A dramatic rise in land valuations in the Brisbane CBD has sparked concerns for the future of the office market

THE residential boom has hit the Brisbane CBD with a dramatic rise in land valuations which could threaten the future direction of the central business district.

DO NOT USE BEFORE DEC 28TH, CONTACT COURIER MAIL PIC DESK Aerial images over Brisbane in summer. Brisbane City, CBD, highrise, skyline, office buildings.

THE residential boom has hit the Brisbane CBD with a dramatic rise in land valuations which could threaten the future direction of the central business district.

The Valuer-General’s annual statutory land valuations has pushed land values up 20 to 30 per cent for many premium CBD office sites and up to 70-80 per cent for others.

One riverfront site which is earmarked for a residential high-rise has jumped 500 per cent.

A major problem with the valuations was that they do not differentiate between residential and commercial sites which means when there is demand for residential sites all land values increase.

There are fears that these increases will mean a rise in State Government land tax and Brisbane City Council rates which are scheduled to take effect on June 30.

Savills CEO Paul McLean said these new valuations could potentially put the CBD under further pressure as increased taxes are passed on the commercial tenants already nervous about where business was heading.

“We need to preserve the CBD as a home to office ... and having the same assessment for residential as office is not appropriate,” he said adding that Savills has a specialist statutory valuations department that handle objections and appeals.

Savills director of research Paul Day said he was concerned that authorities may use the revaluations as a “money grab”.

“Businesses have shrinking margins at the moment and they’re worried about expansion because their margins don’t cover increased expenses,” he said.

“More costs could mean they can’t expand which will leave the CBD with continued high vacancy rates which is compounded by commercial office developers being priced out of the market.

“It is important for the CBD to be a base for strong employment and a growing contributor to the local economy and looking into the future, pricing based upon residential use is going to see commercial office developers being priced out of the market.”

Mr Day also called on governments to change planning laws to recognise the differences between residential and commercial sites.

“It’s a problem when site sales for residential development are used to gauge land values across the whole CBD and near city area,” he said.

“So the remedy is to change planning to recognise office buildings and value them as office building sites and residential sites as residential sites.

‘At the moment it’s too generic and not specific enough.

“We have brilliant CBD and its future is enormous, but not if we give it away to residential.”

A Brisbane City Council spokesman said council categorises all its rateable properties into a rating category based on the property’s primary use.

“Each rating category has a specified rate set annually in Council’s Budget, which is handed down in June,” he said.

“General rates are calculated using a property’s Average Rateable Value and its rating category.

Council averages values over the last three years to minimise impacts on ratepayers from property valuations.”

Gadens Lawyers partner in planning and environment Stafford Hopewell said the “dramatic” increase in valuations will have consequences.

“I expect some landlords will appeal and possibly end up in the Land and Environment Court,” he said. “Also the State Government’s land tax pretty much moves in line with valuations and while council’s rates have a similar relationship there’s more chance of a bit of discretion.”