Adelaide City Council poised to earn millions by selling empty space above its city buildings
Adelaide City Council is poised to reap millions of dollars by selling the empty space above its city buildings.
SA News
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Ratepayers are set to earn tens of millions through the sale of empty space above buildings owned by Adelaide City Council.
Expressions of interest soon will be called from developers to enter into a joint venture to redevelop a city site occupied by a beach volleyball court and ageing carpark.
The council will offer “air rights” above the carpark as part of the project, where developers will pay for the space which will be used for a high-rise building.
It already has negotiated one deal which has seen $28m paid for the “air rights” above the Adelaide Central Market Arcade, which will be demolished next year and replaced with a three-storey podium and two towers.
The $450m project is being undertaken as a joint venture between the council and a Melbourne-based property company, ICD Property, with the council’s investment already covered by the sale of the air space.
Property director Tom McCready said the next project on the council’s agenda was the UPark station and volleyball court on Pirie St, which has been released from its community land classification.
“The City of Adelaide continues to review its strategic properties (buildings) as they reach either the end of useful life, or indeed can add value to the city and its community,” he said.
“The Central Market Arcade redevelopment is one of the most recent successful processes and models where council has utilised its ability to use the air rights above our own underdeveloped building structures.”
Mr McCready said air rights was “basically selling oxygen” above a building site, with land titles created for the apartments or offices which filled the space.
“The concept of utilising air rights to unlock sites that are underdeveloped is not a new concept, but has much potential for the city,” he said.
“The use of air rights can mean council is able to engage with a potential development partner beyond the simple sale of a building.
“Importantly, it also provides the purchaser of the air space the level of ownership needed to satisfy lenders and enable end sale to their purchasers, for example the sale of apartments to end purchasers.”
Mr McCready said air rights deals enabled the council to “continue to retain part ownership, drive development and strategic outcomes, whilst continuing to generate revenue and extract value for all parties”.
Property Council SA executive director Daniel Gannon said the Central Market Arcade project demonstrated “the sky’s the limit when it comes to Adelaide’s CBD air rights”.
Mr Gannon said the project had provided a blueprint for future developments where air rights were sold by the council.
“Air right deals can deliver a triple-win for investors, the community and ratepayers,” he said.
Adelaide Central Market Authority chairman Theo Maras said the council’s decision to sell the air rights above the arcade was “a great initiative”.
“It has been a great outcome for everyone,” he said.
“Not many air rights have been sold in South Australia before.”
Another project where air rights are expected to be sold is the redevelopment of the Rundle St UPark station but this was likely to be several years away.
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