DEVELOPERS and the Property Council of WA have expressed concern ahead of a Government report due mid year concerning proposed changes to the residential components of tourism projects.
Property Council executive director Joe Lenzo says most developers will struggle to fund projects with a residential component below 20 per cent.
Peter Gianoli, a spokesman for developer Mirvac Fini agrees, and suggests the success of the Bunker Bay Resort is a case in point.
Nestled on more than 14 hectares of oceanfront land-scaped gardens, the five-star Bunker Bay Resort was officially opened on April 1.
The resort has cost more than $60 million to build and features 153 fully fitted out luxury villas. All but six of the villas have been sold and placed back into the hotel’s inventory, ready for holiday makers.
Located to the side of the villas are 21 residential blocks of land, which comprise part of the development’s master plan.
Although the residential blocks are indistinguishable from the villas, Mr Gianoli acknowledges that the resort would have been “very difficult to get up without this residential component”.
Tourism developments are typically seen as riskier ventures, and a residential component means it is easier for developments to get off the ground.
Despite the reliance of developers on residential strata, there have been recent moves by the State Government, supported by the Tourism Council of WA, to eliminate residential strata within prime tourist sites, and to cap it within other tourist sites.
Tourism Council of WA executive officer Sally Hollis said the council had already made several submissions to the State Government.
“If a developer wishes to combine residential with tourism, then they must present a convincing case with a feasibility study to demonstrate why a 100 per cent tourism development would not succeed and what proportion of permanents is needed,” she said.
Having a residential mix was not the only answer to stimulating tourist development in WA, Ms Hollis said.
She said that the crux of the issue was that “tourism provides jobs, and if developments contain residential components, the opportunity to maximise ongoing jobs for the future is not maximised”.
The council is suggesting that prime tourism locations be designated only for tourism purposes, and the Government helps to assist in implementing infrastructure and limiting red tape.
Countering developers’ claims that a residential component was vital for funding, Ms Hollis said that if government was seen to be supporting tourist developments, investor backing would not be an issue.
Developers remain sceptical, however.
Mirvac Fini development director Brett Draffen said the bare minimum required to get a tourism project going was a 20 per cent component of residential. He said the permanent residential component of a project needed to remain flexible and determined on a case-by-case basis.
“There are many integrated tourism and residential projects that exist now which manage interface issues well,” Mr Draffen said. “If the cap on residential areas in tourist projects is implemented, he said, “tourists in WA are going to lose out and a lot of projects that are viable now will become unviable”.
The Property Council’s Joe Lenzo told WA Business News that most developers would not be able to fund a tourist development on their own without at least a 20-30 per cent residential component.
He said flexibility was needed on a case-by-case basis in relation to tourist developments. Mr Lenzo said that, if the proposed changes took place, they would be the equivalent to a “knife through the heart” of tourism.
After a large number of submissions and public hearings, the State Government is set to release a report into its findings by mid year.
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