On the brink: the fight to squeeze more units into Perth’s failing apartment builds

Perth developers are increasingly fighting to squeeze more units and floors into high-rise buildings in an attempt to offset rising construction costs and make projects financially viable.

Many developers have pleaded with the state’s planning body not to knock-back their attempts to increase apartment ratios, saying approval delays were exacerbating the state’s housing shortage and leaving land in limbo.

Developers are increasingly applying to downsize apartments in favour of higher dwelling density as soaring construction costs make developments financially “unviable”.Credit: Composite: Cameron Myles

On Wednesday, a South Perth high-rise was pulled back from the brink of collapse after a mercy plea to add six more units to the tower, for a total of 115.

The $150 million Lumiere apartment tower would also need to increase its height by 0.97m – to 101m – and cut apartment size and commercial tenancies to make room for the additions.

In a last ditch pitch to the Metro Inner Joint Development Assessment Panel, Edge Visionary Living development director Jonathon Borrello reasoned that without increasing the number of apartments the project would fall over.

“If the minor amendments are not approved by the DAP, the viability of this development will be severely impacted, and potentially see construction cease,” he said.

“We believe we found a sweet spot between complying with existing approval and aligning with this more contemporary approach to public benefit, the result of which is to deliver more apartments in environment where there is high housing demand.”

The proposal was approved by the panel three votes to one, with City of South Perth councillor Bronwyn Waugh in sole opposition.

It is one of many proposals to downsize apartments in favour of higher dwelling density as soaring construction costs make developments “unviable”.

In September, an eight-storey apartment block at 89 Broadway in Nedlands narrowly passed the scrutiny of the inner metro planning panel after first being slated for rejection.

At the time, speaker for the applicant Paul Simpson said multi-level residential construction prices had risen more 40 per cent, resulting in apartment pre-sale being priced below the cost of constructing them.

“We’re operating in a completely different environment than we were a few years ago, and nothing is going to be built… nothing will stack up unless they’re generating over that rate per square meter – and still, there’s not enough revenue that’s being generated,” he said.

“This isn’t a matter of the developer, or any property developer, just trying to make lots of money.”

Earlier in November the metro inner development assessment panel rejected a plea from WA developer Welink Group to remove six affordable housing units from a six-storey proposed apartment block on Hood Street, Subiaco.

Under the condition, the developer is required to sell six of its 50 apartments at construction cost to a housing provider.

But a Welink spokesperson told this masthead the decision could cripple the proposal’s profit margin.

“The construction cost rate we are required to sell the 6 units at was set in 2016; the forced sales rates impose further unreasonable red tape which has a significant impact on the viability of development,” they said.

A November 12 report from the Property Council of Australia found that over 10,000 approved apartments across Western Australia were on hold due to rising construction costs, red tape and significant financial contributions.

It also revealed Perth’s rate of apartment completions had collapsed to its lowest since records began in the 1980s.

“Relevantly, the housing crisis most significantly affects the 50 per cent of the market who are looking to purchase a home, but do not qualify for social housing,” the Welink spokesperson said.

“Red tape and increasing developer contributions is affecting the ability of developers to address Perth’s housing crisis.”

They said the developer remained committed to the delivery of social housing for key workers and was looking for pathways that supported diverse housing options while balancing economic sustainability.

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