Residential subdivision plans face barriers in form of sand, water and bureaucracy

IT should come as no surprise that building magnate Len Buckeridge is in dispute with the authorities over his plans for a significant piece of land at Baldivis.

Mr Buckeridge is often getting into dust-ups with governments and bureaucracy of all persuasions. It is something of a lifetime habit borne from past experiences –  a belief that the authorities are misguided and the meek will not prevail against them.

While his disputes are mainly in construction and industrial land development, Mr Buckeridge is increasingly frustrated at government approach to residential land, be it in the heart of suburban Perth or in the hotter climes of the Pilbara.

His latest issue arises from 51 hectares of land his group, BGC, acquired last year at a fire sale price of $14.5 million from those overseeing the collapsed group SAS Global, which had paid $34 million in 2006.

It is the northernmost piece of a stretch of land running along the Kwinana Freeway’s western edge. A spluttering property boom, along with a longer-than-expected wait for rezoning, made life too hard for several would-be developers, including the Oswal family behind Burrup Fertilisers; Perron Group recently bought the Oswals’ patch of land. Another buyer in that stretch was Cedar Woods, which secured nearly 70ha early last year.

An additional parcel of about 27ha has been put up for sale by Taylor Woodings, the receivers for two syndicates associated with the Watson Property Group.

On the western side of that land, Spatial Property Group – a significant local player led by former Peet development manager Bruce Young and backed by property investors, developers and builders Vince and Robert Carcione – has The Spires, a 120ha, 1,500-lot development at what it calls North Baldivis.

While not all of the land is the same and some is at a far more advanced stage of development, Mr Buckeridge’s issues will not only be watched by his neighbours, but also others in the land subdivision business.

Mr Buckeridge told WA Business News he had two issues with his plans for the land. Firstly, that his desire to sell large blocks was being blocked by those who had to approve his plans and, secondly, that his moves to raise the level of the land using fill had been obstructed by the local council.

The first may well be a unique problem among developers who, in the main, appear keen to provide smaller blocks to maximise returns and meet demand for affordable housing.

The second is an example of one of the hottest issues facing developers across the metropolitan area – a shortage of cheap sand to fill subdivisions that are increasingly being developed on land that is close to the watertable.

Mr Buckeridge is upset that the council has told him he can’t start to fill his development until he gets approval for subdivision.

The building magnate said he had a supplier – and industrial development – that had significant amounts of sand to remove, an opportunity that would be missed if he was delayed by bureaucracy.

The BGC chief’s problem is that he had the fill available from another nearby site that has excess sand, a commodity once readily available in Perth but becoming increasingly scarce and expensive due to land-use regulations.

Constrained sand supply has been identified by the Urban Development Institute of Australia as one of the biggest threats to the housing sector.

The UDIA said the cost of fill was adding as much as $35,000 to the cost of a lot, an expense that could double over the next five to 10 years because the forecast supply from extraction pits is about one third of what is required.

That issue acknowledges much of the developable land identified in the state’s Directions 2031 urban development plan includes significant areas with a high watertable in proximity to wetlands. This is especially the case in the southern reaches of the city.

UDIA WA CEO Debra Goostrey said the issue was exacerbated by climate modelling requirements, which were creating unrealistic flood scenarios for developers to plan for, by raising land levels even higher, which in turn required even more fill.

“There is an increasingly risk-averse approach from all governments, local and state,” Ms Goostrey said.

Furthermore, she said increasing restrictions on developing new extraction pits and clearing nearby higher land to access fill were affecting supply. Trucking costs for more distant fill were prohibitive, she said.

“Sand, that is fill, is now the most expensive component of the land development process,” Ms Goostrey told WA Business News.

“That is creating an unreasonable burden that gets passed on to the homebuyers.”

According to the UDIA, other big issues concerning developers are the rising costs associated with infrastructure required for housing estates – both in terms of pricing and time.

The UDIA said upfront bonds and pre-funding requirements added to the already significant capital required to develop an estate. 

Ms Goostrey said developers could be required to pay bonds that were as much as 150 per cent of the expected cost.

Coupled with that was a lack of infrastructure planning and transparency when it came to the determination of cost.

One small but alarming problem that had arisen lately, Ms Goostrey said, was access to reliable water supplies for required public open space.

Developers are required to establish open space areas, which they typically pass ownership and control of to local government once an estate is completed. However, in some parts of Perth, licences to take water from aquifers are not available because maximum sustainable yields have already been reached.

Ms Goostrey said local governments would not take possession of open space without a guaranteed water supply.

“That is a show stopper for development,” she said.