End of Spring Hill apartment boom puts developers in limbo

DEVELOPERS who forked out millions in anticipation of the adoption of the Spring Hill Neighbourhood Plan have suffered a double whammy with the end of the high-rise apartment boom and a surge in valuations.

WAITING GAME: Development in limbo at Spring Hill. Picture: Darren England

DEVELOPERS who forked out millions in anticipation of the adoption of the Spring Hill Neighbourhood Plan have suffered a double whammy with the end of the high-rise apartment boom and a surge in valuations.

Many of the major sites have been on Wharf St where the Morris Property Group, ASX-listed and Singapore-based Land and Homes Group, Cbus and Bundaberg Sugar bought up in anticipation of building residential developments of up to 30 levels.

With the plan, which has been in draft form since 2014, yet to be adopted, many of the sites were deemed residential and hit with valuation increases of up to 500 per cent and corresponding council land tax hikes.

One developer, who did not wished to be named, said they were in development limbo, sitting on vacant commercial buildings after missing the development cycle.

“Added to this is the exorbitant cost of the land tax which substantially undermines the value of an investment property because it is an ongoing cost that substantially reduces the net income and can reduce the building value by around 30 per cent.

“So developers can’t sell their sites as they have no equity and the valuation appeal process is a shambles.”

A council spokesman said the Spring Hill plan was sent to the State Government on August 31 last year and Council was awaiting a response and approval to adopt.

The last draft plan includes allowable height of up to 30 storeys for an 1800sq m plus site plus along Wharf St.

However, the high residential tower based site valuations will stay.

A Department of Natural Resources Mines and Energy spokesman said annual valuations for the Brisbane City Council region were undertaken in 2016 and 2017.

“The decision not to undertake a revaluation ... for 2018 that includes Spring Hill was not taken lightly and was made following consultation with BCC and an evaluation of the property market survey report,” he said.

“Valuers from the State Valuation Services have been in extensive dialogue with Spring Hill landowners including developers and property professionals as part of the valuation program and this dialogue is ongoing.

“Developers and/or landowners, as part of the valuation program, have the right to challenge the valuation if they believe their valuation is incorrect as part of the objection process.”

St Pauls Tavern, Spring Hill. Picture: Darren England

Silverstone Developments managing director Troy Daffy said his company bought the former St Pauls Tavern on the corner of Wharf and Leichhardt streets in 2015 for $3.05 million.

He said they intended to refurbish and re-lease the 1500sq m building as a long-term investment.

At the time of purchase the taxable land value was $1.25 million but within 12 months it was revalued at $6.8 million which meant an increase in holding costs from $28,320 to $165,344 a year – a 484 per cent increase.

Mr Daffy said there was more than a year taken in mediation and the value was reduced to $5.8 million and he was told he could launch an appeal.

“The State’s feedback was that the market has remained constant and that there are no sales in Spring Hill to support an adjusted value,” he said.

“We said there were no sales because developers were unable to exit sites now that the market has moved and the plan still hasn’t been adopted.

“So we can launch an appeal but it’s a super slow and expensive process for both the State Government and us.”