesman Jerry Howard said the interim affects of tougher planning regulations had already made it hard to make home building profitable.

Builders had to erect bigger homes to maximise yield to recoup costs of more rigorous compliance, especially for solar access. ''Whether the changes are good or bad, they push up prices,'' Mr Howard said.

Industry groups have opposed the draft variation, which has been referred to the Planning Minister, and will have a major bearing on development costs.

Colliers ACT will do the auction. Chief executive Paul Powderly says the huge, 107-hectare parcel will suit multi-nationals such as Stockland, Australand, Mirvac and Delfin Lend Lease, perhaps with a Canberra partner.

''As you know Molonglo is quite expensive land compared to other parts of Canberra so you need someone who can handle a $400 million or $500 million project,'' Mr Powderly said.

The parcel will provide an estimated 1700 dwelling, effectively setting up the buyer as a competitor with the LDA.

LDA chief executive David Dawes said competition with larger Englobo developments was an important component of affordable housing, as well as widening choice for home buyers.

He said the agency had looked at selling two large parcels in Denman Prospect, but after looking at the risks of having two private developers working on adjacent estates, decided on one release.

Mr Powderly said as well as competition, the LDA was transferring a new skills set into the territory from best-practice developers, who could perform better on land they had themselves developed.

Mr Powderly said after years of having only greenfield land at Gungahlin the region would soon have a wider choice at Googong and Tralee in NSW, and centrally located blocks at Molonglo.

''I think it is healthy for the regional supply of land. It will mean everyone's sales rates will be slightly slower. That's better for price and supply and the demand dynamic.''

Canberra residential developer Frank Porreca said the downside of such big projects was locking out competition with local players on land development and building.

He said there was talk in the industry of syndicates forming.

''But with 1700 dwellings it makes it very, very difficult. Financing for larger projects is going to be difficult to come by.''