building blocks

Greater Western Sydney EditionMay 2021

BUILDING BLOCKSA PRACTICAL

APPROACH TO

LAND SUPPLY

BUILDING BLOCKSGreater Western Sydn ey

UDIA NSW

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Message from the CEO

In recent months, a combination of record low interest rates, the HomeBuilder Grant, COVID-19 induced demand for more space and the strong acceptance of working from home, have seen around a 50% uplift in greenfield house sales, significantly outstripping the supply of new serviced greenfield lots.

There is now minimal trading stock in Western Sydney.

With the NSW Government having virtually stopped development approvals in North West Sydney due to concerns over flooding and not released any major precincts for greenfield housing in the South West Growth Centre for more than 8 years, this lack of land supply is going to get worse.

If immediate action is not taken to fix supply, greenfield dwelling construction will grind to a halt, land and house prices will increase further, potentially beyond the predicted 10% house price increase in 2021. In addition, up to 40,000 construction jobs could be lost and economic value decreased by close to $17 billion by 2023.

To avoid this economic damage and allow development to act as a bridge to the post COVID-19 economic recovery, the NSW Government needs to ensure enabling infrastructure is funded and delivered as soon as possible.

Our new Building Blocks Greater Western Sydney 2021 report, prepared in collaboration with Infrastructure and Development Consulting (IDC), identifies the critical regional infrastructure needed to unlock greenfield supply. It includes nine water, sewer, road and electricity projects that will unblock 69,700 dwellings by 2024. We have targeted growth in the precincts of the North West and South West Growth Centres as well as the growth precincts of Greater Macarthur and Wilton.

As detailed in the UDIA NSW 2021-22 pre-budget submission, we believe that the best way to deliver these projects is to create a new fund as part of a wider Jobs and Affordability (JAffa) Program. This would be a hybrid of the Housing Acceleration Fund (HAF) and the Accelerated Infrastructure Fund (AIF) focused on enabling infrastructure.

The JAffa Program can provide direct funding for the projects identified in a similar way to the HAF. Historically, the HAF has earmarked approximately $100m p.a. We believe that this level of funding will need to continue, with a total fund of $300m over 3 years.

We hope that the NSW Government commits to the projects we have recommended within this document, to sustain the greenfield supply, achieve housing affordability and support the construction industry, as a bridge to ongoing economic recovery in NSW.

We are facing a critical shortage of greenfield housing in NSW as we rapidly run out of serviced land for development. Unless government takes urgent action to ramp up the delivery of enabling infrastructure and planning approvals, NSW will face dire consequences for jobs, housing affordability and the wider economy.

Steve MannUDIA NSW CEO

Greater Western Sydney Partner


UDIA NSW

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Above: Fairwater by Frasers Property AustraliaCover Image: Oran Park Town by UrbanGrowth and Greenfields Development Company


UDIA NSW

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The North West Growth Centre (NWGC) has land development ongoing in Box Hill, Riverstone East, Riverstone and Vineyard. The precincts of Kellyville, Alex Avenue and Colebee are completed, and Marsden Park is close to completion.

In March 2021, the Minister for Planning and Public Spaces blocked new residential development in parts of the NWGC until adequate flood mitigation and evacuation capacity are determined.

It is crucial this is resolved quickly with 27,200 lots now in limbo until a solution is found. Significant road congestion at Garfield Road and Richmond Road also prevents the maximum greenfield release of the remaining precincts.

Four projects have been identified that could see the release up to 27,200 lots in the NWGC by 2024.

The North West Growth Centre

North West Growth Area Infrastructure

Marsden Park North & West Schofields Sewer Pump Stations $40M

Richmond Road Upgrade$70M

Box Hill Zone Substation

$38M

The Water Lane$32M

Infrastructure Project Stage

Cost Lot Yield (Within 3

Yrs)

Lot Yield (Total)

Cost Per Lot

Comment

1. Richmond Road Upgrade

Proposed $70M 8,000 8,000 $8,750

Required to enable the rezoning of Marsden Park North and West

Schofields, as well as reinforce a key flood evacuation route.

2. Marsden Park North and West Schofields Sewer Pump Stations

Concept Design

$40M 8,000 8,000 $5,000

Catalyst required to unlock development in Marsden Park North

and West Schofields.

3. Box Hill Zone Substation

Concept Design

$38M 10,000 10,000 $3,800 Required to free up capacity in

Riverstone East, Vineyard and Box Hill

4. The Water Lane Concept Design

$32M 1,200 1,200 $26,500 Catalyst Required to unlock 1,200 Lots

in Box Hill

TOTAL $180M 27,200 27,200 $11,012

(avg)

Critical infrastructure investment needed to accelerate land holdings in the North West Growth Centre

$6,618


UDIA NSW

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The South West Growth Centre In the South West Growth Centre (SWGC), there is land development ongoing at Edmondson Park, Oran Park, Willowdale and Emerald Hills.

Until a major proposed water recycling facility is completed in 2026 by Sydney Water, the Austral and Leppington precincts are restricted to a maximum of 1,700 dwellings, which has already been allocated to current development. There have also been no new land releases in the SWGC for 8 years and serviceable land is now rapidly running out.

We have proposed an interim wastewater strategy for the Austral and Leppington precincts which, subject to further project assessment, could provide a further 3,000 lots by 2024 and sustain a greenfield pipeline until the new Sydney Water Major Recycling Centre is delivered in 2026.

Lowes Creek Maryland, which lies outside of the SWGC, provides an opportunity to provide up to 12,000 lots by 2024 once a new sewer pump station is built.

South West Growth Area Infrastructure

Lowes Creek Marylands Sewer Pumping Station$30M

Interim Sewer Strategy



Yrs)

Lot Yield (Total)

Cost Per Lot

Comment

5. Interim Sewer Strategy

Proposed TBC 3,000 3,000 TBC

Upgrade to Liverpool Wastewater Treatment Plant or storage tunnel in Austral. Current Infrastructure has

1,700 lot limit which has already been allocated.

6. Lowes Creek Maryland Sewer Pumping Station

Concept Design

$30M 12,000 35,000 $11,250 Sewer Pump Station required for

South Creek West and Pondicherry.

TOTAL $30M 15,000 38,000 TBC

(Avg)

Critical infrastructure investment needed to accelerate land holdings in the South West Growth Centre

857


UDIA NSW

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There is presently very little land zoned for development in Greater Macarthur, which is still subject to work by Transport for NSW and NSW Department of Planning, Industry and Environment to confirm a future road corridor (Outer Sydney Orbital 2). Some development is occurring in the north of the precinct at Menangle and Gilead.

Compared to other growth precincts, Greater Macarthur does not have a high number of landowners that would normally allow lot release to occur in a timely manner.

Traffic congestion at the Narellan Road and Appin Road junction, requires a regional transport connection. There will also be a requirement for a new wastewater treatment plant at North Appin.

Greater Macarthur has not been rezoned but Spring Farm Parkway Upgrade and Hume Highway ramps provide the best option to facilitate the short-term development of the precinct (6,000 lots by 2024), once it is released.

Greater Macarthur

Greater Macarthur Growth Area InfrastructureSpring Farm Parkway

Upgrade$128M



Yrs)

Lot Yield (Total)

Cost Per Lot

Comment

7. Spring Farm Parkway Upgrade

Proposed $128M 6,000 15,000 $21,350

Key East-West Link required to unlock Greater Macarthur (North) and ease congestion on Narellan

Road

TOTAL $128M 6.000 15,000 $21,350

Critical infrastructure investment needed to accelerate land holdings in Greater Macarthur

8,533

$8,533


UDIA NSW

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Wilton The Wilton Precinct was released in 2017 and there have been recent rezonings at Wilton South East and North. There is also ongoing development of Bingara Gorge.

Existing trunk services can only support limited initial growth.

We have identified two key water and sewer projects that could release up 21,500 lots over a three-year timeframe.

Wilton Growth Area Infrastructure

Wilton Sewer Treatment Plant$50M

Wilton Water Reservoir$35M



Yrs)

Lot Yield (Total)

Cost Per Lot

Comment

8. Wilton Water Reservoir

Concept Design

$35M 5,500 16,000 $6,350 Catalyst required to unlock

development in Wilton Precinct.

9. Wilton Sewer Treatment Plant

Proposed $50M 16,000 16,000 $3,150 Catalyst required to unlock 16,000 in

Wilton Precinct.

TOTAL $85M 21,500 32,000 $3,953 (Avg)

Critical infrastructure investment needed to accelerate land holdings in Wilton

$2,656

3,125

2,188


UDIA NSW

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So What’s Changed since Building Blocks 2018

So What’s Changed since Building Blocks 2018 A lot has happened since Building Blocks 2018 was released. We have seen record dwelling completions in greenfield markets in Sydney in 2018-19, followed by a significant slowdown in2019-20, The response to COVID towards greenfield housing and the roll-out of HomeBuilder in mid-late 2020 has caused a major rebound to occur. But we now have a fast-depleting supply of zoned and serviced greenfield land and a supply and emerging housing affordability crisis.

There has not been a significant rollout of enabling infrastructure to sustain greenfield supply in recent years. Only a handful of the Building Blocks 2018 projects have progressed to delivery, including Hambledon Road, the North Leppington zone substation and some of the Austral Leppington Sewerage Package works. These projects were estimated to cost $111 million total project cost and to unlock up to 35,400 lots.

Whilst there are some projects in the planning stage (Appin Road at Greater Macarthur), most projects have been deferred, especially sewerage infrastructure works by Sydney Water in the NWGC and SWGC . Endeavour Energy has also deferred the North Box Hill and Riverstone East and Catherine Fields zone substations. There has also been a major policy shift towards the Aerotropolis which is the new major centre in the Western Parkland City and to the deficit of the existing growth centres. The lack of a greenfield pipeline is a major problem and now is the time to respond with firm measures to offset an impending housing affordability crisis. Provided below is a summary status of the projects recommended in Building Blocks 2018:

Precinct - Growth Centre

Infrastructure Current Status

North West Growth Centre

Hambledon Road (Part) Completed and funded under Housing Acceleration fund.

Riverstone East Zone Substation Currently scheduled for 2024 delivery by Endeavour Energy

North Box Hill Zone Substation Originally scheduled for 2022 delivery, pushed back to 2025 by Endeavour Energy

North Marsden Park Sewer Pump Station No longer required with change of strategic design options

North Marsden Park Sewer Pump Station Scheduled for 2024 delivery by Sydney Water Schofield West Sewer Pump Station Scheduled for 2024 delivery by Sydney Water

South West Growth Centre

Austral Leppington Package - Austral Reservoir - Kemps Creek Sewer Pump Station - Kemps Creek Gravity Main - Kemps Creek Gravity Main (Part B) - Kemps Creek Zoned Substation

Some items complete, others at Concept Design Stage

North Leppington Zone Substation Completed

Catherine Fields Zone Substation Planned for 2027 delivery by Endeavour Energy

Greater Macarthur

Appin Road Strategic design phase, Part gap funding allocated and recent Federal Government funding allocation

Wilton

Packaged Waste Water Treatment Plant Currently under options analysis and investigations by Sydney Water

Upgrade Water Pumping Station & Trunk Main Unchanged

Wilton Roads Package Only partly completed

A lot has happened since Building Blocks 2018 was released. We have seen record dwelling completions in greenfield markets in Sydney in 2018-19, followed by a significant slowdown in 2019-20. However, the aftermath of COVID-19 and the roll-out of HomeBuilder in mid-late 2020 has caused a major rebound to occur. We now have a fast-depleting supply of zoned and serviced greenfield land, and an emerging housing affordability crisis.

There has not been a significant rollout of enabling infrastructure to sustain greenfield supply in recent years. Only a handful of the Building Blocks 2018 projects have progressed to delivery, including Hambledon Road, the North Leppington zone substation and some of the Austral Leppington Sewerage Package works. These projects were estimated to cost $111 million total project cost and to unlock up to 35,400 lots.

Whilst there are some projects in the planning stage (Appin Road at Greater Macarthur), most projects have been deferred, especially sewerage infrastructure works by Sydney Water in the NWGC and SWGC . Endeavour Energy has also deferred the North Box Hill and Riverstone East and Catherine Fields zone substations. There has also been a major policy shift towards the Aerotropolis, the new major centre in the Western Parkland City, which is to the detriment of the existing growth centres.

The lack of a greenfield pipeline is a major problem and now is the time to respond with firm measures to offset an impending housing affordability crisis. Provided below is a summary status of the projects recommended in Building Blocks 2018.


UDIA NSW

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Building Blocks Catalytic Infrastructure Methodology UDIA NSW and IDC have identified catalytic infrastructure on land that was ‘ready to go’. We pinpointed areas where the last missing piece of infrastructure cannot be delivered by the development industry alone.

Our focus was on infrastructure, including roads, electricity, sewer, and water that can be delivered within 3 years to unblock development.

UDIA NSW and IDC have developed a framework that addresses the current market conditions and unlocks the most supply:

• Greenfield land released and/or zoned for residential development in Sydney’s Growth Centres and other key precincts that can supply dwellings to market within 3 years.

• Infrastructure projects that can be delivered within a 3-year timeframe. • Infrastructure projects unlikely or unable to be delivered by developers.

The identification of the projects was based on an IPP Methodology presented below:


UDIA NSW

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UDIA NSW

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Conclusion

We are facing a land availability crisis in Greater Western Sydney.

This crisis can be mitigated in the short term through the immediate funding of critical enabling infrastructure. Building Blocks Greater Western Sydney 2021 identifies practical and realistic solutions to help sustain greenfield housing supply in the North West and South West Growth Centres (including South Creek), as well as the Wilton and Greater Macarthur growth precincts.

Due to major flooding and evacuation risk, the North West Growth Centre and broader region currently has a development moratorium, which is exacerbated by a lack of major road construction, (Richmond Road, Garfield Road and Bandon Road) to support further greenfield release.

In the South West, poor investment in sewer infrastructure by Sydney Water will undermine the ability of the Austral Leppington precincts in the SWGC to rollout greenfield lots until a new wastewater recycling centre is delivered by Sydney Water in 2026.

Our proposed JAffa Infrastructure funding Program can provide direct funding for 9 water, sewer, electricity, and road projects identified across the Growth Centres and key growth precincts to maintain supply. This could yield up to 69,700 lots within a three-year timeframe, protect 40,000 construction jobs and deliver $17 billion of economic activity in NSW.

We hope that the NSW Government commits to the projects we have recommended within this document, to sustain the greenfield supply, achieve housing affordability and support the construction industry, as a bridge to ongoing economic recovery in NSW.

Back cover image: Willowdale by Stockland Left: Brighton Lakes by Mirvac

North West South West Greater Macarthur

Wilton

4 Infrastructure projects

27,200 Lots Unlocked

$180 Million Investment



>$30 Million Investment

1 Infrastructure project

6,000 Lots Unlocked





Potential yield per growth centre

UDIA NSW Level 5, 56 Clarence St, Sydney NSW 2000P: 02 9262 1214E: [email protected]: www.udiansw.com.au

infrastructure & development consulting Suite 414410 Elizabeth Street Surry Hills NSW 2010P: 0425 264 551E: [email protected]

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