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City apartment 'frenzy'

Date

Marika Dobbin, Jason Dowling

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A ''FRENZY'' of apartment towers granted planning permission in one corner of Melbourne's CBD could squeeze thousands of new residents into four city blocks and change the character of the city.

The proposed concentration of developments - many of which include tiny one-bedroom apartments - could see Melbourne follow the lead of Asian cities such as Hong Kong for extreme density, according to a prominent planning academic.

Associate professor in environment and planning at RMIT, Michael Buxton, said: ''It's changing the character of the CBD that people love irrevocably and it's wrecking historic value.'' And property experts fear a glut of apartments could affect property values and rents.

Records from the Department of Planning show 7800 new apartments are proposed for a pocket to the city's west, bounded by La Trobe, William, Bourke and Spencer streets. The area is a microcosm of a citywide trend that began when the residential property market rebounded in 2010, on the back of strong population growth and government stimulus.

Within the Melbourne City Council area alone, about 52,000 new apartments in 201 residential developments are in the planning pipeline. However, researchers BIS Shrapnel, Charter Keck Cramer and ANZ have this year warned of an oversupply of apartments proposed in areas such as Southbank and the CBD that could cause property values and rents to fall.

The developments around King Street include Hong Kong developer Far East Consortium's Upper West Side project on the former power station site at 613-649 Lonsdale Street.

Construction has already begun on the first of four planned buildings of up to 176 metres that will have 2543 apartments, with ground-floor shops.

Another ''city within a city'' is planned across the road at the former Age site at 250 Spencer Street, which is being divided up between developers.

Almost 4000 apartments have been proposed for the site, with Southbank developer Central Equity already gaining planning approval for two towers.

Chinese developer Hengyi Australia has started construction of The William at 199 Little William Street, where 547 apartments are planned to be complete by early 2014.

While history shows many projects never get built, some experts predict the market will hit a record oversupply by 2014.

BIS Shrapnel senior manager Angie Zigomanis said it was ''the greatest concentration of new apartment development or potential for new apartment development'' recorded.

He said there would be a cascading effect through the market as CBD landlords find they have little to no capital growth for several years and have to discount rents to attract tenants.

Mr Zigomanis said this would dampen rents and property values in secondary locations, such as Northcote, Brunswick and Preston, which are also seeing an explosion in new apartments.

Professor Buxton, described the trend as a ''frenzy'' that threatened the viability of Melbourne's apartment market.

He said sizes of just 55 square metres for a one-bedroom apartment were common in overseas cities like Hong Kong, but new for Melbourne.

''The attitude of the approval authorities is, the more construction the better. It's a classic boom and bust mentality,'' Mr Buxton said.

''The government sees cranes on the skyline as indicators of progress, jobs and investment but there just is no oversighting of whether this is good for Melbourne, the danger it represents for small investors and the viability of the apartment market.''

Planning Minister Matthew Guy said Mr Buxton's comments were bordering on the offensive.

''The targeting of Chinese developers based on their ethnicity should be of concern to all Victorians,'' Mr Guy said. ''As usual, Mr Buxton's views are reflective of a zero-growth mentality.''

While many of the planned apartments around King Street will be marketed to offshore investors and financiers, some will never get the money to go ahead. Other landholders in the area will on-sell their sites with new permits, without any construction taking place, a common speculative industry strategy.

This will likely be the case for land behind a historic brick building at 640 Bourke Street, between King and Spencer streets. Australia Post, headed by former NAB chief Ahmed Fahour, has lodged an application that would include 560 apartments and just 249 car park bays.

It has tried to sell it four times, but would have more luck selling the site if it obtains a permit.

159 comments

  • So everyone complains about no public transport to outer suburbs yet they also complain about developing close to the CBD and infrastructure?

    C'mon guys, you can't have it both ways. If you want a house with land, and want to afford it, then you are living in the fringe, and you absolutely cannot expect public transport to extend out that way.

    We need to increase density and do it quickly. Why can't we throw up arms in outrage everytime the government (labour and liberal) extends the urban boundaries? Melbourne is dying a slow death.

    Commenter
    ozdude
    Location
    Singapore
    Date and time
    December 31, 2012, 12:11AM
    • I don't know that the problem is 'development' so much as the nature of it... Have you ever tried to live in a space of 55sqm? It's kinda like jail, but with no exercise yard.

      Commenter
      andilee
      Location
      Melbourne
      Date and time
      December 31, 2012, 7:32AM
    • Nonsense Andilee. I have lived in a small space for years. I don't know how big it is, but I'm thinking it's under 55sqm. I'd like more space for books, but that's about it. Otherwise I am perfectly content, and I would honestly hate to live in a big house.

      Plenty of people worldwide live in small spaces, and do their entertaining and socialising in public spaces. It's really important in a city where people live in those sort of spaces to have public areas that are free and accessible, which is why we must make certain that inner city public space is protected. People are just going to have to learn to live that way. It's riduculous to assume we can continue to build big houses on big blocks of land.

      Commenter
      vj
      Date and time
      December 31, 2012, 7:53AM
    • hear hear. http://www.abs.gov.au/ausstats/abs@.nsf/mf/3101.0

      Commenter
      timothy.richardson
      Date and time
      December 31, 2012, 7:59AM
    • Ozdude, I think you are throwing uo your arm in surrender. What we REALLY need is less people. What you say kinda makes sense if we assume there will always be more people tomorrow than today and we all know that is something that can't happen indefinately. Government says they are leading the way by planning how the city is developed while not showing any leadership in controlling the number of people.
      We don't NEED more people. The earth's evironment is collapsing under the burden of what we have now regardless of where they live. Making people live like battery hens is not the solution, neither is more urban sprawl.

      Commenter
      snafu
      Date and time
      December 31, 2012, 8:06AM
    • @andilee - if a small apartment is not your thing, then take the 2 hour drive out to a house with a back yard.

      Commenter
      handyman
      Date and time
      December 31, 2012, 8:20AM
    • @ozdude.
      Mate, Melbourne IS dying a slow death and its mainly due to people like you encouraging these developments. At 46 years of age, I have seen Melbourne change and not for the better. This furphy of increasing development has destroyed or is destroying the character that made this city unique and a pleasure to live in. For what purpose....you saying we should hold up a Singapore, a Hong Kong or a Shanghai as something we would follow and be proud off. In my book, if we became 'just like them' the we have failed as both a city and a people. Funny how so many people want to emigrate from 3 rd world nations or even 1st world like those I mentioned.....for open spaces. But you are encouraging us to replicate those very places people wanted to get away from. Good man!!!!

      Commenter
      Andrew
      Location
      Elsternwick
      Date and time
      December 31, 2012, 8:23AM
    • As long as the NIMBYs in the inner suburbs oppose medium-density housing, we will need to either go up in the CBD or out at the fringes, both of which have their own problems.

      Commenter
      vacri
      Date and time
      December 31, 2012, 8:38AM
    • @Andrew
      I totally and utterly agree with you ... lets stop this development, as it will just spell the demise of city live music establishments as with all the new residents, there willbe an increase of complaints which will then result in the closure of entertainment in the city.

      Commenter
      no more development
      Location
      Melbourne
      Date and time
      December 31, 2012, 8:48AM
    • 15 years ago the Melbourne CBD was dead. It is developments like these that have pumped life in to the city and made it an interesting and eventful place to be.

      I'm with ozdude on this one - for those who don't want to live in an apartment, don't. Simple isn't it. But let others who want to live in apartments do it without complaint.

      Commenter
      Greg
      Location
      Melbourne
      Date and time
      December 31, 2012, 9:02AM

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