Governments put developments on fast-track to kickstart economy
State governments are kickstarting major commercial and residential developments in an attempt to restart economic activity in the recovery phase from the coronavirus.
In one of the largest plays, the Victorian government is close to making a final decision on the shortlist for the $2 billion Treasury Square precinct in Melbourne’s central business district.
Industry super fund-backed Cbus Property and listed developer Mirvac, both of which had made aggressive bids for the development rights that reflect pre-crisis prices, are heading the field, according to industry sources.
This may see two other short-listed bidders — a tie-up between listed group Dexus and John Holland, and Canadian group Brookfield — drop away from the process for the $500 million CBD-fringe site that spans about 13,600sqm.
But the uncertainty introduced by the coronavirus could see all of the parties taken through to the next stage as the project is one of Melbourne’s largest sites.
Sitting on the southern side of Flinders Street, it could accommodate a trio of major office towers comprising about 130,000sqm, that would be worth about $2 billion when finished.
While the situation is fluid, the next stage of the process, being handled by Colliers International and Ernst & Young, is imminent and comes as governments step up efforts to get major projects started.
Treasury Square needs an anchor tenant to get going, but bidders are said to be optimistic despite gloomy forecasts if white-collar unemployment spikes.
The NSW government, meanwhile, is stimulating apartment projects and has approved concept plans for Ivanhoe Estate in Sydney’s northwest, with the project being led by Singapore’s Frasers Property. It will have more than 3000 new units, a school and a town plaza on an 8.2ha site.
The estate is one of the first projects to be fast-tracked by the government and follows the Berejiklian government moving a $2.5bn tech precinct on the western edge of Sydney’s Central Station to the final phase of approval.
The approval of that Dexus/Frasers project will also light the way for more technology projects and software company Atlassian is already advancing plans for a neighbouring $1bn tower.
In Queensland, the Palaszczuk government last month lifted heavy vehicle lockout periods to aid the development of the $3.6bn Queen’s Wharf Brisbane project.
Despite the slump in shopping centres, office and industrial property are showing signs of life with logistics assets still in hot demand.
Property funds group Charter Hall is favoured to win a $700 million portfolio of Aldi distribution centres and it has lined up the backing of German group Allianz in a process being handled by agency JLL. Charter Hall is separately looking to buy an industrial asset in Sydney’s Erskine Park.
The situation for offices is less rosy. In a move that rattled the office development market, industry super group ISPT stepped back from a deal to buy a $1bn tower that Macquarie Group is building in Sydney’s Martin Place.
This article originally appeared on www.theaustralian.com.au/property.
