ONH: [Gilberton] 45 Park | 35m | 10lvls | Residential

[stumpjumper]

In Dec 2004 Channel 7 sold its 12700sqm site on Park Tce at Gilberton to Watersun for $9.35 million. Watersun then applied for and was granted approval for 47 dwellings in 3 storey buildings. No problems there - Watersun paid just under $200,000 land value per unit. WIth a discount for the bulk purchase, that was about the mark at the time. Fair exchange at the market price. A 120sqm unit built on that notional $200,000 of land would cost the builder about $200,000 to build, and would sell for abotu $500,000, giving the builder

Today, you might pay $650,000 for the same unit. A rise in land value would account for ome fom that - the balance would be increased building costs and a rise in the price of built dwellings.

Having ensured themselves a higher price by hanging onto the land for a few years (paying interest on a loan or paying the opportunity cost of tied up cash) Watersun can now enjoy higher prices for their units.

But, some people are never satisfied. Back to the Walkerville Council goes Watersun, demanding an increase in height for the development from the approved 3 stories to 6 stories, and a large increase in the number of units.

This will deliver a super-profit to Watersun, and make the land, if approved for the increased numebr of units, much more valuable with approval for 6 rather than 3 stories.

Channel 7 would be annoyed - they sold it based on 3 stories and far fewer units.

Will Watersun be offering a discount, to spread their good fortune around? No way.

True or false: "The mechanism for changing zoning or other entitlements in a Development Plan under the South Australia Planning Act is via the demand of a developer who wishes to increase profit. The demands of the developer shall be supported by the state government and rank ahead of good planning practice, and the views of both the local council and the local community."

[Wayno]

that's a heavily loaded question stumpjumper...remember the classic "Yes or No; Have you stopped beating your wife?"

Breaking your question into manageable chunks:

• * TRUE: A request to change zoning or other entitlements may be initiated via the developer. The reasons for this request could be driven by profit or frustration about crappy out of date planning guidelines
  
  * TRUE: The demands of the developer may be supported by the state government. Again the reasons could be many, but typically involve intense levels of frustration (didn't we just have a backwater discussion?)
  
  * UNFORTUNATELY TRUE: The outcome may indeed rank ahead of good planning practice. But who is to blame? The nirvana image would be for Councils to be known as "proactive, inventive, and constructive champions of the future". Then the SA Govt would not have to side with the developer when DA's get rejected. Sadly i don't believe your average councillor is paid enough to care much about the future (is it 5pm yet?)
  
  * SOMETIMES TRUE: The outcome ranks ahead of the views of the local council and community. Hmmm, could this be due to the short-term blinkered nimby view?

I'm sure the majority of S.A. bloggers prefer to see posts on this website focused on sharing ideas and solving problems, not just loaded questions that stymie conversation...

stumpjumper, how can the Developer/Council/SA Govt "love triangle" be fixed? It will repeat ad nausem if not resolved...

[Will]

I think this it is a marvellous idea by the developer. The suburbs cannot extend forever, it is unsustainable. Higher density housing is the future for our and every other city.

[AtD]

stumpjumper:

Why should the developer not seek higher profits? If their prices were too high, no rational person would buy the apartments in question.

Why should Ch7 be entitled to any form of compensation? They're no longer a party to the issue. If they had any sense, which they probably would have, they would have sold the property on its market value at the time given any future potential for development.

Why should anything other than market prices apply to the proposed units?

The developer is well within its rights. The problem is in your head. Unless the local residents can justify that their losses due to this development exceed the gains, there should be no reason to cease the development. And since apartments generate far less noise, traffic and other external costs than an office (epically one with its own helicopter pad), I can't see that happening. If anything, it'd increase their property values.

[AG]

What developer would go ahead with constructing and selling apartments if they could not make a profit from it, even with the best intentions?

In an area so close to the city, rapidly rising land values and construction costs, and with a prime position close to the river, it makes sense that the developer wants to maximise the potential of their development. Development is not about a gesture of goodwill, it is about meeting the needs of the economy and society through the provision of required facilities. If anything, the meander of the river around which the land in question sits is an ideal spot for medium higher density housing close to the city (within reason of course, something like a 25 level set of apartments would really be pushing it and probably wouldn't be feasible anyway).

Why do so many of us develop this "me versus you" mentality when it comes to developers and development rather than looking at things from the perspective of "How can we improve this"?

[Edgar]

I think stumpjumper has problems with developer and their ever changing development plans. Everybody seeks profit, it's not about good practices or bad practices.

If I buy a property off you now for $300,000, and managed to sell it in another month to $400,000 and made $100,000 in profit. So am I subject to the negativity side of demanding more and bad planning practice (as in to maximise my profit), and you would be annoyed to find out that I managed to sell it at $100,000 higher that you did when you sold it to me.

So should I offer discount to spread my easy come easy go fortune around?

No Way.

[Ben]

Stumpjumper why is EVERY single one of your posts against one development or another. Is there any developments you do support? Yes you will argue that you were happy with the original 3 storey proposal if it was of a good standard but seriously. A six level building in the suburbs. God forbid what is this city turning into? How dare a developer who bought the land as an investment try to maximise their profits. That is a disgrace isn't it?

Think outside the square and EMBRACE change.

[Cruise]

I'm with Stumpjumper on this one.

do you all believe we should change our council Development Approval Procedures to "He who has the gold makes the rules"?

[Ben]

I'm with Stumpjumper on this one.

do you all believe we should change our council Development Approval Procedures to "He who has the gold makes the rules"?

Who said the rules are fair and reasonable? Who has the right to make that judgement? The owner should be able to do what they please - within reason.

[Cruise]

within reason.

yes, within reason

[ynotsfables]

Good on Watersun that's a great investment on their behalf. i hope something awesome gets built there, so they should make a super profit thats what business is all about.

[Edgar]

In other words, it's like opposing the developments of 123m 20-22 Currie St proposal because the developer is going way beyond the currently limited height restrictions in the zone.

Or...

The DAP is not conducting in a good planning practice because they have approved the plans and then put it on halt because they introduced some changes to the development plan recently?

Development plans changes over the time and accordingly in response to the current situation and trend. Back when the site was sold to Watersun, a 3 level units would have seem feasible and capable at the time. Now it has change, the demand has increased, so what is the matter of coping the demand by supplying enough in response to the demand?

When the deal was closed, it's closed forever, there is no point whinging about it now and how much profit the vendor could have made back then if they know the value of it now. It is like selling my house now and whinging about it 4 years later that the value has increased.

[Cruise]

Is any extra profit made from 6 story units going to be forwarded onto the customer? I think not.

All it will do is keep inflating the real estate market (at levels it can not continue at) and make those that are struggling to afford to put a roof over there heads harder.

[AtD]

Is any extra profit made from 6 story units going to be forwarded onto the customer? I think not.

All it will do is keep inflating the real estate market (at levels it can not continue at) and make those that are struggling to afford to put a roof over there heads harder.

See, this is why Economics should be mandatory at high schools, you've got the whole thing backwards! Increasing supply reduces prices, so the more they build the better it is for those "struggling to put a roof over their heads." It's the lack of supply that's causing prices to increase.

Why do you think businesses should act as charities?

[stumpjumper]

The only aspect of the Watersun development I disagree with is the business of buying at market price of $X based on in this case 47 units allowable under the Devt Plan on the land, then coming back and demanding 100 units on the same land. It's a demand for 'spot rezoning', and if those demands are routinely granted, it makes a joke of the planning system, ie why do we have planners when its developers who decide what is to be built and where?

As for spreading the good fortune around - it was a rhetorical question. If you've made an honest profit, it belongs in your pocket. I'm just objecting to the way the profit is made.

Maybe Channel 7 should have added a clause like: 'If the number of units to be built on the subject land while owned by this purchaser is increased from what is currently allowed then the purchaser shall pay to the vendor one half the increased value of the land.'

Stumpjumper
'Always in favour of good development'