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Developers 'flipping' projects for huge profits

Date

Clay Lucas and Aisha Dow

Developer Equiset has gone back to Planning Minister Matthew Guy to build even higher on a Collins Street site that tripled in value after the minister approved a skyscraper on it early this year.

It is the latest example of a developer trying to "flip" a project – on-sell it for huge profits after gaining planning approval from Mr Guy, who is responsible for signing off on large projects in Melbourne's CBD.

Flipping has long been a part of Melbourne's property industry, but the surge in skyscraper approvals in recent years has dramatically multiplied the worth of development sites in the CBD if they can be sold with an approved permit.

Equiset bought 464 Collins Street last May for $10.5 million, and immediately began plans for a 55-level apartment tower on the tiny site, known as Makers Mark because of an existing building.

Mr Guy approved the project in February, and it went on the market for around $30 million. The project is now, according to agents CBRE, under contract for sale.

Equiset – which says the building is not yet sold – now wants Mr Guy to sign off on another six levels so that the project's apartments can be made bigger.

Other similar projects, approved by the minister but never built, include 64 A'Beckett Street, bought in 2009 for $11 million and flipped for almost $27 million to Singaporean firm Aspial after MrGuy granted approval for 48 levels on the site.

Aspial, also behind the controversial Australia 108 skyscraper in Southbank, now wants Mr Guy to approve another 33 levels to make the tower over 80 levels.

Another property, 555 Collins Street, was bought by developer Harry Stamoulis in 2003 for $38million.

It sold for a reported $78 million in May to another Singaporean firm, Fragrance, after planning laws applying to the building were altered to allow more height.

Mr Guy's spokeswoman did not reply to questioning over whether the minister had concerns over projects he approved being on-sold without being built.

Opposition planning spokesman Brian Tee said Melbourne's "prized liveability" was being forsaken so developers could turn a profit. "The look and feel of the city is being traded off for developer profits," Mr Tee said.

Melbourne City Council planning chair Ken Ong said he noticed development sites being flipped "a few times a year".

"If an applicant is a known developer we figure they'll build it," Cr Ong said.

But he said unknown applicants were proving less likely to develop sites.

"If the applicant is someone we haven't seen before there's a likelihood they'll get the permit and flip it," he said.

Cr Ong said developers would often apply for a permit with a genuine intent to build the property, but end up selling after being approached with a good offer.

He said one idea to prevent the flipping of properties was to put a limit on the number of times landholders could apply for an extension of a development permit.

He said the council had recently turned down an application to extend a building permit for the seventh time.

32 comments so far

  • Mathew Guy, he is like Father Christmas to developers.

    Commenter
    Bobo
    Location
    Melbourne
    Date and time
    September 02, 2014, 7:54AM
    • Yes....and you really have to wonder why??? What is the catch? What is the pay off for the LNP and himself? And I think he has done his dash if he harbored any leadership aspirations as there will now always be a stench as to what favors were done for corporate mates and more importantly, overseas investors that don't live her but collectively have combined to destroy this city and its character forever... True Melburnians have a long memory....

      Commenter
      David
      Location
      South Yarra
      Date and time
      September 02, 2014, 8:12AM
    • Funny but I don't think the shenanigans exposed by ICAC in NSW are in any way unique. Maybe Andrews can commit to outlaw political donations from developers as part of his platform. Property development is the scourge of Melbourne and should be investigated at state and local council level. My guess is that the findings would script like a Hollywood block buster.

      Commenter
      Barney
      Date and time
      September 02, 2014, 8:59AM
    • @David - Have a good look at it ALL. Melbourne (like the rest of Australia), is being sold off to overseas buyers.

      Commenter
      Jump
      Date and time
      September 02, 2014, 9:19AM
    • The ALP has done the same thing. Tom Roper in the 80's got the ball rolling for 'facadism' in our CBD. Neither party has clean hands. SOOOOO why aren't people putting pressure with the forthcoming election to get a proper anti-corruption body? One that can investigate politicians and their deals with property developers, etc,..?

      Commenter
      Chickpea
      Date and time
      September 02, 2014, 9:41AM
    • Isn't this just all jealousy?

      Developers provide supply of housing, which everyone agrees is needed.

      Otherwise who does? The government doesn't, and you lot are not about to start building on your big backyards are you...?

      There is a massive undersupply of housing, evidenced by prices continuing to rise. Somehow people blame the Planning Minister for pandering to the developers who want to build apartments to meet that supply. The Planning Minister has in fact provided the biggest benefit to existing residents in the recent changes to the zonings.

      Added to this is the big elephant in the room of the huge number of Chinese pouring huge money into our housing market, pricing local Australians out. Many Chinese buy here and don't even live in the house. Go to an auction in the inner East and see the problem for yourself.

      The there's the inner city rich NIMBY types who won't allow people to move into their rich established suburbs. Blocking development and forcing those people to live huge distances away on housing estates, which needs all new and more infrastructure.

      Allah help us if Councillors get to decide housing and planning policy too. These mini dictators without any education or skills in urban planning (the Lord Mayor is a former school teacher) trying to meddle in our planning is a disaster.

      The planning permit system allows for anyone to amend their permit. That's only fair, we don't live in a communist state last time I looked, we have the right to change our minds or make money within the law. You would if you could.

      What is the issue otherwise?

      Commenter
      Jealousy is what this is all about
      Date and time
      September 02, 2014, 9:51AM
    • @Jealously. So your a property developer are you? because the mantra 'they create housing' ignore the simple fact that most do not live in the areas they destroy, they have no problems building ghettos and if they were so concerned with building housing we need, then why are none of these apartments 3 and 4 bedrooms for families??? They are quick buck cheap ugly designs that magically change from the artists impressions they hawk to ignorant lazy council workers and planning authorities. We spent the first 70 years of the 20th century bringing in laws to get rid of ghettos, slums and shoe box housing as it was unhealthy, all things you seem to think are fine and which Minister Mathew Guy (and those recently before him) think is fine. No developers have destroyed this city BECAUSE they don't listen to residents and include their concerns in any design. They only have one idea and thats slap them up and sell them at profit - their is no noble design to provide more housing and its telling of you that you would even suggest that. Oh by the way we did have developers building decent housing (and apartments) more than 20 years ago. Jealous - lol. Yer right that must be it - oh by the way I actually live in an apartment BUT it was built by a decent developer and compared to today, people would kill for the room it has.

      Commenter
      Andrew
      Date and time
      September 02, 2014, 10:28AM
    • @Andrew

      It's you're, not your. Also, it's jealousy, not jealously.

      No I'm not a property developer. But I am sick of Nimby types enforcing their views on taste, whining hypocritcally about the price of housing then trying to stop the supply of housing which would otherwise benefit them.

      The times you talk of were prior to any major immigration into Australia, when Melbourne was building high rise housing commission towers in the inner city but house and land blocks for families out in the boondocks of now prized areas. Times change. A lot. Those home owners are baby boomers milking the property system, blocking young Australians from buying affordable housing while saying how tough they did it.

      You talk about producing apartments for families, yet these planning permits are for CBD and Southbank locations. Family units generally choose suburbs where there are schools and yards for the kids, not the CBD. Don't you see the nonsense of anyone providing 3-4 bedroom apartments for a non existent buyer?

      Who is this 'decent' developer you talk of? How do you regulate to allow him but not this other guy?

      You can still buy roomy apartments, just pay for it. If you want free housing and rules and regulations for everything and telling us what style we have go live in North Korea.

      What is the approved standard you all talk about? There are building regulations and codes in place (BCA), so again I think you are talking about (your definition) of taste. How do you legislate for taste anyway?

      110 square metres is massive, over double the average one bedroom apartment and a complete McMansion style wastage. Imagine the cost, let alone the energy wasted to build and heat or cool. Seriously, you can't tell people how they must live.

      Commenter
      Jealous
      Date and time
      September 02, 2014, 2:43PM
    • I'm struggling to understand how Matthew Guy can reconcile with himself the fact that he is permanently changing the future of one of Australia's biggest cities based on his short term whims. What he is in control of is the fundamental heart of Melbourne. It is a complex and vital decision process that will shape the future of the city and all those that inhabit it. I'm not confident that his approach is well considered. I hope he doesn't lament his hasty decisions when he is old and grey. The ramifications will be permanent and follow him into history.

      Commenter
      Why?
      Date and time
      September 04, 2014, 11:47PM
  • Or perhaps just make the permit apply to the owner to whom it was granted. New owner, new permit.

    Commenter
    Lex
    Date and time
    September 02, 2014, 8:05AM

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