Development of new Brisbane satellite city strangled by crippling costs

Two more major developers have spoken out about the alarming impact infrastructure costs are having on a huge new satellite city north of Brisbane. It comes after AVJennings this week pulled out of the project, expected to become the size of Mackay.

Two more developers have spoken out about the alarming impact infrastructure costs are having on a huge new satellite city north of Brisbane set to become as large as Mackay.

Orchard Property Group managing director Brent Hailey also called on the government to help with major infrastructure projects that were too expensive for individual developers to build.

His comments came after AVJennings shocked the market on Wednesday by announcing it would pull out of its option to build 3500 affordable housing lots at Caboolture West, equivalent to about 10 per cent of its expected total population of 70,000 residents.

The company blamed rising infrastructure charges, but long delays in approvals were also believed to be a factor.

Mr Hailey said developers at Caboolture West, now known as Waraba, had to pay for council infrastructure charges and also state government charges as the project was a Priority Development Area.

“We’re at this point now in SEQ where unless the solutions are put in place quickly, there’s going to be a rapid decline in affordability, forced by supply not meeting demand,” he said.

Construction activity at Lilywood Landings, which sits at the gateway to Waraba (formerly Caboolture West) and will be the largest community in the city’s first suburb of Lilywood. Picture: Contributed

“It’s (the problem facing developers) the cost of delivering the infrastructure and the balance between fully servicing those costs and trying to get an affordable home.

“There’s the normal council charges and the Priority Development Area (PDA) charges.

“Interestingly the PDA charges are more than the local government charges.

“It’s a discussion over the last 30 years in our industry and there’s no easy solution.

“During Covid-19 costs went through the roof, all of a sudden infrastructure is costing a lot more.”

Mr Hailey said Orchard was spending money hand over fist, delivering water and sewerage infrastructure right now for its 133-lot Lilywood estate at Waraba.

“The industry has been advocating for the state government to be involved in ‘catalytic’ infrastructure provision,” Mr Hailey said.

“It’s a set charge that helps facilitate the building of chunky infrastructure that a single developer can’t afford.

“The state government contribution to the Waraba development area is $38 million, with $13 million in grants and $25m in loans.

“The developers in that catchment repay those loans.

“When you can imagine it’s a loan, it’s a cost to the ultimate sale price to the block of land.”

Mr Hailey said Orchard is spending money hand over fist, delivering water and sewerage infrastructure right now for its Lilywood estate at Waraba of 133 lots, valued at $43 million. Picture: File

Mr Hailey stressed Orchard would not follow AVJennings’ lead and was committed to its investment in Waraba.

Another Waraba developer, Lennium Group, also said it would continue to forge ahead and had already made great progress on earthworks this year.

It was understood the first of Lennium’s 228 affordable housing lots would be released to the market in the coming few months, with the first registrations expected by the end of the year.

That would allow buyers to start building next year.

Its Lilywood Landings project would be the largest community in the city’s first suburb of Lilywood.

Work on the project began in February this year, including stormwater and wastewater infrastructure.

Lennium development manager Ian Worthington said he was very pleased with the progress.

“We are aware that a developer in a future Waraba precinct, AV Jennings, has terminated the option on its land, citing a significant increase in infrastructure and development costs,” he said.

“While this will have no impact on Lilywood Landings, we also faced serious challenges in relation to infrastructure over several years in the lead-up to work starting on our project.”

Several other major developers at Waraba were approached for comment.

after AVJennings’ announcement on Wednesday, City of Moreton Mayor Peter Flannery sheeted home blame for infrastructure cost blowouts to the state government.

But Local Government Minister Meaghan Scanlon said her government was poised to deliver a second, $100 million round of infrastructure support for councils on top of billions more in basic projects such as roads and schools.