[+] Behind the Western Sydney Aerotropolis Rezoning Saga

Controversy surrounding land values at the Western Sydney Aerotropolis has prompted the Valuer General NSW to undertake a major review into the effects of rezoning.

Valuer General Dr David Parker is reviewing the value of all land affected in the Aerotropolis’ rezoned precincts.

Meanwhile, an independent commissioner has been appointed to look at the concerns of landholders.

An analysis of 48 land sales between 2016 and 2020 in areas rezoned under the Western Sydney Aerotropolis revealed an upward trend in land values that began when initial speculation about rezoning started and the property market anticipated potential effects.

The review is assessing the rezoning process—from before a rezoning is announced to it being fully implemented—and how the market reacts. The findings will be used to develop a policy about how land valuers should consider the effect if there is rezoning when valuing land.

Total market increases ranged from 58 per cent to 238 per cent across three or four Aerotropolis precincts that were studied, Parker said.

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Land values were affected by existing land use, proposed land use, timing of a rezoning, service provision and a market strength for the rezoned land, he said.

In most cases, rezoned properties in the Aerotropolis are expected to experience an overall increase in value. However, if new zonings are more restrictive than the land’s current use, landowners are unlikely to be worse off.

A new policy that supports council rating and land tax assessments will follow. This includes compulsory acquisitions of properties affected by infrastructure projects.

“Our analysis so far suggests that land values increase in the years leading up to a rezoning,” Parker said.

“Land values then stabilise when rezonings are announced, and there is more certainty regarding what zonings will apply to which areas.”

Independent commissioner appointed

The review comes as the newly-appointed Community Commissioner for Western Sydney’s Aerotropolis begins examining the views and concerns of landholders.

University of Newcastle Professor of Local Government Roberta Ryan has been bought in ensure the community’s voice is heard, after an extended community consultation process and several one-on-one meetings with landowners.

Appointed by the NSW Department of Planning, Industry and Environment, her role is to provide access to independent expert advice, such as planning, valuation and development processes. She will also connect landholders with other agencies and relevant government stakeholders to provide clarity and support.

western sydney rezoning
▲ Landowners have been affected by rezoning at the new Western Sydney airport.

“I appreciate that landholders have already communicated their views and concerns through a range of forums.

“I am now spending time to understand what people have said to date, to understand the different ways they have been impacted, and based on this I will develop a framework for engagement,” Ryan said.

Professor Ryan will provide briefings during the next few months, with a final report and recommendation to government to be finalised mid-year.

The story so far

The Greater Sydney Commission describes the vision for the Aerotropolis as being a home for technology, science and creative industries that will combine jobs, connectivity and liveability.

It will also deliver the biggest jobs boom in NSW’s history, which will “sustain prosperity within the region, creating more than 100,000 new job opportunities across the Aerotropolis Core, Badgerys Creek, Northern Gateway and Agribusiness Precincts by 2056”.

But local landowners have been fuming after the NSW government rezoned all land around the Aerotropolis, prompting substantial land value drops.

Dr Cameron Murray said that legal precedents existed to stop governments from down-zoning every site they wanted to acquire.

“If the down-zoning happens for the same purpose as the resumption, then the down-zoning can be ignored in the determination of compensation,” he said.

“However, each state and federal government will have slight variations when it comes to these details.”

▲ An artist’s impression of parts of the Western Sydney Aerotropolis, a new “economic corridor” surrounding the second Sydney airport.
▲ An artist’s impression of parts of the Western Sydney Aerotropolis, a new “economic corridor” surrounding the second Sydney airport.

The Australian Federal Police (AFP) has also launched a major criminal investigation, conducting a dawn raid on the home of a Canberra senior public servant, over possible corruption relating to the $30-million purchase of a block of land at the development that was later valued at just $3 million.

The AFP investigation aims to determine if government officials paid 10 times too much for the 12.26ha land parcel, which was owned by billionaire businessmen Tony and Ron Perich.

The AFP told The Urban Developer that the investigation remains ongoing.

“No further comment can be made.”

Minister for Planning and Public Spaces Rob Stokes acknowledged it has been a confusing and stressful time for many landowners.

“Building a new city is a long and incredibly complex process, and while there will be enormous benefits to be shared, I realise that not everyone’s land was zoned the way they might have hoped,” he said.

“In many cases, this is due to the fact that land is flood-prone and development cannot be intensified.”

Calls for change

Rezoning experts have also weighed in as the saga goes on.

Peter Tulip is the co-author of Reserve Bank research paper, The Effect on Zoning on House Prices. He blames the current structure of the zoning system for the dramas, and said it needs to be overhauled.

“The corruption we often see is a production of the zoning system. Rezoning is incredibly lucrative because there is an administratively-determined shortage of residential land,” Tulip, who is chief economist at the Centre for Independent Studies, said.

“The shortage drives up the price of rezoned land and creates a big temptation for corruption. The lack of logic underpinning rezoning makes the corruption easy.

“Defenders of zoning say that planning has not changed, so that is not responsible. This is seriously misleading.

“The rigidity of the planning system is the problem. It means higher demand results in higher prices.

“A responsible planning system would have resulted in more construction and lower prices.

“Economists agree that greater supply would make housing more affordable.”

western sydney rezoning
▲ Stage one of the Western Sydney Airport is expected to be open by 2026.

Another expert labelled the NSW planning system the slowest in the world.

Dr Shane Geha is the managing director of NSW rezoning company EG Advisory and adjunct professor of Engineering at UNSW.

“You can’t build on unzoned land without a development application and a myriad of other approvals, both at a council and state level,” he said.

“As such, we have a highly inelastic product that immensely slows down supply, which, if done for long enough, increases the value of the stock dramatically, particularly if there is high demand.

“In Sydney for example, this is unquestionable, hence why you see capital gains in excess of 12 per cent per year.”

Nation building is about building something today for tomorrow, and the government has committed more than $50 billion into land development, zoning, highways, public railways and freight rail in an effort to make the airport and its surrounding lands more appealing, Geha said.

“There’s nowhere in the world in land economic terms where rezoning or government investment in land hasn’t increased in value.

“Those living in this region will benefit from improved connectivity, transport options, additional utility value, more functionality and more amenity, all within close proximity.

“The desirability of the location has increased ten-fold.”

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