Fears Red Tape Will Derail Melbourne Metro as Development Engine

Melbourne spent more than a decade and $13 billion building Metro rail infrastructure that could unlock billions more in private investment around the five new stations and beyond. But Charter Keck Cramer analyst Richard Temlett says that will only happen if the state strips away the red tape and financial roadblocks stopping projects from getting off the ground. Planning applications are picking up speed around the newly opened Metro stations. Projects are citing better transport links as the reason they’re finally moving forward after years gathering dust. Recent filings in the Anzac Station precinct on St Kilda Road signal that the infrastructure is beginning to reshape development feasibility across inner Melbourne, though Temlett says government action will decide whether this momentum catches fire or fizzles out. Density potential unlocked Temlett says Melbourne Metro stations anchor precincts that could pack in far more buildings than planning allows. “Areas like Arden or St Kilda Road are actually underdone from a density perspective right now,” the national executive director of research tells The Urban Developer . “We could go significantly denser in those areas.” He singles out Arden as a prize opportunity. The 15ha precinct is 3km from the CBD and is in the midst of an urban renewal plan where factories and warehouses are already making way for apartments and shops. According to the City of Melbourne, the precinct could accommodate approximately 34,000 jobs and be home to around 15,000 residents. The area around Anzac Station could also prove to be an epicentre for the next big development boom, Temlett says. Temlett’s analysis shows that, within 1km of Anzac Station, four projects holding 720 apartments are approved or awaiting sign-off. Another nine finished projects have 375 unsold apartments. He says the government could unlock all 1095 apartments with targeted policy. The 720 awaiting approval need incentives to stack up. The 375 already built need stamp duty breaks to sell. This approach could then extend across other stations to recapture development in 2026. “The government needs to do everything it can this year to kickstart the property market because that’s all it needs—it’s like jump-starting a car,” he says. “I’m convinced that the Anzac Station and that precinct could be the epicentre to kickstart it.” ▲ Charter Keck Cramer analyst Richard Temlett says the government needs to come to the party to maximise development opportunities in Melbourne. Proving market appetite Marshall White director Leonard Teplin says there has been an almost overnight shift in demand at the First Light project 200m from Anzac Station. First Light is the $180-million, 26-storey luxury tower under construction at 28 Albert Road in Melbourne’s Domain Precinct being developed by DCF Property Group. Marshall White is handling sales. The development comprises about 40 apartments and Australia’s first YOO hotel. The 97-key property is designed by YOO &amp; Starck with interiors by French designer Léo Terrando. The project, which broke ground in October 2024, is scheduled for completion in October of this year. “Since the Metro Tunnel opened, we’ve seen a clear increase in buyer interest, particularly from investors who recognise the long-term value of this level of hyper-connectivity,” Teplin tells The Urban Developer . Teplin says the station will transform how people move through the precinct. “Easy access to employment hubs, education, lifestyle amenity and multiple transport lines is a powerful driver of demand,” he says. Policy levers government must pull Capturing that demand at scale requires government intervention, according to Temlett, who says the government needs to pull several levers simultaneously to unlock development potential. Fast-tracking planning approvals tops Temlett’s priority list. “Certain things like fast-tracking don’t cost the government any money, so I don’t see why there should be any resistance,” he says. ▲ Teplin says First Light sales activity is proof of the market appetite for hyper-connected developments near Metro stations. Developers cite two-year approval timelines as a major barrier to committing capital, with uncertainty around outcomes making it difficult to price risk appropriately. Financial incentives rank equally important as planning reforms. Temlett proposes special economic zones within 500m of Arden and Anzac stations, combining reduced taxes and waived infrastructure contributions. This, he says, is how the government could immediately help schemes achieve viability that currently fall short. “Building costs and charges have pushed too many projects past the point where they make sense,” Temlett says. “I’m encouraging them to start getting the velocity of transactions going, because if there are no transactions, they’re not going to raise revenue anyway.” Financial incentives for residual apartment stock could clear inventory and create space for new construction. “They could extend stamp duty incentives to that residual stock which needs to get removed from the market, so that new stock at a higher price point could then get delivered,” Temlett says. Height rules need rethinking to help projects pan out, too, he says, highlighting Sydney’s Chatswood as an example where government approved extra floors and paved the way for more feasible developments. “It’s quite simple: with Melbourne’s current conditions, development doesn’t stack up. So they have to go higher to make it viable,” he says. “High density needs three things: land at the right price, infrastructure, and demand. Melbourne has the last two. Government controls the first. They just need to adjust the settings and the market will do the rest.” ▲ Chatswood on Sydney’s Metro Northwest, where government height concessions are unlocking development around the station. Learning from Sydney Whether Melbourne captures that potential depends on what is learnt from Sydney’s Metro Northwest, which provides a compelling case study. Domain research shows houses within 400m of new stations sold for 16.6 per cent more than comparable homes 2-to-3km away at the market’s peak. Units commanded even stronger premiums at 24.4 per cent. But the gains varied wildly by location proving that proximity to rail alone doesn’t guarantee value uplift—local context, rezoning and development potential determine which precincts win. Growth hubs such as Bella Vista recorded a 39 per cent house price uplift, while commercially focused Macquarie Park had no premium despite having a station. From next month, more than 1000 extra weekly trains will run outbound from the five new stations. This may have a ripple effect that could flow to suburbs along the Cranbourne, Pakenham and Frankston lines. “The secondary markets further out also benefit just with shorter commute times,” Temlett says. As Australia’s second-largest city with completed infrastructure and density potential, Melbourne remains significantly undervalued, he says. “Melbourne will start to reprice. All the fundamentals are here,” he says. The Metro provides the catalyst, but government policy will determine whether the opportunity translates into sustained development activity and market confidence. “Just sending those signals for a period of time will give finance and developers more comfort. It’s that domino effect, that cascading effect that will build confidence in the market, which we need. “This is a decade in the making. We’ve got this infrastructure now. It is a significant opportunity for the government in an election year to start getting supply mobilised.”

Fears Red Tape Will Derail Melbourne Metro as Development Engine

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Fears Red Tape Will Derail Melbourne Metro as Development Engine

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