Three recent Baldivis land deals signal a key development is being revisited.
THE dominoes are falling in one of Perth’s most strategic residential development areas as established property players position themselves along the Kwinana Freeway in Baldivis.
Building giant BGC has bought nearly 51 hectares of land south of Millar Road for $14.5 million, one of three big parcels up for offer due to the financial difficulties of previous owners.
In that case, the land was owned by part of the SAS Global group, which collapsed at the end of 2009. It had paid $34 million for the land in 2006.
The deal between BGC and receivers and managers from KordaMentha settled on March 23, setting a price of $285,000/ha for land in an area that has been affected by delayed infrastructure commitments and, most recently, by the marketing of several stressed assets.
Two other large sites linked to companies with financial difficulties remain on the market. Almost 80ha of land bordered to the north by Mundijong Road was part of the assets of the Oswal family after they left the country following the receivership of their primary investment Burrup Fertilisers.
Another parcel of about 27ha has been put up for sale by Taylor Woodings, the receivers for two syndicates associated with the Watson Property Group.
It is understood the two syndicates, Watson Property Group Baldivis Road and Watson Property Group Investments, succumbed to debts after delays due to a lack of water and sewerage infrastructure, a common complaint for developers in the area. The two companies were separate entities to the Watson Property Group, which is debt-free and remains trading.
Apart from the BGC purchase, two other major pieces of land have changed hands in recent weeks.
Listed developer Cedar Woods announced last month that it had contracted to buy 38.2ha from private land owners for $12 million, or about $312,000/ha.
That purchase, due to settle in July, follows an earlier deal with another private owner in April in which Cedar Woods paid $9.1 million for 29.5ha of adjoining land, a price of $308,000/ha.
Cedar Woods is already a major developer in the area with the huge 139ha The Rivergums development south of Safety Bay Road, which still has years of land sales to come.
Stockland is also a player via its Settlers Hill development, which sits north of two joint venture developments involving Satterley and an independent estate being marketed by the UK-based Avon Group.
But the area poised for significant development in the next few years is the stretch of land running between Millar Road at the north and Safety Bay Road at the south and bounded east and west by the Kwinana Freeway and Baldivis Road.
The other two major landowners in this corridor are listed developers Peet and Australand, which have both completed or nearly completed estates across Baldivis Road.
Cedar Woods WA state manager Stuart Duplock said the former cattle farming sites his group had bought were a good strategic fit in an area that was being revisited by the major developers after expectations of earlier infrastructure pushed up prices during the boom years.
“There were some high prices paid during better times,” Mr Duplock told WA Business News.
“That was with a view to water and sewerage coming on stream sooner. That looks like 2015 at the earliest.”
An example of the price differential is revealed in BGC’s acquisition, which is nearly $20 million below the $34 million paid by SAS Global Baldivis in September 2006, a deal funded by a $19.3 million loan from National Australia Bank.
According to a 2009 report to creditors by then receiver Martin Jones of Ferrier Hodgson, one of the reasons SAS Global Baldivis collapsed was a delay in the expected change in zoning from rural to urban. Instead, it was only rezoned to urban deferred, reflecting the lack of services to the region.
The rezoning, which was initiated in 2005, was opposed by the Water Corporation on the grounds that existing sewerage infrastructure could not cope with additional demand if the entire area was converted to housing.
The issue prompted the then five land holding developers – Australand Property Group, Peet, Watson Property Group, SAS Global Property Group and Golden Assets Pty Ltd – to form the Baldivis East Stakeholder Team, in order to lobby for the rezoning.
At the time they argued that the wastewater treatment plant planned for East Rockingham, to be commissioned in 2015, would provide enough extra capacity to support more housing, and that the whole area would not be developed at once.
But Water Corporation said it was already under pressure to meet demand in Baldivis, and could only provide for 70 per cent of the land currently zoned urban if it was developed.
The change in ownership, and the prices attained, suggests the potential for more affordable housing development along the freeway stretch, although much of the land is low lying, a problem that does add to the cost of development.
Australia’s biggest building company, BGC is known to be having something of an internal debate about the development of its recently acquired parcel of land.
BGC founder Len Buckeridge, who became a major player in building via low-cost housing in multi-residential developments in the 1960s, wants to offer cheap land in the area.
BGC is also looking at a retirement village as part of its development and may look at offering home and land packages it will build itself.
