From the City Messenger:
Harbo hits out at developers
newsBusiness20 Jan 10 @ 10:30am by Emily Charrison
BUILDING PLEA: Lord Mayor Michael Harbison says local developers are not in a postion to meet the city's housing needs.
Lord Mayor Michael Harbison will try to lure east coast developers to build more city apartments, saying the local industry is not up to the job.
Mr Harbison says local developers are too suburban-focused and do not have the expertise to expand the city’s skyline.
His tough line comes after he earlier lambasted developer Con Makris for a lack of progress in building apartments at the long-vacant LeCornu site, North Adelaide.
“There’s no doubt a demand for city housing - the problem is supply,” Mr Harbison said.
“There’s not much capacity in the multi-level residential development area - there’s only a handful of developers in SA with that capacity. Our housing industry mostly specialises in bricks and sticks.”
The Lord Mayor’s stand has sparked an angry reaction from Adelaide’s development industry, which blames the global financial crisis, tight lending conditions and long waits on development approvals for the city’s stagnant housing stock.
Property Council SA executive director Nathan Paine said it was “very simplistic” to suggest local developers were not capable of meeting demand.
“Recently we’ve seen a number of developments fail or at least put on hold because they haven’t been able to sell enough properties,” Mr Paine said.
“It’s a bit of confusing mixed messages - on the one hand the council lords how much development has been approved, but now we’re getting the message that apparently the industry isn’t doing enough.”
Housing Industry Association executive director Robert Harding said Mr Harbison was “incorrect” and the main issue for developers was securing enough finance to fund large-scale projects.
“Lending criteria has become extremely difficult since the global financial crisis - in some cases the banks are asking for 100 per cent pre-sold,” he said.
Urban Development Institute of Australia SA branch executive director Terry Walsh said getting council approval for major projects was another problem for the industry.
“What we have is difficulty in getting anything approved in some cases over two-storeys,” he said.
“Once builders get certainty that developments will be approved, they will respond to market needs very quickly.”
Mr Harbison said Adelaide’s “very small” housing industry was preventing the City Council from reaching its population target of 25,500 people by 2012.
Figures from the council’s just-released annual report showed the city’s population grew by just 843 people to 19,883 in 2008/09.
To an extent Harbo does have a point. I strongly believe that there is demand for inner city living, however the local industry only provides supply to the higher end of the market. Having studied the stock available in the eastern states, there are apartment complexes built over there for middle-income earners. Such complexes do not exist here in Adelaide, where the only stock available is at the 2 extremes; either 15sqm2 student apartments or luxury apartments for the rich.
I encourage the local industry to come up with complexes for middle income earners. Buildings which do not have pools, saunas, zen-gardens, tai-chi decks or wine storage facilities. Build decent size 2-3 bedroom apartments at a reasonable price!
However part of the blame has also got to be accepted by the ACC. Their strict and antiquated regulations make building anything over 3 levels which does not have a pseudo heritage facade quite difficult. Unless they change their ways, developers accustomed to local councils which do not see tall buildings, high-density and modern architecture as bad things will never come here.
