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Considering costs above their station

THE State Government has commenced negotiations to acquire up to 13 inner city retail properties for the construction of the new city train station beneath William Street.

The properties are located on the east side of William Street between Murray and Wellington streets.

The Government has estimated that $40 million will cover the cost of acquiring these buildings.

However, the final cost will depend heavily on the price paid for the biggest property on the site, the old Myers Building on the corner of the Murray Street arcade and William Street, which could be worth anywhere between $13 million and $30 million according to property sources.

The property is currently owned by the Pacific Shopping Centre Group, which is controlled by Melbourne property millionaire Maurice Alter.

A report from the Valuer General’s office shows the unimproved value of the land the old Myers Building and a number of smaller buildings also owned by the Pacific Shopping Centre Group down William Street totals $13,100,000.

Some industry analysts have suggested that given the age of the property the total value would not be significantly higher but at least one source priced the prime site at $30 million.

The major leasee of the building is King Kong Sales and there are nine sub-tenants.

Pacific Shopping Centre Group representative Peter George said the group had been made aware that the Government would need to acquire the building and demolish it to build the station.

In relation to the possible sale price of the prime site, Mr George said there hadn’t been any discussions.

“Money will buy you anything, though. Anything like this is expensive, it’s land in the city,” he said.

“There have been discussions but they [the Government] haven’t decided how they want to proceed.

“We’re very happy with the way they’ve conducted themselves.”

Werrett Property Group managing director Mark Werrett who represents King Kong Sales said his client had been kept in the dark.

“Why is the Government hellbent on rushing into this?” he asked.

Mr Werrett said King Kong Sales had inhabited the ground floor space of the building for about 12 years.

“The Government has said that they may only be able to give up to 12 weeks notice,” he said.

“It’s very worrying. There are a lot of staff that are affected and we have no idea what the Government’s plan is.”

A spokesperson from the Department of Planning and Infrastructure said the Government had the ability to resume the land but would only take this course if negotiation with the owners proved unsuccessful.

“Government obtains its own independent valuations as the basis for negotiation, including compensation costs for lessees and any other issues affecting property value,” he said.

“If negotiation fails to realise agreement within a reasonable range of the valuation, resumption follows.”

An analysis carried out by the DPI determined that the sale of the development rights for the land above the station would make the acquisition process cost neutral.

Rail enabling legislation, which will allow the Government to resume the land, has not yet been passed.

The Department spokesman denied there had been any blow-out in costs associated with land acquisitions during the construction of the Graham Farmer Freeway.

“An independent review of our land acquisition process for the Graham Farmer Freeway confirmed its legitimacy and rigour,” he said.

“However, experience gained from the Graham Farmer Freeway will be utilised by the City Rail Development project team, particularly in relation to valuing compensation for affected businesses.”

Western Australian Government Railways project director Richard Mann said only informal discussions had taken place in relation to the properties.

The other major property owners in the precinct are both local families.

Mr Mann said the total area of the land needed for the station was still not finalised.

“It could be up to 13 sites, which would be the entire precinct but the platform obviously doesn’t extend over that whole area,” he said.

In terms of the cost of the land Mr Mann said it was a cashflow issue rather than a budget one.

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