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Punt Road Public Acquisition Overlay Valuation & Economic Advice Norton Rose Fulbright on behalf of VicRoads February 2016

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Page 1: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

Punt Road Public Acquisition Overlay

Valuation & Economic Advice Norton Rose Fulbright on behalf of VicRoads

February 2016

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© Urbis Valuations Pty Ltd ABN 28 105 273 523 All Rights Reserved. No material may be reproduced without prior permission. You must read the important disclaimer appearing within the body of this report. URBIS Australia Asia Middle East urbis.com.au

URBIS STAFF RESPONSIBLE FOR THIS REPORT WERE:

Directors Andrew Kinnaird & Mark Dawson Senior Valuer Linda Sharkey Valuer Brie McClaren Job Code MPEV-1429

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TABLE OF CONTENTS

URBIS MPEV-1429-001

Executive Summary .................................................................................................................................... 1

1 Introduction ...................................................................................................................................... 2 1.1 Instructions ........................................................................................................................................ 2 1.2 Basis of Valuation .............................................................................................................................. 2 1.3 Definitions Of Value and Compensation ........................................................................................... 2 1.4 Escalation Allowance For Time ......................................................................................................... 3 1.5 Qualifications and Experience ........................................................................................................... 4 1.6 Assistance ......................................................................................................................................... 4 1.7 Questions Outside Expertise, Inaccuracies and additional Matters .................................................. 4 1.8 Facts, matters and assumptions ........................................................................................................ 4 1.9 Planning Panel Victoria Statement .................................................................................................... 4 1.10 Date of Inspection And Valuation Estimate ....................................................................................... 4

2 Key Assumptions and Disclaimers ............................................................................................... 5 2.1 Condition of Improvements ................................................................................................................ 5 2.2 Occupancy ......................................................................................................................................... 5 2.3 Planning Permits................................................................................................................................ 5 2.4 Ownership .......................................................................................................................................... 5 2.5 Other Heads of Compensation .......................................................................................................... 5 2.6 Properties Assessed .......................................................................................................................... 6 2.7 Building and Land Areas ................................................................................................................... 6 2.8 Impact on Buildings in ‘After’ Value ................................................................................................... 6 2.9 Property Ownership and Prior Compensation ................................................................................... 6 2.10 Redevlopment of Properties .............................................................................................................. 6 2.11 Pecuniary Interest .............................................................................................................................. 6 2.12 Limited Liability Scheme .................................................................................................................... 6 2.13 Market Movement .............................................................................................................................. 7 2.14 Goods & Services Tax ....................................................................................................................... 7 2.15 External Information Sources ............................................................................................................ 7

3 Location ............................................................................................................................................ 8

4 Land Affected by Public Acquisition Overlay ............................................................................. 10 4.1 Title Details ...................................................................................................................................... 10 4.2 Encumbrances, Caveats and Notices ............................................................................................. 10 4.3 Services ........................................................................................................................................... 10 4.4 Site Contamination .......................................................................................................................... 10 4.5 Land Area of Each Property ............................................................................................................ 10 4.6 Public acquisition Overlay Area ....................................................................................................... 11

5 Town Planning ............................................................................................................................... 12 5.1 Zoning .............................................................................................................................................. 12 5.2 Overlays ........................................................................................................................................... 13 5.3 Heritage Considerations .................................................................................................................. 13 5.4 Permitted Uses ................................................................................................................................ 13

6 Improvements ................................................................................................................................ 14 6.1 Overview .......................................................................................................................................... 14 6.2 Photographs .................................................................................................................................... 14

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URBIS

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7 Market Considerations ................................................................................................................. 15 7.1 Residential ...................................................................................................................................... 15 7.2 Retail/commercial ........................................................................................................................... 15 7.3 Development Sites .......................................................................................................................... 16 7.4 Sales Evidence ............................................................................................................................... 16 7.4.1 Punt Road house Evidence – Western side ................................................................................... 17 7.4.3 Punt Road House Evidence – Eastern Side ................................................................................... 18 7.4.4 House Sales – Nearby .................................................................................................................... 20 7.4.5 Apartment Sales – Punt Road ........................................................................................................ 21 7.4.6 Aprtment Sales – Nearby ................................................................................................................ 22 7.4.7 Land Sales – Dwellings .................................................................................................................. 23 7.4.8 Development Sites .......................................................................................................................... 24 7.4.9 Retail Sales ..................................................................................................................................... 25 7.4.10 Pub and Hotel Sales ....................................................................................................................... 26 7.4.11 Petrol Station and Carwash Sales .................................................................................................. 27

8 Economic Advice .......................................................................................................................... 28

9 Valuation Estimate ........................................................................................................................ 29

10 Economic Cost of Removing PAO .............................................................................................. 31

11 Economic Cost of Redevelopment ............................................................................................. 33

12 Economic Cost Summary ............................................................................................................ 34

Disclaimer .................................................................................................................................................. 35

Appendix A Letter of Instruction

Appendix B Qualifications and Experience

Appendix C Economic Memo

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URBIS MPEV-1429-001 INTRODUCTION 1

Executive Summary

Brief Description: Properties affected by Public Acquisition Overlay along the eastern side of Punt Road, between Alexandra Avenue, South Yarra and Union Street, Windsor.

Instructing Party: Rory O’Connor of Norton Rose Fulbright, on behalf of VicRoads.

Purpose of Report: To provide an expert report that comments broadly on the economic value of retaining the Public Acquisition Overlay (PAO) and the economic cost of having to reinstate the PAO if it was removed.

Total Land Area: 78,429 m2, including VicRoads owned properties.

Total Land area of PAO: 36,630 m2, plus 10,634 m2of VicRoads owned properties.

Town Planning: General Residential, Residential Growth, Neighbourhood Residential and Commercial 1 zones.

Interest Valued: Freehold unencumbered subject to the assumptions contained herein.

Date of Valuation Estimate: 20 January 2016

Valuation Estimate Approaches: Direct Comparison, Summation and Capitalisation of estimated rent.

Economic Cost of Removing PAO: 2016 $ 2051 $ 50% P&E Act Reduction $39,100,000 $540,000,000 70% P&E Act Reduction $55,400,000 $650,000,000 90% P&E Act Reduction $71,700,000 $750,000,000

Economic Cost of Redevelopment: 2016 $ 2051 $ $N/A $82,450,000

Key Assumptions: I refer to the Key Assumption and Disclaimers contained within section 2 of this report. This report contains a high level estimate of potential compensation scenarios only. Internal inspections and occupancy details were not made available as part of this assessment.

Disclaimer: This Executive Summary should be used in conjunction with the Report and Valuation Estimates which follows, not in isolation.

Valuer: Andrew Kinnaird, AAPI Director

Certified Practising Valuer Australian Property Institute Member No 62804

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2 INTRODUCTION URBIS

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1 Introduction

1.1 INSTRUCTIONS The Advisory Committee was appointed by the Minister for Planning to report and recommend on whether to retain, modify or remove the Public Acquisition Overlay (PAO) along the eastern side of Punt Road between Alexandra Avenue, South Yarra and Union Street, Windsor.

Specifically, I have been requested to:

(1) Review the background materials provided;

(2) Confer with instructing solicitors and counsel where necessary;

(3) Prepare an expert report addressing valuation matters arising from the Terms of Reference. In particular, I have been requested to comment broadly on the economic value of retaining the PAO and the economic cost of having to reinstate the PAO if it was removed; and

(4) If necessary, appear at the Tribunal for the Final Hearing of these matters, currently listed on February 9-11, 16-, 18 and 19, when necessary for the purpose of presenting your expert opinion concerning town planning.

My letter of instruction is attached at Appendix A.

In answering Question 3 I have based my calculations on the assumption that the current improvements situated within the PAO are identical to what would exist when ultimately compulsorily acquired.

In addition to the foregoing I have been verbally instructed to consider advice from 10 Consulting. I have been instructed to assess the cost of compensation in the event that the PAO is removed from the subject properties together with all supporting Government strategic planning or similar documents which could be construed as constituting a proposed reservation. This requires me to consider what level of redevelopment could occur on the subject properties over a 35 year time period and the potential impact on the economic cost of reinstating the PAO.

1.2 BASIS OF VALUATION In calculating the estimated economic value of retaining the PAO, I have undertaken an indicative desktop valuation estimate of each property affected by the PAO as at the current date. I have not inspected any of the individual properties internally, nor have I undertaken detailed investigations into the condition and state of accommodation of each individual property.

My indicative valuation assessments have been based on the information provided to me only, which I have assumed to be reasonably accurate. The Direct Comparison and Summation approaches have been utilised in my indicative desktop valuation estimates. Where appropriate I have also undertaken a capitalisation of estimated rent approach as a check method for commercial properties. I note that if occupancy details were available this would most likely become the primary method of valuation.

This report has been prepared for the above mentioned purpose only and cannot be relied upon for any other purpose.

1.3 DEFINITIONS OF VALUE AND COMPENSATION The Land Acquisition and Compensation Act 1986 (LACA) includes the following definitions which may pertain to compulsory acquisitions and are relevant to the indicative assessments contained within this report. The Planning and Environment Act 1987 (P&E Act) refers to the LACA in relation to these definitions, highlighting that payments of compensation under this Act is for Financial Loss.

“market value”, in relation to any interest in land on a particular date, means the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser;

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URBIS MPEV-1429-001 INTRODUCTION 3

“loss attributable to severance”, in relation to the acquisition of a claimant’s interest in land, means the amount of any reduction in the market value of any other interest of the claimant in the acquired land or any interest of the claimant in other land used in conjunction with the acquired land which is caused by its severance from the acquired land.

The LACA and P&E Act include additional definitions and measures of compensation which are discussed later in this report. Two key principles relate to when compensation is paid under the P&E Act (or its predecessor the Town and Country Planning Act 1961). When a payment is made under the P&E Act it is registered on Title.

In the event that the property is later compulsorily acquired the formula for the prescribed amount is applied in Section 41(7) of the LACA.

A X C B

A = the amount of compensation previously paid in respect of the land for the loss of market value due to:

i) the reservation or proposed reservation of the land or part of the land for a public purpose in a planning instrument, or ii) any part of the land being required for a public purpose.

B = the market value of the land in respect of which the compensation was paid, that value to be determined as if the underlying zoning applied to the land at the date which was the basis for the calculation of that compensation.

C = the compensation payable under this Part for the market value and severance less the value of the land attributable to improvements of a durable nature made:

i) with the consent of the Authority under section 12(1) (b); or ii) after the last date on which compensation was paid in respect of the land and before service of the most recent notice of intention to acquire an interest in the land.

In the event that a PAO is removed, recovery of compensation previously paid under the P&E Act is detailed in Section 111 as follows;

1) Any person who has paid compensation under this Part in respect of land as a result of a reservation or proposed reservation may recover the amount of compensation which is set out in a statement lodged under section 110(1) in respect of the land from its present owner of the land if-

a) the planning scheme is amended to remove the reservation; or

b) the amendment which proposed to reserve the land lapses; or

c) the declaration under section 113 is cancelled.

As a matter of completeness, market value has also been assessed in accordance with the definition approved by the Australian Property Institute, as follows:

“The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in and arm’s length transaction, after proper marketing, wherein the parties have each acted knowledgably, prudently, and without compulsion.”

1.4 ESCALATION ALLOWANCE FOR TIME In calculating the estimated economic cost of having to reinstate the PAO, Urbis Economists have estimated the potential house and unit price growth over the identified future acquisition timeframe to as

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4 INTRODUCTION URBIS

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compared to the Consumer Price Index. The difference between these two measures equates to the likely real house price growth which I have applied to the current market value estimates of each individual property to demonstrate the potential economic cost. I highlight that this memo has been prepared by Mark Dawson of this office and relates to advice that is outside my area of expertise.

1.5 QUALIFICATIONS AND EXPERIENCE My expert evidence report has been prepared in accordance of the requirements of the Planning Panels Victoria ‘Guide to Expert Evidence’ and a statement of my qualifications and experience is attached as Appendix B to this report.

A significant proportion of my valuation experience has been preparing compensation valuations in accordance with the Land Acquisition and Compensation Act 1986 and the Planning and Environment Act 1987.

1.6 ASSISTANCE In preparing this report I was assisted by Linda Sharkey, Senior Valuer and Brie McClaren, Valuer in gathering information, searching Certificates of Title and preparing parts of the report at my direction. Section 8 Economic Commentary was prepared by Mark Dawson, Director. The report was also peer reviewed by Brian Dudakov, Director. The opinions contained within the report are my own unless stated otherwise.

1.7 QUESTIONS OUTSIDE EXPERTISE, INACCURACIES AND ADDITIONAL MATTERS

To my knowledge, there are none contained within in my report. I highlight that section 8 Economic Commentary was prepared by Mark Dawson, Director, Economics and Market Research. This section is not my opinion as it contains advice that sits outside my area of expertise.

1.8 FACTS, MATTERS AND ASSUMPTIONS These are stated within my report.

1.9 PLANNING PANEL VICTORIA STATEMENT I have made all the inquiries that I believe are desirable and appropriate and no matters of significance which I regard as relevant to my knowledge been withheld from the Panel.

1.10 DATE OF INSPECTION AND VALUATION ESTIMATE A kerbside inspection of the properties affected was undertaken on 20 January 2016, this has been adopted as the relevant date of the valuation estimate.

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URBIS MPEV-1429-001 KEY ASSUMPTIONS AND DISCLAIMERS 5

2 Key Assumptions and Disclaimers

2.1 CONDITION OF IMPROVEMENTS As mentioned earlier, I have not internally inspected the properties affected by the PAO at the date of inspection. Therefore I cannot accurately assess the value of the buildings situated on the properties.

Reference to the Rawlinson’s Construction Cost guide indicates that a medium size and quality residential dwelling with double brick is likely to cost in the order of $1,525-$1,645 per m2 excluding GST as at January 2015. Three storey flats of medium standard (modern build) are likely to cost in the order of $1,925 to $2,075 per m2 excluding GST as at January 2015.

In most instances I have adopted a deprecated building value of $750 per m2 for houses and between $1,000 and $1,500 per m2 for apartments. For some properties that have sold recently, where internal photos are available in Urbis’s sales databases, I have adopted higher or lower building rates.

I reserve the right to review these estimates if more detailed information becomes available.

2.2 OCCUPANCY I have not been provided with detailed occupancy details. This is of particular relevance to the properties that are being leased or occupied for retail or commercial purposes. These properties may be over or under let, which would impact on the market value of these properties. Furthermore, this information would be required to determine whether these properties highest and best use value is in line with the current use or would be for an alternative purpose i.e. residential redevelopment.

2.3 PLANNING PERMITS As the PAO has been in place since 1954 there is likely to be a number of properties that have either been fully constructed or have been substantially renovated since. In these circumstances it is possible that any planning permit issued for the works on these properties would have been approved on the basis that compensation is not payable for such.

I have not been provided with the above information. Therefore, it is possible that some of the estimates of compensation contained within this report are over stated, where permits on the aforementioned basis have been issued.

2.4 OWNERSHIP Other than those properties advised to be owned by VicRoads I have not been provided with the ownership details of the subject properties. Where two or more continuous certificates of title are held in one line there could be an impact on the compensation entitlement for those properties. This has not been factored into the valuation estimates.

2.5 OTHER HEADS OF COMPENSATION The estimates of compensation in this report focus on the market value, severance and application of the prescribed formula. When properties are compulsorily acquired, owners are entitled to other heads of claim. These claims, or costs to VicRoads, could add to the economic cost of the project. Nevertheless we have not detailed these within this report. They could include but are not limited to;

Disturbance; such as moving costs and stamp duty for replacement properties, business loss for commercial properties,

Special Value; such as additional costs for fitting a dwelling for disabled persons, Solatium; up to 10% payment of the market value for the intangible and non-pecuniary

disadvantages resulting from the acquisition, Costs of claim; these can include lawyers, valuers, town planners, accountants, engineers, etc.

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6 KEY ASSUMPTIONS AND DISCLAIMERS URBIS

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I highlight that most of the aforementioned other heads of claim are not assessed by property valuers and hence would fall outside my area of expertise.

2.6 PROPERTIES ASSESSED The properties assessed are limited to those situated along the eastern side of Punt Road. Additional properties on the western side of the Punt Road are affected by a PAO but do not form part of this report.

2.7 BUILDING AND LAND AREAS For the majority of properties I have adopted the land and building areas as identified in either 10 Consulting report or VicRoads records. I have tested some of this advice by searching Certificates of Title and undertaking check measures of the PAO online. Hence, in limited circumstances I have adopted different land or building areas to what has been provided.

2.8 IMPACT ON BUILDINGS IN ‘AFTER’ VALUE I have estimated whether the affected buildings within the PAO would be fully demolished or partially or fully retained. This estimate has been made based on the aerial plans provided. I reserve the right to review my assessments based on detailed advice in this regard.

2.9 PROPERTY OWNERSHIP AND PRIOR COMPENSATION Based on the advice provided to me I have categorised each property as either; owned by VicRoads, P&E Act compensation paid or no compensation paid. In relation to the properties having no compensation paid I understand that only two or three of these have a right to claim compensation under the P&E Act, I have not been informed which properties these are. I have not independently verified this information.

In relation to the properties where compensation has been paid under the P&E Act I have been provided with the amount of compensation paid. In order to accurately apply the prescribed formula under the LACA it is necessary to be provided with the Before Value as at the date the compensation was paid. Absent of this information I have undertaken alternative calculations on the basis that the previous compensation paid equates to either 50%, 70% or 90% of the total compensation ultimately to be paid when compulsory acquisition occurs. This is important in determining VicRoads interest in these properties.

I reserve the right to review my valuation estimates if more detailed information becomes available.

2.10 REDEVLOPMENT OF PROPERTIES In accordance with my instructions I have relied upon 10 Consulting’s advice as to the redevelopment potential of subject properties in the event that the PAO is removed. I have applied this to a typical property size and then applied it to 50% of the total PAO area. This is a high level estimate to demonstrate the potential increase in property costs and is not based on specific properties.

2.11 PECUNIARY INTEREST I confirm that neither I, nor Urbis, have any pecuniary interest that could reasonably be regarded as being capable of affecting that person’s ability to give an unbiased opinion of value, or that would conflict with a proper valuation of the property. I advise that this position will be maintained until the purpose for which this valuation is being obtained is completed.

2.12 LIMITED LIABILITY SCHEME Urbis Valuations Pty Ltd operates under the Australian Property Institute Limited Liability Scheme which is a scheme approved under Professional Standards Legislation.

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URBIS MPEV-1429-001 KEY ASSUMPTIONS AND DISCLAIMERS 7

2.13 MARKET MOVEMENT I am required to advise that this valuation is current at the date of valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period of time (including as a result of general market movements or factors specific to the particular property). Liability for losses arising from such subsequent changes in value is excluded as is liability where the valuation is relied upon after the date of the valuation.

2.14 GOODS & SERVICES TAX In my opinion the properties affected are most likely to be defined as either a ‘going concern’, GST exempt or the purchaser is entitled to claim an input tax credit under the relevant provisions of current GST legislation. Accordingly, a hypothetical sale of the interest valued herein is assumed to be GST free and our valuation is exclusive of any GST. I take no responsibility for the liability or otherwise for the payment of GST on an assumed sale of the interest valued herein. In addition, any market rentals, passing rentals from existing leases and outgoings amounts are also assumed to be exclusive of GST unless stated to the contrary.

2.15 EXTERNAL INFORMATION SOURCES In undertaking our valuation assessments I have relied on the following information:

Individual property information as provided within the background materials, prepared by 10 Consultancy Group, dated March 2015;

Spread sheets provided by Vic Roads (Roads Corporation) with details of land areas, area of the PAO and amounts of compensation previously paid.

VicRoads Punt Road Study May 2012 together with various background reports

Terms of Reference for Advisory Committee

Internal Urbis databases and externally provided market information; and

Sales evidence sourced from local real estate agents, valuers and Council.

In referring to sales and/or rental information as detailed within this report, I have relied on a range of external sources including publicly available information (newspapers, statements by public companies), subscription to information databases and information generally provided verbally by others such as estate agents, property managers, property valuers and consultants. In many instances, I have not had access to the original source material such as contracts of sale or signed leases. Although I have no reason to doubt the validity of the information provided to us, and I have relied on this information in good faith, I am unable to state with certainty that the information upon which I have relied is consistent with the contractual arrangements between the relevant parties.

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8 LOCATION URBIS

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3 Location The Public Acquisition Overlay runs along the eastern side of Punt Road, from Alexandra Avenue to Union Street, through the suburbs of South Yarra, Prahran and Windsor, approximately 3 radial kilometres south, south-east of the Melbourne CBD.

This part of Punt Road is predominately occupied by period dwellings constructed before the introduction of the PAO, along with some commercial properties including petrol station, car wash, shops, car rental outlet, and various accommodation buildings such as a boarding house and backpacker lodge.

In addition, there are a number of schools positioned along the western side of Punt Road, including Christ Church Grammar School, South Yarra Primary School, Wesley College and Airlie Police College. Wesley College owns tennis courts affected by the PAO on the east side of Punt Road. The Alfred Hospital is situated to the south-western corner of Punt Road and Commercial Road, with the main entrance on Commercial Road.

Detailed overleaf is a location plan outlining the area affected by the Acquisition Overlay:

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URBIS MPEV-1429-001 LOCATION 9

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10 LAND AFFECTED BY PUBLIC ACQUISITION OVERLAY URBIS

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4 Land Affected by Public Acquisition Overlay

4.1 TITLE DETAILS I have not been provided with copies of the Certificates of Title for each property. A Certificate of Title was searched for randomly selected properties. I have done this confirm the accuracy of the information provided to me, in particular land areas, as detailed below in Section 4.5.

4.2 ENCUMBRANCES, CAVEATS AND NOTICES This valuation does not take into account the effect, if any, on the value of the interest valued of any easements, encumbrances or other notations whether registered on the Certificates of Title or not. I accept no responsibility for the impact on value from any such instrument.

4.3 SERVICES I have assumed that all services, including gas, electricity, water, sewerage and telephone, are connected or available for connection to the properties.

I have not undertaken formal searches to establish whether or not services are either available or connected to the subject property.

4.4 SITE CONTAMINATION I have not been provided with, nor sighted, contamination reports prepared by a qualified consultant.

Therefore, this valuation takes no account of the actual or possible effect on the value of the subject property of any previous or current environmental hazard including pollution, contamination, noxious emission or discharge, or the cost of, or necessity for, ceasing or cleaning up any environmental hazard.

Should any environmental reports subsequently reveal contamination issues and/or associated clean-up costs, my assessment may require revision.

4.5 LAND AREA OF EACH PROPERTY As I have not been provided with Title Plans for each property, I have relied upon land areas provided to me for the individual properties contained within the background materials, prepared by 10 Consultancy Group, dated March 2015 and Vic Roads records.

A summary of the property areas of the searched Certificates of Title are as follows;

I have assumed this information to be correct and have not had the opportunity to verify the majority of the information, aside from a small selection of properties. I accept no responsibility for information provided to me and relied upon within my assessment which is not accurate.

Land AreasPUNT ROAD

Land Area (m²)

474 Punt Road, South Yarra 356412-414 Punt Road, South Yarra 538

380 Punt Road, South Yarra 230212 Punt Road, Prahran 438206 Punt Road, Prahran 412

508/508A Punt Road, South Yarra 530484-486 Punt Road, South Yarra 2,168

Street Address

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URBIS MPEV-1429-001 LAND AFFECTED BY PUBLIC ACQUISITION OVERLAY 11

4.6 PUBLIC ACQUISITION OVERLAY AREA I have been provided with the areas of the PAO by Vic Roads for the majority of the properties. I have relied upon this information for the purpose of this valuation estimate. There are 11 properties where I have not been provided with PAO areas and have estimated these with the plans provided. There are a further 10 properties that I have made some amendments to areas provided.

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5 Town Planning

5.1 ZONING The following zoning information has been sourced from the Department transport, Planning and Local Infrastructure’s website (www.dtpli.vic.gov.au/planning). In accordance with both the 10 Consulting Report and my investigations, all of the land affected by the PAO is contained within the City of Stonnington. The affected properties have the following zonings:

- ‘General Residential’ Zone - ‘Residential Growth’ Zone - ‘Neighbourhood Residential’ Zone - ‘Commercial 1’ Zone.

The purpose of the ‘General Residential’ Zone is:

To encourage development that respects the neighbourhood character of the area.

To implement neighbourhood character policy and adopted neighbourhood character guidelines.

To provide a diversity of housing types and moderate growth in locations offering good access to services and transport.

The purpose of the ‘Residential Growth’ Zone is:

To provide housing at increased densities in buildings up to and including four storey buildings.

To encourage a diversity of housing types in locations offering good access to services and transport including activities areas.

To encourage a scale of development that provides a transition between areas of more intensive use and development and areas of restricted housing growth.

To allow educational, recreational, religious, community and a limited range of other non-residential uses to serve local community needs in appropriate locations.

The purpose of the ‘Neighbourhood Residential’ Zone is:

To recognise areas of predominantly single and double storey residential development.

To limit opportunities for increased residential development.

To manage and ensure that development respects the identified neighbourhood character, heritage, environmental or landscape characteristics.

To implement neighbourhood character policy and adopted neighbourhood character guidelines.

To allow educational, recreational, religious, community and a limited range of other non-residential uses to serve local community needs in appropriate locations.

The purpose of the ‘Commercial 1’ Zone is:

To create vibrant mixed use commercial centres for retail, office, business, entertainment and community uses.

To provide for residential uses at densities complementary to the role and scale of the commercial centre.

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URBIS MPEV-1429-001 TOWN PLANNING 13

5.2 OVERLAYS All of the individual properties are affected by the Public Acquisition Overlay.

In addition, properties are also affected by Heritage Overlay, Design and Development Overlay and Special Building Overlay.

The purpose of the Public Acquisition Overlay is:

To identify land which is proposed to be acquired by an authority and reserves land for public purpose. In the instance of the subject overlay, for the purpose of road widening.

The purpose of the Heritage Overlay is:

To conserve and enhance heritage places of natural or cultural significance.

To conserve and enhance those elements which contribute to the significance of heritage places.

To ensure that development does not adversely affect the significance of heritage places.

To conserve specifically identified heritage places by allowing a use that would otherwise be prohibited if this will demonstrably assist with the conservation of the significance of the heritage place.

The purpose of the Design and Development Overlay is:

To identify areas which are affected by specific requirements relating to the design and built form of new development.

The purpose of the Special Building Overlay is:

To identify land in urban areas liable to inundation by overland flows from the urban drainage system as determined by, or in consultation with, the floodplain management authority.

To ensure that development maintains the free passage and temporary storage of flood waters, minimises flood damage, is compatible with the flood hazard and local drainage conditions and will not cause any significant rise in flood level or flow velocity.

To protect water quality in accordance with the provisions of relevant State Environment Protection Policies, particularly in accordance with Clauses 33 and 35 of the State Environment Protection Policy (Waters of Victoria).

5.3 HERITAGE CONSIDERATIONS Some of the properties are affected by Heritage Overlays, as I have not internally inspected the properties I have not made specific adjustments for heritage encumbrances or significance. In some circumstances heritage dwellings of certain significance or quality of improvement can positively or negatively impact on the value of a property.

5.4 PERMITTED USES I have not obtained a copy of any planning permit/s for the affected properties. As no lease or occupation information has been provided to me, I have undertaken my valuation estimates on the highest and best use which may not be the current use.

As noted in section 2.3 I have not taken into account any impact on compensation entitlement flowing from planning permit conditions.

Page 18: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

14 IMPROVEMENTS URBIS

MPEV-1429-001

6 Improvements

6.1 OVERVIEW It was not possible for me to undertake any internal inspections of the properties affected by the overlay. I have relied upon the information provided to me along with publically available information and mapping applications in arriving at a brief overview of the improvements to each property.

In the majority of cases, I have been unable to identify the condition of each property internally. I have thus assumed the condition of each property to be average.

6.2 PHOTOGRAPHS Detailed below is a sampling of photographs of some of the properties affected by the overlay: These were taken on 20 January 2016, being the day of assessment.

PICTURE 1 –522 PUNT ROAD PICTURE 2 – 390 PUNT ROAD

PICTURE 3 – 262 PUNT ROAD PICTURE 4 –122 PUNT ROAD

Page 19: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

URBIS MPEV-1429-001 MARKET CONSIDERATIONS 15

7 Market Considerations

7.1 RESIDENTIAL The inner city residential market has been strong over the last 18 to 24 months, on the back of a low interest rate climate, stabilised economy and strong demand for inner residential houses and apartments.

Since the start of 2015, there have been several examples of inner city dwellings selling well above expectation, with clearance rates regularly above 70% during the latter half of 2014.

Our recent enquiries reveal that a strong appetite exists for established dwellings for both investment and owner occupation with agents reporting high levels of interest at inspections and auctions throughout 2015.

Given the attributes of the subject properties, particularly the convenient access to the Melbourne CBD, arterial road network, public transport routes and shopping facilities it would be reasonable to expect a strong demand for the subject properties if put to the market.

7.2 RETAIL/COMMERCIAL Low interest rates (lower interest payments) and rising house prices (greater equity) have freed up income for consumer spending, in particular discretionary spending, which has in turn supported the retail market. Households appear to be now moving from high levels of savings to increased consumption. National retail trade growth has been strongest in both Victoria and New South Wales and is indicative of the correlation between consumer spending and movements in house prices, with the improved consumer confidence from house price rises driving an increase in spending.

Expenditure at restaurants and cafés has been the strongest component of retail trade over the past 24 months, indicating that consumer caution has diminished and also reflects the growth in fast casual dining and the increase in popularity of lane-ways as retail destinations, particularly in Melbourne’s CBD.

Local and overseas investor appetite continues to drive demand for investment properties, particularly those offered with medium to short term leases. Self-managed superannuation funds (SMSF) have also had a part to play in this market. This competition for stronger returns has put downward pressure on yields.

The office city fringe vacancy rate has risen in the six months to September 2015, from a historical tight 5.97% to 7.83%, largely due to new supply coming into the market, in particular recently in South Melbourne. Location and proximity to services continues to be a strong factor in tenant demand, with availability of modern, well positioned stock, at affordable prices levels being more favoured by tenants, to older or secondary positioned stock.

The Reserve Bank of Australia decided to leave the official cash rate on hold at 2.0 per cent at its 6 October 2015 meeting. This follows a 25 basis point reduction in May 2015 and a 25 basis point reduction in February 2015. The intent of the rate cut is to stimulate the economy, although it may take some time to determine the result on the property market.

Page 20: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

16 MARKET CONSIDERATIONS URBIS

MPEV-1429-001

7.3 DEVELOPMENT SITES The Melbourne residential development market has been extremely strong, particularly over the past twelve to eighteen months. The existing sentiment has been assisted by a low interest rate climate, stabilised economy and increased demand for inner residential houses and apartments.

The market for residential apartment sites, particularly in the Melbourne CBD and CBD fringe, has attracted wide interest from both local and offshore developers. There have been multiple examples whereby sites have sold for prices well in excess of vendor expectations.

The strength of the development site market has seen a steady flow of sites marketed for sale, particularly over the past twelve months. The rise in prices paid for inner city housing combined with strong population projections has given developers confidence in purchasing and developing these sites.

Unquestionably, the market has been assisted by the emergence of both offshore apartment purchasers and offshore developers. It is common in the current market for projects to be majority or wholly sold to international investors, particularly out of Asia.

Whilst there has been recent strong representation from Asian developers and investors active in the Melbourne market, Urbis are of the view that those properties located within close proximity to the CBD will continue to remain sought after, particularly those benefiting from strong amenity, including access to public transport and local shops.

Interim planning controls, which were introduced in September 2015 under the central city planning review launched by the Labor Government, have introduced maximum plot ratios and in some instances restricted building height limits in the city and Southbank until an amendment to the Melbourne Planning Scheme is passed following a twelve month public consultation period. These controls significantly reduce the potential densities on city development sites, which in turn will affect value. Sites offered with the surety of development approval, particularly those with high density development approved prior to the introduction of the planning controls, are likely to be more keenly sought after by developers. There is now evidence starting to emerge of a clear premium being paid for sites with existing planning approval under the previous controls as opposed to site transacting with no planning approval which will therefore be subject to the new controls.

7.4 SALES EVIDENCE In preparing the valuation estimates for the subject properties I have researched sales evidence considered most capable of comparison.

The comparable sales evidence which I have relied upon is detailed in the 11 sales schedules contained over the following pages.

Page 21: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

UR

BIS

M

PEV-

1429

-001

MAR

KET

CO

NSI

DER

ATIO

NS 17

7.

4.1

PU

NT

RO

AD

HO

USE

EV

IDE

NC

E –

WES

TER

N S

IDE

Sal

es E

vide

nce

PU

NT

RO

AD

DW

ELL

ING

SA

LES

- W

ES

TER

N S

IDE

1 &

2/ 9

23 P

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oad,

So

uth

Yarr

a 43

9 Pu

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oad,

Ri

chm

ond

235

Punt

Roa

d,

Rich

mon

d 23

7 Pu

nt R

oad,

Ri

chm

ond

561

Punt

Roa

d, S

outh

Ya

rra

311

Punt

Roa

d,

Rich

mon

d

Sal

e P

rice

$2,0

10,0

00$7

90,0

00$1

,400

,000

$1,3

92,0

00$1

,450

,000

$929

,000

Sal

e D

ate

Oct

-15

Aug-

15M

ay-1

5O

ct-1

4D

ec-1

4D

ec-1

3B

uild

ing

Area

300

sq.m

105

sq.m

201

sq.m

230

sq.m

205

sq.m

160

sq.m

Land

Are

a41

6 sq

.m19

8 sq

.m23

3 sq

.m23

2 sq

.m43

5 sq

.m16

3 sq

.mZo

ning

GR

Z1N

RZ1

GR

Z3G

RZ3

GR

Z1G

RZ3

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rlays

DD

O, H

OD

DO

2, H

O36

4, L

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332

HO

332

HO

6H

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2

Anal

ysed

Bui

ldin

g Va

lue

179,

600

032

8,20

032

4,80

010

1,50

017

9,20

0An

alys

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($/m

²)59

90

1,63

31,

412

495

1,12

0An

alys

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nd V

alue

1,83

0,40

079

0,00

01,

071,

800

1,06

7,20

01,

348,

500

749,

800

Anal

ysed

land

rate

4,40

03,

990

4,60

04,

600

3,10

04,

600

Sale

Rat

e pe

r sq.

m. L

and

Area

$4

,832

$3,9

90$6

,009

$6,0

00$3

,333

$5,6

99

Com

men

ts

Form

er m

ansi

on

curr

ently

con

figur

ed a

s tw

o ap

artm

ents

, eac

h w

ith 2

bed

room

s an

d an

d 1

bath

room

. Site

ha

s re

ar la

ne a

cces

s an

d on

-site

par

king

for

thre

e ca

rs.

Sin

gle

stor

ey, s

emi-

deta

ched

Vic

toria

n co

ttage

with

3

bedr

oom

s an

d 1

bath

room

. Dw

ellin

g is

in

belo

w a

vera

ge c

ondi

tion

and

in n

eed

of fu

ll re

furb

ishm

ent.

Fully

reno

vate

d, tw

o-le

vel V

icto

rian

terr

ace

with

3 b

edro

oms,

2

bath

room

s, b

rick

pave

d co

urty

ard

and

off-s

treet

pa

rkin

g.

A th

ree

leve

l Vic

toria

n te

rrac

e w

ith 3

be

droo

ms,

stu

dy, 2

ba

thro

oms

and

base

men

t den

/sto

rage

. In

clud

es R

OW

to o

ne o

ff-st

reet

car

spa

ce.

Det

ache

d do

uble

fro

nted

dw

ellin

g w

ith

Haw

thor

n br

ick

faça

de,

4 be

droo

ms

and

1 ba

thro

om

Two

stor

ey V

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rian

terr

ace

in d

ated

but

go

od c

ondi

tion.

In

clud

es th

ree

bedr

oom

s, tw

o liv

ing

area

s, o

ne b

athr

oom

an

d do

uble

car

port

via

RO

W.

Pho

to

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 22: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

18 MA

RKE

T C

ON

SID

ER

ATIO

NS

UR

BIS

MPE

V-14

29-0

01 7.

4.3

PU

NT

RO

AD

HO

USE

EV

IDE

NC

E –

EA

STE

RN

SID

E

Sal

es E

vide

nce

PU

NT

RO

AD

SA

LES

- A

FFE

CTE

D (E

AS

TER

N S

IDE

)

344

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Roa

d, S

outh

Ya

rra

214

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d, P

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350

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Roa

d, S

outh

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rra

368

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Roa

d, S

outh

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378

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d, S

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rra

206

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d, P

rahr

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6-30

8 Pu

nt R

oad,

So

uth

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a

Sal

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rice

$950

,000

$850

,000

$1,5

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$3,9

00,0

00S

ale

Dat

eD

ec-1

5Ap

r-15

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15M

ar-1

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b-15

Sep

-14

Land

Are

a12

6 sq

.m43

3 sq

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0 sq

.m24

0 sq

.m20

0 sq

.m40

4 sq

.m2,

523

sq.m

Dev

elop

able

Are

a34

sq.

m19

3 sq

.m31

sq.

m86

sq.

m46

sq.

m19

2 sq

.m1,

609

sq.m

Zoni

ngR

GZ1

RG

Z1N

RZ3

RG

Z1R

GZ1

RG

Z1R

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PAO

PAO

PAO

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PAO

PAO

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PAO

, SB

O

Sale

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r sq.

m. L

and

Area

$7

,540

$1,9

63$1

1,53

8$3

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$3,4

00$2

,601

$1,5

46Sa

le P

rice

- per

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elop

able

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$27,

941

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$14,

783

$5,4

71$2

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Com

men

ts

A re

nova

ted

two-

leve

l Vi

ctor

ian

terr

ace

prov

idin

g 3

beds

and

1

bath

. For

mer

ly oc

cupi

ed

as a

sho

p an

d dw

ellin

g.

Pre

sent

s w

ell i

nter

nally

. S

ite is

larg

ely

affe

cted

by

PAO

and

has

rear

la

ne a

cces

s .

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mi-d

etac

hed,

sin

gle

stor

ey c

otta

ge w

ith 4

be

ds, 2

bat

hs. L

arge

ly un

reno

vate

d. P

erio

d fe

atur

es. I

nclu

des

rear

bu

ngal

ow.

Ren

ovat

ed 3

bed

room

Vi

ctor

ian

terr

ace

with

re

ar c

ourty

ard

and

off-

stre

et p

arki

ng v

ia re

ar

right

of w

ay. A

ffect

ed b

y P

AO.

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oder

n (1

995)

two

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l tow

nhou

se w

ith 3

be

droo

ms,

1 b

athr

oom

an

d of

f-stre

et p

arki

ng

via R

OW

lane

way

. The

dw

ellin

g is

set

bac

k 20

m fr

om th

e fro

ntag

e (n

ot in

PAO

are

a).

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o st

orey

Vic

toria

n dw

ellin

g in

nee

d of

co

mpl

ete

refu

rbis

hmen

t. P

rovid

es

3 be

droo

ms,

2

bath

room

s.

Dou

ble

front

ed,

reno

vate

d 3

bedr

oom

, 2

bath

room

sin

gle

stor

ey

dwel

ling

set b

ack

from

th

e fro

ntag

e.

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arw

ater

Car

was

h an

d ca

fé. C

orne

r lo

catio

n w

ith s

econ

dary

fro

ntag

e to

Arg

o S

treet

; Fu

ture

rede

velo

pmen

t po

tent

ial a

lthou

gh

affe

cted

by

PAO

. Sol

d as

a g

oing

con

cern

(u

nder

rece

ivers

hip)

.

Pho

to

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 23: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

UR

BIS

M

PEV-

1429

-001

MAR

KET

CO

NSI

DER

ATIO

NS 19

Sal

es E

vide

nce

PU

NT

RO

AD

SA

LES

- A

FFE

CTE

D (E

AS

TER

N S

IDE

)

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Roa

d, W

inds

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ville

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el, 1

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mer

cial

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d &

270

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nt R

oad,

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th Y

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0 Pu

nt R

oad,

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d, S

outh

Ya

rra

122

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d, W

inds

or48

0 Pu

nt R

oad,

Sou

th

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a94

-96

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Roa

d,

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dsor

380

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Roa

d, W

insd

or

Sal

e P

rice

$1,2

10,0

00$7

,352

,000

$1,1

00,0

00$9

84,0

00$8

10,0

00$5

,100

,000

$2,2

50,0

00$9

50,0

00S

ale

Dat

eAu

g-14

Jun-

14M

ay-1

4Ap

r-14

Oct

-13

Oct

-13

Apr-

13M

ar-1

3La

nd A

rea

447

sq.m

1,39

0 sq

.m33

7 sq

.m66

3 sq

.m34

0 sq

.m2,

762

sq.m

1,21

0 sq

.m23

1 sq

.mD

evel

opab

le A

rea

248

sq.m

1,14

6 sq

.m13

4 sq

.m34

3 sq

.m12

6 sq

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150

sq.m

1,16

8 sq

.m81

sq.

mZo

ning

RG

Z1R

GZ1

RG

Z1G

RZ9

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rlays

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O

PAO

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DO

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Sale

Rat

e pe

r sq.

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and

Area

$2

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$5,2

89$3

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$1,4

84$2

,382

$1,8

46$1

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$4,1

13Sa

le P

rice

- per

Dev

elop

able

m2

$4,8

87$6

,415

$8,2

40$2

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$6,4

29$2

,372

$1,9

27$1

1,72

8

Com

men

ts

Det

ache

d do

uble

fro

nted

dw

ellin

g w

ith4

bedr

oom

s, 2

ba

thro

oms.

Ful

ly re

nova

ted

inte

rnal

ly.

Incl

udes

off-

stre

et

park

ing

via R

OW

.

Cor

ner s

ite o

ccup

ied

as

a ho

tel,

sold

with

vac

ant

poss

essi

on fo

r 'Th

e B

lock

' ren

ovat

ing

TV

show

.

Ren

ovat

ed s

paci

ous

dwel

ling

(219

sqm

) with

4/

5 be

droo

ms,

3

bath

room

s, c

ourty

ard

and

doub

le g

arag

e.

Cor

ner s

ite w

ith g

ood

acce

ss.

Det

ache

d si

ngle

leve

l dw

ellin

g in

unr

enov

ated

co

nditi

on.

Acco

mm

odat

ion

incl

udes

4 b

edro

oms,

1

bath

room

1950

's u

nren

ovat

ed

sing

le le

vel d

wel

ling

offe

ring

3 be

droo

ms

and

1 ba

thro

om, w

ith a

se

ctio

n of

the

dwel

ling

parti

tione

d in

to a

stu

dio

apar

tmen

t. In

clud

es

doub

le g

arag

e. C

orne

r si

te.

Ger

man

Con

sula

te.

Com

pris

es a

det

ache

d tw

o-le

vel p

erio

d dw

ellin

g an

d va

cant

la

nd to

the

rear

. Sui

tabl

e to

rede

velo

pmen

t.

Two

adjo

inin

g pr

oper

ties

with

acc

ess

from

bot

h P

unt R

oad

and

Uni

on S

treet

, su

itabl

e fo

r re

deve

lopm

ent.

Cur

rent

ly be

ing

rede

velo

ped

to a

n ap

artm

ent b

uild

ing.

Ren

ovat

ed tw

o-st

orey

Vi

ctor

ian

terr

ace

(164

sqm

) with

3

bedr

oom

s, 2

bat

hroo

ms

plus

off-

stre

et p

arki

ng

for t

wo

cars

via

RO

W.

Pho

to

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 24: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

20 MA

RKE

T C

ON

SID

ER

ATIO

NS

UR

BIS

MPE

V-14

29-0

01 7.

4.4

HO

US

E S

ALE

S –

NE

ARB

Y

Sal

es E

vide

nce

DW

ELL

ING

SA

LES

- N

EA

RB

Y

21 N

icho

lson

Str

eet,

Sout

h Ya

rra

15 A

lbio

n St

reet

, Sou

th

Yarr

a 66

Air

lie S

tree

t, So

uth

Yarr

a 16

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xand

ra S

tree

t, So

uth

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a 8

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ol S

tree

t, Pr

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dsto

ne S

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inds

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n St

reet

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dsor

67 A

lfred

Str

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ran

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lsto

n St

reet

, Sou

th

Yarr

a

Sal

e P

rice

$1,8

26,0

00$1

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$2,1

75,0

00$1

,215

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$1,3

50,0

00$8

90,0

00$9

50,0

00$8

50,0

00$1

,105

,000

Sal

e D

ate

Nov

-15

Jul-1

5Ju

l-15

Jun-

15M

ay-1

5D

ec-1

4N

ov-1

4S

ep-1

4Ju

n-14

Bui

ldin

g Ar

ea11

3 sq

.mn/

a11

3 sq

.m10

3 sq

.m12

0 sq

.m10

0 sq

.m13

8 sq

.m97

sq.

m10

3 sq

.mLa

nd A

rea

302

sq.m

170

sq.m

283

sq.m

131

sq.m

210

sq.m

161

sq.m

202

sq.m

162

sq.m

188

sq.m

Zoni

ngN

RZ3

NR

Z3N

RZ1

NR

Z3N

RZ3

NR

Z3N

RZ3

NR

Z3G

RZ1

2O

verla

ysN

ilN

ilD

DO

, HO

Nil

SBO

DD

O, H

OD

DO

, SBO

SBO

, N

il

Anal

ysed

Bui

ldin

g Va

lue

$176

,000

n/a

$175

,000

$255

,000

$275

,000

$133

,300

$142

,000

$121

,000

$118

,000

Anal

ysed

Bui

ldin

g Ra

te ($

/m²)

1,55

8n/

a1,

549

2,47

62,

292

1,33

31,

029

1,24

71,

146

Anal

ysed

Lan

d Va

lue

$1,6

50,0

00n/

a$2

,000

,000

$960

,000

$1,0

75,0

00$7

56,7

00$8

08,0

00$7

29,0

00$9

87,0

00An

alys

ed L

and

Valu

e ($

/m²)

$5,4

64n/

a$7

,067

$7,3

28$5

,119

$4,7

00$4

,000

$4,5

00$5

,250

Com

men

ts

Fully

reno

vate

d,

deta

ched

wea

ther

boar

d Vi

ctor

ian

cotta

ge w

ith

thre

e be

droo

ms,

two

bath

room

s, u

pdat

ed

inte

rior,

rear

dec

k an

d of

f-stre

et c

ar s

pace

via

R

OW

.

Two

leve

l, m

oder

n to

wnh

ouse

with

3

bedr

oms

and

2 ba

thro

oms,

plu

s of

f-st

reet

par

king

to th

e fro

nt.

Fully

reno

vate

d,

elev

ated

, det

ache

d do

uble

fron

ted

dwel

ling

with

2 b

edro

oms,

1

bath

room

and

2 li

ving

area

s pl

us la

ndsc

aped

ga

rden

s.

Fully

reno

vate

d si

ngle

st

orey

dw

ellin

g w

ith 2

be

droo

ms

and

1 ba

thro

om. I

nclu

des

roof

st

orag

e an

d re

ar

cour

tyar

d.

Sin

gle

stor

ey, s

ingl

e fro

nted

Vic

toria

n co

ttage

w

ith 3

bed

room

s, 1

ba

thro

om, u

pdat

ed

inte

rior a

nd s

ide

cour

tyar

d.

Sin

gle

front

ed

Edw

ardi

an te

rrac

e w

ith

3 be

droo

ms,

1 ba

thro

om, d

ated

but

fu

nctio

nal i

nter

ior a

nd

rear

cou

rtyar

d.

Dou

ble

front

ed

Edw

ardi

an d

wel

ling

with

3

bedr

oom

s, 1

ba

thro

om, p

artia

lly

reno

vate

d in

terio

r and

la

ndsc

aped

rear

co

urty

ard.

Sin

gle

front

ed V

icto

rian

terr

ace

with

2 b

ed, 1

ba

th, d

ated

but

fu

nctio

nal i

nter

ior a

nd

one

off-s

treet

car

spa

ce

via R

OW

lane

way

.

Two

bedr

oom

, tw

o ba

thro

om, s

ingl

e fro

nted

Vic

toria

n co

ttage

w

ith b

rick

pave

d co

urty

ard.

Pho

to

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

tses

t. bu

ildin

g si

ze

Page 25: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

UR

BIS

M

PEV-

1429

-001

MAR

KET

CO

NSI

DER

ATIO

NS 21

7.

4.5

AP

AR

TME

NT

SA

LES

– P

UN

T R

OA

D

Sal

es E

vide

nce

SO

UTH

YA

RR

A A

PA

RTM

EN

TS -

PU

NT

RO

AD

5/94

3 Pu

nt R

oad,

Sou

th Y

arra

3/39

2 Pu

nt R

oad,

Sou

th Y

arra

1/95

3 Pu

nt R

oad,

Sou

th Y

arra

7/39

2 Pu

nt R

oad,

Sou

th Y

arra

1/55

9 Pu

nt R

oad,

Sou

th Y

arra

2/76

7 Pu

nt R

oad,

Sou

th Y

arra

13/7

67 P

unt R

oad,

Sou

th

Yarr

a4/

37 D

avis

Ave

nue,

Sou

th

Yarr

a1/

943

Punt

Roa

d, S

outh

Yar

ra

Sal

e P

rice

$549

,000

$527

,000

$355

,000

$515

,000

$417

,500

$465

,000

$530

,000

$503

,500

$790

,000

Sal

e D

ate

Dec

-15

Dec

-15

Nov

-15

Nov

-15

Nov

-15

Nov

-15

Nov

-15

Sep

-15

Jun-

15Ap

artm

ent S

ize (m

2 )65

sq.

m86

sq.

m45

sq.

m86

sq.

m58

sq.

m66

sq.

m73

sq.

m40

sq.

m10

4 sq

.mB

edro

oms

(No.

)2

21

21

22

12

Bat

hroo

m (N

o.)

11

11

11

11

1C

ar P

arks

(No.

)1

11

01

11

11

Sale

Pric

e - p

er m

2$8

,446

$6,1

28$7

,889

$5,9

88$7

,198

$7,0

45$7

,260

$12,

588

$7,5

96

Pho

to

Com

men

tsAn

upd

ated

two

bedr

oom

ap

artm

ent w

ithin

a

conv

erte

d Vi

ctor

ian

man

sion

. One

of o

nly

5 ap

artm

ents

.

An u

pdat

ed a

rt de

co tw

o be

droo

m a

partm

ent w

ith

com

mun

al g

arde

n ar

ea.

A 19

70's

one

bed

room

ap

artm

ent p

rese

ntin

g in

be

low

ave

rage

con

ditio

n.

With

in b

lock

of n

ine.

A re

nova

ted

art d

eco

first

flo

or tw

o be

droo

m

apar

tmen

t with

com

mun

al

gard

en a

rea.

No

car s

pace

A pa

rtial

ly up

date

d ar

t dec

o on

e be

droo

m g

roun

d flo

or

apar

tmen

t. B

enef

its fr

om

two

priva

te c

ourty

ards

.

An u

pdat

ed e

leva

ted

grou

nd

floor

apa

rtmen

t with

bal

cony

an

d ca

r spa

ce.

A pa

rtial

ly up

date

d to

p flo

or

2 be

droo

m a

partm

ent w

ith

balc

ony

and

car s

pace

.

A re

nova

ted

first

floo

r one

be

droo

m a

partm

ent w

ith

balc

ony

and

car s

pace

An u

pdat

ed g

roun

d flo

or tw

o be

droo

m a

partm

ent w

ithin

a

conv

erte

d Vi

ctor

ian

man

sion

. One

of o

nly

5 ap

artm

ents

. B

enef

its fr

om

priva

te c

ourty

ard.

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 26: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

22 MA

RKE

T C

ON

SID

ER

ATIO

NS

UR

BIS

MPE

V-14

29-0

01 7.

4.6

AP

RTM

EN

T SA

LES

– N

EA

RB

Y

Sal

es E

vide

nce

SO

UTH

YA

RR

A A

PA

RTM

EN

TS -

NE

AR

BY

1/4

Rals

ton

Stre

et, S

outh

Ya

rra

88/8

Per

th S

tree

t, Pr

ahra

n1/

45 C

arol

ine

Stre

et,

Sout

h Ya

rra

4/37

Dav

is A

venu

e, S

outh

Ya

rra

4/10

3 O

sbor

ne S

tree

t, So

uth

Yarr

a

Sal

e P

rice

$505

,000

$677

,500

$589

,000

$503

,500

$511

,000

Sal

e D

ate

Oct

-15

Oct

-15

Sep

-15

Sep

-15

Sep

-15

Apar

tmen

t Size

(m2 )

86 s

q.m

40 s

q.m

60 s

q.m

Bed

room

s (N

o.)

12

21

2B

athr

oom

(No.

)1

11

11

Car

Par

ks (N

o.)

11

11

1

Sale

Pric

e - p

er m

2n/

a$7

,878

n/a

$12,

588

$8,5

17

Pho

to

Com

men

tsAn

ave

rage

gro

und

floor

on

e be

droo

m a

partm

ent

with

cou

rtyar

d an

d ca

r sp

ace.

One

of n

ine.

An a

vera

ge tw

o be

droo

m

apar

tmen

t with

bal

cony

an

d ca

r spa

ce. B

enef

its

from

com

mun

al g

arde

ns

and

swim

min

g po

ol.

A da

ted,

gro

und

floor

2

bedr

oom

apa

rtmen

t with

ca

r spa

ce.

A re

nova

ted

first

floo

r one

be

droo

m a

partm

ent w

ith

balc

ony

and

car s

pace

A re

nova

ted

first

floo

r tw

o be

droo

m a

partm

ent w

ith

car s

pace

. O

ppos

ite

railw

ay li

ne

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 27: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

UR

BIS

M

PEV-

1429

-001

MAR

KET

CO

NSI

DER

ATIO

NS 23

7.

4.7

LAN

D S

ALE

S –

DW

ELLI

NG

S

Sal

es E

vide

nce

DW

ELL

ING

LO

T S

ALE

S -

LAN

D V

ALU

E

7 Po

rtla

nd P

lace

, Sou

th

Yarr

a 18

Mos

s St

reet

, Pra

hran

58 A

lfred

St,

Prah

ran

32 Y

ork

Stre

et, P

rahr

an33

Nic

hols

on S

tree

t, So

uth

Yarr

a 4

Com

mer

cial

Roa

d,

Prah

ran

7 He

nry

Stre

et, W

inds

or

Sal

e P

rice

$2,2

65,0

00$1

,655

,000

$1,4

85,0

00$8

65,0

00$1

,132

,000

$800

,000

$861

,000

Sal

e D

ate

Dec

-15

Dec

-15

Nov

-15

Aug-

15Fe

b-15

Apr-

15Ap

r-15

Land

Are

a46

5 sq

.m29

3 sq

.m32

5 sq

.m14

2 sq

.m24

8 sq

.m21

0 sq

.m17

7 sq

.mZo

ning

NR

Z3N

RZ3

NR

Z3N

RZ3

NR

Z3R

GZ1

NR

Z3O

verla

ysH

OS

BO

n/a

SB

OS

BO

SB

OD

DO

Sale

Rat

e pe

r sq.

m. L

and

Area

$4

,871

$5,6

48$4

,569

$6,0

92$4

,565

$3,8

10$4

,864

Com

men

ts

Dat

ed d

etac

hed

bric

k dw

ellin

g w

ith 4

be

droo

ms

in n

eed

of fu

ll re

furb

ishm

ent.

Con

side

red

to b

e cl

ose

to la

nd v

alue

. Site

has

15

met

re fr

onta

ge a

nd

has

side

abu

ttal t

o a

lane

way

.

Det

ache

d w

eath

erbo

ard

bung

alow

with

3

bedr

oom

s. B

athr

oom

is

upda

ted

whi

le th

e re

mai

ning

hou

se

pres

ents

in g

ener

ally

orig

inal

con

ditio

n.

Sem

i-det

ache

d br

ick

victo

rian

with

3

bedr

oom

s. P

rese

nts

in

aver

age

cond

ition

.

Vaca

nt la

nd w

ith

pote

ntia

l for

car

acc

ess.

D

etac

hed

3 be

droo

m, 1

ba

thro

om w

eath

erbo

ard

dwel

ling

in b

elow

av

erag

e co

nditi

on -

Clo

se to

land

val

ue.

Vaca

nt la

nd w

ith re

ar

lane

acc

ess

and

pote

ntia

l for

city

vie

ws.

An o

rigin

al s

ingl

e st

orey

dw

ellin

g w

ith 2

be

droo

ms

and

1 ba

thro

oms.

Con

side

red

to re

pres

ent c

lose

to

land

val

ue.

Pho

to

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 28: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

24 MA

RKE

T C

ON

SID

ER

ATIO

NS

UR

BIS

MPE

V-14

29-0

01 7.

4.8

DE

VE

LOP

ME

NT

SIT

ES

Sal

es E

vide

nce

DE

VE

LOP

ME

NT

SIT

ES

39 D

arlin

g St

reet

, Sou

th

Yarr

a28

3-28

9 Hi

gh S

tree

t, Pr

ahra

n10

8-12

6 C

omm

erci

al

Road

, Pra

hran

17 &

19

Com

mer

cial

Ro

ad, S

outh

Yar

ra10

5 Pu

nt R

oad,

Win

dsor

1-

3 Yo

rk S

tree

t, Pr

ahra

n10

98 M

alve

rn R

oad,

A

rmad

ale

103-

105

High

Str

eet,

Prah

an16

8-17

6 Hi

gh S

tree

t & 1

-5

Vic

tori

a St

reet

, Pra

hran

22-3

2 To

orak

Roa

d,

Sout

h Ya

rra

24 G

rang

e Ro

ad, T

oora

k

Sal

e P

rice

$5,9

70,0

00$5

,250

,000

$17,

500,

000

$2,4

00,0

00$8

,820

,000

$2,9

50,0

00$1

,206

,000

$6,2

50,0

00$8

,400

,000

$15,

000,

000

$7,2

00,0

00S

ale

Dat

eD

ec-1

9D

ec-1

9N

ov-1

9Ju

n-19

May

-19

Apr-

19D

ec-1

8D

ec-1

8D

ec-1

8N

ov-1

8Ap

r-18

Land

Are

a67

2 sq

.m53

7 sq

.m2,

300

sq.m

605

sq.m

1,32

2 sq

.m83

0 sq

.m35

0 sq

.m85

0 sq

.m1,

137

sq.m

1,87

5 sq

.m2,

653

sq.m

Zoni

ngG

RZ9

C1Z

C1Z

, MU

ZR

GZ1

GR

Z1G

RZ1

2G

RZ1

C1Z

C1Z

C1Z

GR

Z11

Ove

rlays

DD

O1

DD

O7,

SBO

n/a

n/a

DD

OS

BO

-D

DO

7D

DO

7, H

O12

6D

DO

7, H

O15

0-

Sale

Pric

e - p

er m

2$8

,884

$9,7

77$7

,609

$3,9

67$6

,672

$3,5

54$3

,446

$7,3

53$7

,388

$8,0

00$2

,714

Com

men

ts

Cur

rent

ly co

mpr

ises

ol

der s

tyle

apa

rtmen

t bl

ock

com

pirs

es 1

0 on

e be

droo

m a

partm

ent w

ith

lock

up

gara

ges.

Cur

ent

rent

al $

12,5

23 p

er

mon

th.

Cor

ner d

evel

opm

ent s

ite

sold

with

per

mit

for 3

1 ap

artm

ents

and

4

grou

nd fl

oor u

nits

Cor

ner d

evel

opm

ent s

ite

com

pirs

ing

thre

e re

tail/

show

room

s.

Cur

rent

inco

me

$457

,588

p.a

Cur

rent

com

pris

es tw

o pe

riod

hom

es w

ithin

R

GZ1

zon

e. B

enef

its

from

rear

acc

ess.

An a

partm

ent b

lock

of

ferin

g 20

stu

dio

apar

tmen

ts a

nd 2

0 on

e-be

droo

m a

partm

ents

, in

clus

ive o

f pla

ns a

nd

perm

its fo

r 82

apar

tmen

ts a

nd 5

1 ca

r sp

aces

.

Cur

rent

ly co

mpr

isin

g a

basi

c w

areh

ouse

. Zo

ned

GR

Z an

d co

nsid

ered

sui

tabl

e fo

r re

side

ntia

l re

deve

lopm

ent.

Vaca

nt G

RZ

land

si

tuat

ed o

n th

e so

uth

side

of M

alve

rn R

oad,

ju

st w

est o

f Gle

nfer

rie

Roa

d. L

and

size

is

rela

tivel

y sm

all.

Cur

ently

com

pris

es

rest

uran

t and

car

was

h w

ith a

n ap

prox

imat

e in

com

e of

$12

0,00

0 p.

a ,

expi

ring

in J

une

2017

. B

enef

its fr

om d

ual s

treet

fro

ntag

e to

Hig

h an

d P

ercy

stre

et.

Cur

rent

ly im

porv

ed b

y si

ngle

leve

l bric

k w

areh

ouse

. Sol

d w

ith

vaca

nt p

osse

sion

. Site

be

nefit

s fro

m tw

o st

reet

fro

ntag

es a

nd s

ide

lane

way

.

At th

e tim

e of

sal

e,

impo

rvem

ents

co

nsis

ted

of th

ree

doub

le s

tore

y re

tail

shop

s. S

old

with

per

mit

for 6

3 un

its a

nd

tow

nhou

ses,

incl

udin

g gr

ound

floo

r ret

ail w

ithin

6

stor

ey c

ompl

ex

Cor

ner d

evel

opm

ent s

ite

loca

ted

clos

e to

Too

rak

Villa

ge. G

ener

al

Res

iden

tial Z

oned

site

.

Pho

to

Sour

ce: U

rbis

, Rea

l Est

ate

Agen

ts

Page 29: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

UR

BIS

M

PEV-

1429

-001

MAR

KET

CO

NSI

DER

ATIO

NS 25

7.

4.9

RE

TAIL

SA

LES

Sal

es E

vide

nce

RE

TAIL

159

Com

mer

cial

Rd,

Sou

th

Yarr

a19

-21

Toor

ak R

d, S

outh

Ya

rra

182

Com

mer

cial

Rd,

Pr

ahra

n21

1 C

omm

erci

al R

d, S

outh

Ya

rra

604

High

St,

Prah

ran

135

Toor

ak R

d, S

outh

Yar

ra31

8-32

6 C

hape

l St &

1-3

C

arlto

n St

, Pra

han

Sal

e P

rice

$1,5

00,0

00$3

,300

,000

$3,8

00,0

00$1

,471

,000

$1,5

10,0

00$1

,825

,000

$10,

805,

000

Sal

e D

ate

Nov

-19

Sep

-19

Jul-1

9Ju

n-19

Apr-

19O

ct-1

8Ju

l-18

Zoni

ngC

1ZC

1ZC

1ZC

1ZG

RZ1

2C

1ZC

1ZO

verla

ysD

DO

7, H

O12

6D

DO

1, D

DO

7D

DO

7, H

O12

6, IP

O3

DD

O7,

HO

126,

IPO

3, S

BO

HO

178

DD

O1,

DD

O7,

SB

O D

DO

7B

uild

ing

Area

129

sq.m

233

sq.m

371

sq.m

165

sq.m

170

sq.m

240

sq.m

1,87

1 sq

.mLa

nd A

rea

155

sq.m

336

sq.m

276

sq.m

125

sq.m

220

sq.m

153

sq.m

1,08

2 sq

.mP

assi

ng R

ent

$71,

140

$90,

205

$126

,782

$67,

600

Vaca

nt P

osse

ssio

n$8

0,04

4$4

08,0

00A

naly

sed

Rat

e/sq

m.m

.$5

51$3

87$3

42$4

10n/

a$3

34$2

18In

itial

Yie

ld4.

74%

2.73

%3.

34%

4.60

%n/

a4.

39%

3.78

%

Bldg

Rat

e ($

/m2 )

$11,

628

$14,

163

$10,

243

$8,9

15$8

,882

$7,6

04$5

,775

Land

Rat

e ($

/m2 )

$9,6

77$9

,821

$13,

768

$11,

768

$6,8

64$1

1,92

8$9

,986

Com

men

tsS

old

with

pas

sing

rent

of

appr

ox $

71,1

40 p

.a o

n 5

year

leas

e te

rm w

ith a

fu

rther

opt

ion

of 5

yea

rs.

Impr

oved

by

olde

r sty

le

doub

le s

tore

y br

ick

dwel

ling.

Sol

d w

ith p

assi

ng re

ntal

of

$90,

205

pa. F

ive

sepa

rate

te

nanc

ies.

Impr

oved

by

two

stor

ey, d

oubl

e fro

nted

old

er

styl

e bu

ildin

g. O

n-si

te

park

ing.

Sol

d w

ith p

assi

ng n

et

rent

al o

f $12

6,78

2 or

$1

35,0

00 g

ross

. C

ompi

rses

old

er s

tyle

2

stor

ey b

uild

ing

with

4

tena

ncie

s. S

ubje

ct to

C

hape

l stre

et p

reci

nct

herit

age

over

lay

Sol

d w

ith p

assi

ng n

et re

nt

of $

67,6

00 p

.a o

n 4

year

le

ase

with

two

optio

ns o

f 4

year

s. C

ompr

ises

old

er

styl

e tw

o st

orey

bui

ldin

g.

Sol

d as

vac

ant

poss

essi

on. C

ompr

ises

ol

der s

tyle

2 s

tore

y bu

ildin

g

Sol

d w

ith to

tal g

ross

rent

of

$80,

044

p.a

from

two

tena

ncie

s. C

ompr

ises

re

furb

ishe

d tw

o st

orey

bu

ildin

g.

Cor

ner s

ite s

old

with

a

pass

ing

net i

ncom

e of

$4

08,0

00 p

.a.

Impr

ovem

ents

com

pris

e 5

atta

ched

thre

e st

orey

te

rrac

e st

rip s

hops

.

Phot

o

Sour

ce: U

rbis

, Var

ious

Page 30: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

26 MA

RKE

T C

ON

SID

ER

ATIO

NS

UR

BIS

MPE

V-14

29-0

01 7.

4.10

P

UB

AN

D H

OTE

L S

ALE

S

Sal

es E

vide

nce

PU

BLI

C H

OU

SE

S, H

OTE

LS A

ND

AC

CO

MM

OD

ATI

ON

733

Punt

Roa

d, S

outh

Yar

ra

333

Mal

vern

Roa

d, S

outh

Ya

rra

The

Prin

ce o

f Wal

es, 2

9 Fi

tzro

y St

reet

, St K

ilda

King

Dav

id S

choo

l, 11

7 Ko

oyon

g Ro

ad &

21-

23

Mun

ro S

tree

t, A

rmad

ale

Flyi

ng D

uck

Hote

l, 67

Be

ndig

o St

reet

, Pra

hran

Alb

any

Hote

l, 1-

23 M

illsw

yn

Stre

et, S

outh

Yar

raW

ater

Rat

Hot

el, 2

56 M

oray

St

reet

, Sou

th M

elbo

urne

33

9-34

1 Pu

nt R

oad,

Ri

chm

ond

62-7

4 A

rgo

Stre

et, S

outh

Ya

rra

Sal

e P

rice

$2,7

00,0

00$8

,000

,000

$45,

000,

000

$14,

500,

000

$4,3

75,0

00$1

6,40

0,00

0$2

,300

,000

$1,6

55,0

00$5

,300

,000

Sal

e D

ate

May

-15

Feb-

15Fe

b-15

Jan-

15D

ec-1

4N

ov-1

4Ap

r-14

Nov

-13

Oct

-12

Zoni

ngG

RZ1

RG

Z1C

1ZN

RZ2

GR

Z12

GR

Z1M

UZ

MU

ZR

1Z (N

ow N

RZ3

)

Ove

rlays

DD

OH

O, S

BOD

DO

, HO

HO

, IP

OD

DO

, DP

O, H

O, S

BOD

DO

and

HO

DD

O, H

OE

AO, H

OH

O

Bui

ldin

g Ar

ea71

0 sq

.m1,

421

sq.m

5,80

2 sq

.m1,

750

sq.m

540

sq.m

1,77

0 sq

.m51

3 sq

.m38

0 sq

.m86

0 sq

.m

Land

Are

a65

5 sq

.m3,

105

sq.m

4,25

0 sq

.m6,

026

sq.m

768

sq.m

2,15

2 sq

.m31

4 sq

.m30

5 sq

.m1,

407

sq.m

Pas

sing

Ren

t$1

70,0

00$3

20,0

00$2

,300

,000

Unk

now

nVa

cant

Pos

sess

ion

Vaca

nt P

osse

ssio

n Va

cant

Pos

sess

ion

Vaca

nt P

osse

ssio

n Va

cant

Pos

sess

ion

Ana

lyse

d R

ate/

sqm

.m.

$239

.44

$225

.19

$396

.42

N/a

N/a

N/a

N/a

N/a

N/a

Initi

al Y

ield

6.30

%4.

00%

5.11

%N

/aN

/aN

/aN

/aN

/aN

/a

Bldg

Rat

e ($

/m2 )

$3,8

03$5

,630

$7,7

56$8

,286

$8,1

02$9

,266

$4,4

83$4

,355

$6,1

63La

nd R

ate

($/m

2 )$4

,122

$2,5

76$1

0,58

8$2

,406

$5,6

97$7

,621

$7,3

25$5

,426

$3,7

67

Com

men

tsTw

o le

vel p

erio

d dw

ellin

g le

ased

as

a ho

stel

for 7

+7

year

s fro

m 1

/6/2

014.

Ren

t is

fixe

d fo

r the

firs

t 2 y

ears

an

d in

crea

sed

by 3

% p

.a.

ther

eafte

r. Ag

ent b

elie

ves

the

sale

pric

e is

bel

ow

mar

ket.

Sal

e ha

s ye

t to

settl

e (le

gal i

ssue

s w

ith th

e co

ntra

ct o

f sal

e).

Leon

ard

Joel

Auc

tion

Roo

ms.

Lea

sed

by a

rt au

ctio

neer

Joh

n Al

brec

ht

until

Jun

e 20

17 w

ith

optio

nal f

urth

er te

rms.

Four

leve

l bui

ldin

g le

ased

to

7 te

nant

s op

erat

ing

a pu

blic

hou

se, b

andr

oom

, re

stau

rant

, day

spa

, 39-

room

hot

el a

nd 1

50 s

pace

ca

rpar

k. T

here

is a

per

mit

for a

furth

er 6

6 ap

artm

ents

to

the

rear

car

par

k (le

ase

to th

e ca

rpar

k ex

pire

s M

arch

201

5).

Arm

adal

e H

ouse

- a

man

sion

occ

upie

d as

pr

ivate

Jew

ish

scho

ol s

old

subj

ect t

o a

two-

year

le

aseb

ack.

Pur

chas

ed b

y a

priva

te in

vest

or.

Est

ablis

hed

pub

on c

orne

r si

te, w

ith d

ual s

treet

fro

ntag

e, a

djoi

ning

Prin

ces

Gar

dens

. Sol

d w

ith v

acan

t po

sses

sion

. Inc

lude

s pu

boic

hou

se, b

istro

, bee

r ga

rden

and

firs

t flo

or

resi

denc

e. S

uita

ble

for

rede

velo

pmen

t.

The

Alba

ny H

otel

whi

ch

sold

with

pla

nnin

g ap

prov

al

for t

he re

furb

ishm

ent o

f the

dw

ellin

g an

d de

velo

pmen

t of

eig

ht h

igh

end

apar

tmen

ts.

Pur

chas

er

plan

s to

act

on

the

perm

it.

Last

sol

d in

Apr

-12

with

out

a pe

rmit

for $

13.7

mil

($6,

366

per m

2 of l

and)

.

Two

leve

l Vic

toria

n bu

ildin

g w

ith p

rom

inen

t cor

ner

posi

tioni

g, g

ood

expo

sure

an

d 36

m c

ombi

ned

front

age.

Pro

vides

pub

lic

hous

e, fu

nctio

n ro

om,

rest

aura

nt a

nd o

utdo

or

deck

. $1m

reno

vatio

n co

mpl

eted

in 2

005.

Sol

d w

ith v

acan

t pos

sess

ion.

Two

adjo

inin

g tw

o-le

vel

Vict

oria

n te

rrac

es

conf

igur

ed a

nd o

pera

ting

as a

bro

thel

, with

six

bedr

oom

s - a

ll w

ith

show

ers.

Incl

udes

par

king

to

the

rear

via

RO

W. S

uit

back

pack

ers

host

el a

nd

bout

ique

hot

el a

ltern

ative

us

es.

A la

rge

site

inco

rpor

atin

g th

e Ar

go H

otel

and

ad

join

ing

car p

ark.

The

pr

oper

ty s

old

with

vac

ant

poss

essi

on a

nd fe

atur

es

thre

e st

reet

fron

tage

s.

Pla

nnin

g ap

prov

al w

as in

pl

ace

at th

e tim

e of

sal

e fo

r a

40-a

partm

ent

deve

lopm

ent.

Phot

o

Sour

ce: U

rbis

, Var

ious

Page 31: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

UR

BIS

M

PEV-

1429

-001

MAR

KET

CO

NSI

DER

ATIO

NS 27

7.

4.11

P

ETR

OL

STA

TIO

N A

ND

CA

RW

ASH

SAL

ES

Sal

es E

vide

nce

PE

TRO

L S

TATI

ON

/ CA

R W

AS

H

103-

105

High

Str

eet,

Prah

ran

Prah

ran

7 El

even

, 728

M

alve

rn R

oad,

Pra

hran

Mal

vern

Eas

t 7 E

leve

n, 6

09

Wav

erle

y Ro

ad, M

alve

rn

East

306-

308

Punt

Roa

d, S

outh

Ya

rra

43-4

7 Ne

pean

Hig

hway

, El

ster

nwic

k

Sal

e P

rice

$6,2

50,0

00$4

,230

,000

$2,8

50,0

00$3

,900

,000

$4,1

00,0

00

Sal

e D

ate

Jan-

15Au

g-14

Aug-

14Ja

n-14

Jan-

14

Zoni

ngC

1ZR

GZ2

GR

Z7R

GZ1

C2Z

Ove

rlays

DD

O7

Nil

Nil

PAO

, SBO

Bui

ldin

g Ar

ea77

0 sq

.m55

0 sq

.m55

0 sq

.m61

0 sq

.m35

6 sq

.m

Land

Are

a85

0 sq

.m2,

015

sq.m

1,21

2 sq

.m2,

500

sq.m

2,21

2 sq

.m

Pas

sing

Ren

t$1

20,0

00$1

74,3

53$1

29,3

59N

/a$1

75,0

83A

naly

sed

Rat

e/sq

m.m

.$1

56$3

17$2

35N

/a$4

92In

itial

Yie

ld1.

92%

4.12

%4.

54%

N/a

4.27

%

Bldg

Rat

e ($

/m2 )

$8,1

17$7

,691

$5,1

82$6

,393

$11,

517

Land

Rat

e ($

/m2 )

$7,3

53$2

,099

$2,3

51$1

,560

$1,8

54

Com

men

tsTw

o ad

join

ing

fact

orie

s,

one

occu

pied

as

a ca

r w

ash

and

the

othe

r as

a di

ner/r

esta

uran

t. Lo

cate

d op

posi

te S

win

burn

e U

ni.

Leas

e ex

pire

s Ju

ne 2

017.

R

ear a

cces

s via

Per

cy

Stre

et.

7 E

leve

n co

nven

ienc

e st

ore

and

petro

l sta

tion.

Lea

sed

for 1

5 yr

s fro

m S

ept 1

1, w

ith

3x5

year

opt

ions

. Ren

t in

crea

ses

by 4

% p

er

annu

m.

7 E

leve

n co

nven

ienc

e st

ore

and

petro

l sta

tion.

Lea

sed

for 1

5 yr

s fro

m J

uly

11, w

ith

3x5

year

opt

ions

. Ren

t in

crea

ses

by 4

% p

er

annu

m.

Cle

arw

ater

Car

was

h an

d ca

fé. C

orne

r loc

atio

n w

ith

seco

ndar

y fro

ntag

e to

Arg

o S

treet

; Fut

ure

rede

velo

pmen

t pot

entia

l al

thou

gh a

ffect

ed b

y P

AO.

Sol

d as

a g

oing

con

cern

(u

nder

rece

ivers

hip)

.

Cle

arw

ater

Car

was

h an

d ca

fé. C

orne

r loc

atio

n w

ith

seco

ndar

y fro

ntag

e to

Al

exan

dra

Aven

ue.

Red

evel

opm

ent p

oten

tial.

Sol

d as

a fr

eeho

ld a

nd

goin

g co

ncer

n. In

com

e is

fro

m s

igna

ge.

Phot

o

Sour

ce: U

rbis

, Var

ious

Page 32: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

28 ECONOMIC ADVICE URBIS

MPEV-1429-001

8 Economic Advice I refer to the Memo prepared by Mark Dawson attached as Appendix C.

I have adopted the growth rates within this Memo for the purpose of assisting my estimate of the economic cost of reinstating the PAO.

The key growth rate table and 2 bullet points in this advice are;

SCENARIO 2 – ADJUSTED HOUSE/UNIT ANNUAL PRICE GROWTH OVER TIME 1 YEAR 5 YEARS 10 YEARS 15 YEARS

House Unit House Unit House Unit House Unit

Greater Melbourne 0.2% 0.1% 2.0% 1.0% 5.0% 2.5% 6.5% 3.5%

Stonnington 3.0% 1.5% 6.5% 2.0% 7.5% 4.5% 8.0% 5.0%

CPI 2.1% 2.6% 2.6% 2.5%

This scenario has been viewed on a 15 year time frame. Growth over the longer term of 35 years could be anticipated to be similar to the assumed growth rates over the 15 year time period as provided here. This is indicative only, and the further out in time that projections are provided, the more uncertain they become.

It should also be noted that this scenario presents median price growth for Stonnington as a whole. Properties within particular areas of Stonnington will experience greater/lower rates of growth than the median. With reference to the properties in question along Punt Road, it would be anticipated that these properties are likely to achieve a lower rate of growth than the Stonnington median price, since owners of these properties are less likely to invest further capital due to the PAO.

The difference between these two measures equates to the likely real house price growth which I have applied to the current market value estimates of each individual property to demonstrate the potential economic cost. The annual growth rate above CPI is 5.5% and 2.5% for houses and units respectively. As the majority of the properties are either houses or land I have adopted a growth rate of 5.5% for the purpose of this assessment.

In considering the economic cost of redevelopment in section 11, I have not grown the cost of building costs above the inflation rate. I am informed that the Building Cost Index (BCI) has historically been similar to the rate of inflation. The significant inputs to the BCI are material costs, labour costs and efficiency gains through building processes or technology.

Page 33: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

URBIS MPEV-1429-001 VALUATION ESTIMATE 29

9 Valuation Estimate My indicative valuation assessments have been based on the information provided to me only, which I have assumed to be reasonably accurate. The Direct Comparison and Summation approaches have been utilised in my indicative desktop valuation estimates. Where appropriate I have also undertaken a capitalisation of estimated rent approach as a check method for commercial properties. I note that if occupancy details were available this may become the primary method of valuation.

I have undertaken valuation estimates for the properties as at 20 January 2016. For those properties that are not owned by VicRoads, which are to be partially acquired, I have undertaken a ‘Before’ and ‘After’ assessment. The ‘Before’ value is to be determined ignoring any impact of the acquisition. In contrast the ‘After’ value takes into account all impacts, favourable or unfavourable, resulting from the Scheme of the Acquisition.

I refer to section 2 for my detailed assumptions and qualifications in undertaking the valuation estimates. The total of the compensation estimates is summarised on the following page. If required, I can provide my detailed calculations.

I note that the total P&E Act compensation paid by VicRoads is $2,418,155. This includes $960,000 for property 15 which is a claim not yet finalised. The P&E Act compensation payments are across 41 properties. VicRoads owns 19 properties and the balance 75 properties have not had compensation paid. I understand that all but two or three of these properties are not entitled to claim compensation under the P&E Act as they have been purchased with the knowledge of the PAO.

I further note that two of the properties were compensated for Financial Loss before 14 February 1966, when Australia changed from the pound to the dollar. I have assumed that the compensation figures provided to me are in dollars. As such, there may need to be a minor adjust to the total compensation paid for these two properties, which account for $10,400 of the aforementioned total.

Page 34: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

30 VA

LUAT

ION

EST

IMAT

E

U

RBI

S

MPE

V-14

29-0

01

S

umm

ary

of V

alue

Est

imat

esP

UN

T R

OA

D

Type

Ado

pted

Lan

d Ar

ea (m

²)Es

t. PA

O A

rea

Befo

re L

and

Valu

eBe

fore

Bui

ldin

g Va

lue

Befo

re T

otal

Va

lue

Afte

r Lan

d Va

lue

Afte

r Bui

ldin

g Va

lue

Afte

r Tot

al

Valu

eCo

mpe

nsat

ion

50%

70%

90%

VicR

oads

Ow

ned

10,6

34$4

9,20

9,71

0$1

,348

,500

$50,

558,

210

No

Com

pens

atio

n P

aid*

46,6

1123

,433

$199

,880

,018

$20,

613,

450

$220

,530

,000

$79,

581,

509

$5,2

24,3

78$8

4,78

0,00

0$1

35,7

50,0

00

Loss

on

Sal

e21

,184

13,1

97$1

02,0

04,9

00$1

2,00

0,03

3$1

14,0

60,0

00$2

9,98

6,34

9$2

,577

,425

$32,

570,

000

$81,

490,

000

$40,

745,

000

$24,

447,

000

$8,1

49,0

00

Sub

tota

ls78

,429

36,6

30$3

51,0

94,6

28$3

3,96

1,98

3$3

85,1

48,2

10$1

09,5

67,8

59$7

,801

,803

$117

,350

,000

Tota

l Com

pens

atio

n*in

clud

es 2

pro

perti

es w

hich

hav

e rig

ht to

cla

im c

ompe

nsat

ion

unde

r P &

E A

ct

Whe

re P

&E

Act C

ompe

nsat

ion

Paid

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URBIS MPEV-1429-001 ECONOMIC COST OF REMOVING PAO 31

10 Economic Cost of Removing PAO I have assessed the economic value of retaining the PAO and the economic cost of having to reinstate the PAO if it was removed as follows;

Retaining the PAO

In the scenario that the PAO was retained the remaining compensation to be paid would be;

VicRoads Owned properties; $0 No Compensation Paid properties; $135,750,000 Loss on Sale Properties (assuming 70% P&E Act reduction) $24,447,000 Total Payable as at 2016 (rounded) $160,200,000

The cost of acquiring the market value of the properties not owned by VicRoads as at 2016 is $160,197,000 based on the assumption that the compensation paid for the loss on sale properties equates to 70% of the compensation entitlement. The cost based on 50% and 90% P&E Act reduction is $176,500,000 and $143,900,000 respectively.

The future cost of the compulsory acquisitions in 35 years based on 5.5% annual real growth after CPI reduction is;

50% P&E Act reduction (rounded) $1,150,000,000 70% P&E Act reduction (rounded) $1,040,000,000 90% P&E Act reduction (rounded) $940,000,000

Removing the PAO

In the scenario that the PAO was abandoned I have assumed that VicRoads would sell the properties that they own and would recover the compensation paid under the P&E Act.

That VicRoads would sell their properties; $50,560,000 Less the cost of selling at say 1.5%; ($758,400) Income from recovery of P&E Act Compensation; $2,418,155 Total 2016 Income (rounded): $52,220,000

Cost of acquiring all 135 properties again (assumed the following day);

VicRoads Owned properties; $50,560,000 No Compensation Paid properties; $135,750,000 Loss on Sale Properties $81,490,000 Total Payable as at 2016 $267,798,210 Total 2016 Income (rounded): $52,220,000 Net Difference as at 2016 (rounded) $215,600,000

The net difference of removing the PAO on day 1 and compulsorily acquiring all of the properties on day 2 as at 2016 is $215,600,000.

I have assumed that in the scenario that VicRoads sells their properties that this income would be used for other projects and would not be reinvested to be used in 35 years’ time

The future cost of acquiring $267,798,210 in 35 years at 5.5% $1,744,390,000 Less 2016 Income $52,220,000 Total Future Cost to Acquire (Rounded) $1,690,000,000

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32 ECONOMIC COST OF REMOVING PAO

Difference

The difference between the value of retaining the PAO and removing it is;

As at 2016

50% P&E Act reduction $215,600,000 less $176,500,000 $39,100,000 70% P&E Act reduction $215,600,000 less $160,200,000 $55,400,000 90% P&E Act reduction $215,600,000 less $143,900,000 $71,700,000

As at 2051

50% P&E Act reduction $1,690,000,000 less $1,150,000,000 $540,000,000 70% P&E Act reduction $1,690,000,000 less $1,040,000,000 $650,000,000 90% P&E Act reduction $1,690,000,000 less $940,000,000 $750,000,000

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URBIS MPEV-1429-001 ECONOMIC COST OF REDEVELOPMENT 33

11 Economic Cost of Redevelopment I have been instructed to assess the cost of compensation in the event that the PAO is removed from the subject properties together with all supporting Government strategic planning or similar documents which could be construed as constituting a proposed reservation. This requires me to consider what level of redevelopment could occur on the subject properties over a 35 year time period and the potential impact on the economic cost of reinstating the PAO.

I have been advised that the properties currently have 41,856 m2 of buildings over 78,429m2 of land, reflecting a plot ratio of 0.53:1. I note that the majority of the Vic Roads owned properties are predominantly vacant land used for car parks.

Mr Rob Milner’s advice indicates that a significant proportion of the properties zoned Residential Growth could be redeveloped for townhouse or apartment buildings of between 2 to 4 storeys. As such, plot ratios of 2:1 to 3:1 could be achieved for these properties.

For the purpose of this assessment I have assumed that 50% of the properties would be redeveloped over 35 years and have a plot ratio increase from 0.53:1 to 2.5:1, based on Mr Milner’s average range. My calculation is as follows;

Total land Area 78,429m2 land area Assume 50% is redeveloped 39,215m2 of land area Current Plot Ratio 0.53:1 20,784m2 of building area Potential Plot Ratio of 2.5:1 98,038m2 of building area

My current average building value estimate for dwellings is $750 per m2. I consider that this would change to $1,000 per m2 based on the same level of deprecation but for denser townhouse or apartment product. This could result in a value up lift of;

Current buildings – 20,784m2 @ $750 per m2 $15,588,000 Potential redevelopment – 98,038m2 @ $1,000 per m2 $98,038,000 Potential Increase in building value (2051 $) $82,450,000

As discussed in section 8 Economic Advice, I have not grown the potential increase in building value above the CPI.

This figure would be on top of the 2051 economic cost of removing the PAO as discussed in Section 10.

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34 ECONOMIC COST SUMMARY

12 Economic Cost Summary Based on the foregoing assumptions I have assessed the economic value of retaining the PAO and the economic cost of having to reinstate the PAO if it was removed as follows

2016 $ 2051 $ 50% P&E Act reduction $39,100,000 $540,000,000 70% P&E Act reduction $55,400,000 $650,000,000 90% P&E Act reduction $71,700,000 $750,000,000

Potential impact of redevelopment (2051 $) $82,450,000

I have made all the inquiries that I believe are desirable and appropriate and no matters of significance which I regard as relevant to my knowledge been withheld from the Panel.

I advise that this Report and Valuation Estimates is only for the use of the party to whom it is addressed, and no responsibility or liability is accepted to any third party for the whole or any part of its contents.

Urbis Valuations Pty Ltd

Andrew Kinnaird Director and Certified Practising Valuer Australian Property Institute Member No 62804

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URBIS MPEV-1429-001 DISCLAIMER 35

Disclaimer This report is dated February 2016 and incorporates information and events up to that date only and excludes any information arising, or event occurring, after that date which may affect the validity of Urbis Valuations Pty Ltd’s (Urbis) opinion in this report. Urbis prepared this report on the instructions, and for the benefit only, of The Body Norton Rose Fulbright on behalf of VicRoads (Instructing Party) for the purpose of Valuation Report (Purpose) and not for any other purpose or use. To the extent permitted by applicable law, Urbis expressly disclaims all liability, whether direct or indirect, to the Instructing Party which relies or purports to rely on this report for any purpose other than the Purpose, and to any other person which relies or purports to rely on this report for any purpose whatsoever (including the Purpose).

In preparing this report, Urbis was required to make judgements which may be affected by unforeseen future events, the likelihood and effects of which are not capable of precise assessment.

All surveys, forecasts, projections and recommendations contained in or associated with this report are made in good faith and on the basis of information supplied to Urbis at the date of this report, and upon which Urbis relied. Achievement of the projections and budgets set out in this report will depend, among other things, on the actions of others over which Urbis has no control.

Whilst Urbis has made all reasonable inquiries it believes necessary in preparing this report, it is not responsible for determining the completeness or accuracy of information provided to it. Urbis (including its officers and personnel) is not liable for any errors or omissions, including in information provided by the Instructing Party or another person or upon which Urbis relies, provided that such errors or omissions are not made by Urbis recklessly or in bad faith.

This report has been prepared with due care and diligence by Urbis and the statements and opinions given by Urbis in this report are given in good faith and in the reasonable belief that they are correct and not misleading, subject to the limitations above.

Liability limited by a scheme approved under Professional Standards Legislation.

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APPENDICES URBIS

MPEV-1429-001

Appendix A Letter of Instruction

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URBIS MPEV-1429-001 APPENDICES

Appendix B Qualifications and Experience

Page 48: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

Andrew Kinnaird Director Professional Details and Qualifications

Full Name: Andrew Paul Kinnaird

Practice: Urbis Valuations Pty Ltd Level 12/120 Collins Street Melbourne Vic 3000

Occupation: Director Urbis Valuations Pty Limited (trading as Urbis)

Qualifications: AAPI (Associate of the Australian Property Institute) Certified Practising Valuer – Member No. 62804 Bachelor of Business (Property) with Distinction – RMIT

Associations Current Member – Australian Property Institute Admissions Subcommittee, joined August

2012 Member 2009-2011, Property Council of Australia Residential Developers Committee Western Australia Land Valuers Licensing Board No. LV44537, date first license granted 13

January 2011

Experience Became a Certified Practising Valuer in September 2003 and have the following experience in the valuation of Residential, Industrial and Commercial and other forms of Real Estate throughout Victoria; Residential and Industrial Sub-divisional Land, Infill Development Sites

Valuation and consultancy advice for Acquisition and Disposal, Rating and Tax, Compensation and Mortgage Purposes, and

Experienced in assessing the impacts on land value of properties with a Growth Areas Infrastructure Contribution liability.

Feasibility analysis, and Margin Scheme Valuations, and Market research

Expert Evidence and Conferences Provided Expert Evidence in J&G Knowles and Associates Pty Ltd and Owners Corporation

RP12247 (plus 30 more respondents) – VCAT Reference OC2088/2013. Gave Expert Evidence to the Planning Panel on behalf of the Metropolitan Planning

Authority for the Wyndham North Development Contributions Plan in December 2013. Provided Expert Evidence in Broadcast Australia Pty Ltd and Valuer General (2011)

WASAT 58. Involved in a numerous mediations and compulsory conferences for a range of purposes.

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Professional Details and Qualifications

Page 2

Development Contributions Plan Valuations Prepared Development Contribution Plan Valuations on behalf of the Metropolitan Planning

Authority for various Precinct Structure Plans, and Advised land owners in a number of Development Contributions Plan areas of values. Sat on the Metropolitan Planning Authority Advisory Panel which introduced the Public Land

Equalisation Method of Valuation for Development Contribution Plans.

Acquisition and Compensation Valuations on behalf of both owners and Authorities for compulsory acquisition purposes

e.g. road widening (VicRoads), railways (Regional Rail Link) educational sites (Department of Education), retarding basins (Melbourne Water) and land within the Western Grassland Reserve, and

Gave a presentation to the Australian Property Institute Swan Hill Conference on compulsory acquisition issues in November 2014.

Industrial, Retail and Commercial Valuation and consultancy advice for Acquisition and Disposal, Rating and Tax,

Compensation and Mortgage Purposes, and Experience in rental assessments, negotiations and Determinations.

Contact

tel: 61 3 8663 4888 fax: 61 3 8663 4999 email: [email protected]

mobile and after hours: 0405 128 040

Date this document was prepared: 1 February 2016

Page 50: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

APPENDICES URBIS

MPEV-1429-001

Appendix C Economic Memo

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Punt Road_EMR Component_160129\

Memo (Internal Use Only)

To: Andrew Kinnaird

From: Mark Dawson

Email: [email protected]

Date: 28 January 2016

Subject: Punt Road – Economic Advice

Dear Andrew,

Long Term Housing Market Conditions

This memo presents the findings of economic analysis to inform the potential growth rates of residential property that will impact upon the economic cost of removing the PAO over a 15 year period.

Research Aims and Approach

As noted in our earlier discussions, the pace of inflation is particularly hard to predict in both the short and the long term. It is subject to many influences at different times.

In providing insight into potential house price inflation Urbis has reviewed a range of historic economic indicators and forecasts. Given the many variables and influences, even these inputs must be regarded as indicative only over the longer term.

In order to provide some guidance, Urbis has: 1. Reviewed long term historic trends in house and unit prices to identify common cycles and influences. This

long term historic transaction analysis provides an evidence base from which to compare historic house price and CPI growth over various cycles.

As a starting point this provides an average growth rate that has been achieved and can be used to inform future growth prospects over time.

2. Reviewed indicators on national and state economic prospects as available from ABS, Treasury and state government as well as Urbis forecasts to understand how the rate of price growth may be affected at different times within the 15 year period.

3. Prepared a population forecast to provide an indication of anticipated future dwelling demand for the study area, which would underpin Stonnington’s ability to achieve a greater or lesser level of house price growth.

Using the information above we have provided two scenarios:

Scenario 1 – A continuation of historic rates of growth carried forward

Scenario 2 – An adjusted scenario taking into account current and forecast market conditions

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Scenario 1 – Continuation of Long Term Historic Rates of Growth Historic Trends

We have reviewed the long term historic trends in house and unit price growth for Greater Melbourne and Stonnington, and have identified the following cycles and influences. Melbourne Market

Since 1995, Melbourne has experienced 5 property market cycles. The most recent cycle peaked in 2013 with a growth rate of 7.1%, which compared to previous cycles was

not particularly strong. Over the last 15 years, Melbourne has seen a compound growth rate of 7.3% per annum in the median

house price and 6.5% per annum for the median unit price. This compares to historic CPI growth over the same time period of 2.6% per annum for Greater Melbourne.

MEDIAN HOUSE PRICE GROWTH AND HOUSE COMPLETIONS – GREATER MELBOURNE

Stonnington Market

Stonnington has experienced similar peaks and troughs to the broader Melbourne market. Whilst Stonnington has at times experienced some periods of much lower growth rates than Melbourne, the

peaks have been much higher which has translated to a higher growth rate over the long term. The median house price grew by 8.9% per annum over the 15 years to 2015 and the median unit price grew

by 6.6% per annum. SCENARIO 1 - HISTORIC HOUSE/UNIT PRICE GROWTH OVER TIME

1 Year 5 Years 10 Years 15 Years

House Unit House Unit House Unit House Unit

Greater Melbourne -0.9% 0.9% 2.0% 1.1% 5.5% 5.2% 7.3% 6.5%

Stonnington 12.6% 1.4% 7.9% 2.0% 7.8% 5.2% 8.9% 6.6%

Source: ABS; APM PriceFinder; Urbis

-5%

0%

5%

10%

15%

20%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Pric

e G

row

th

Est

imat

ed H

ouse

Com

plet

ions

Period (Annual)

High supply

9/11

GFC

Stimulus,FHB boosts,

rate cuts, lowsupply

Supplycoming on

Stimulusending

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MEDIAN HOUSE/UNIT PRICE GROWTH AND HOUSE/UNIT COMPLETIONS – STONNINGTON

Implied Future Growth

In the last 20 years on average, the lowest level of growth (trough) has occurred approximately 2 years after the peak growth. Currently, we are seeing a trough for Greater Melbourne, and based on historic patterns, it is expected that 2016 will see the lowest point of this trough.

Supply levels have typically lagged price growth by 1 year. It is expected that 2016 will see a high amount of supply being completed, this will lead into a softer 2017 for houses if historic patterns are relied upon.

Beyond 2017, the positive Victorian economic growth and forecast strong population growth mean that the housing market is expected to see continued growth.

For Stonnington, the stronger house price growth than Melbourne is a reflection of the quality of stock that is located in the suburbs that make up the LGA and the desirability of the area.

Based on historic rates of growth over the past 15 years, Stonnington could be expected to see median house price growth of 8.9% per annum over the next 15 years and 6.5% per annum in median unit price growth.

This growth is 6.4% per annum and 4.1% per annum respectively, above the long term forecast inflation rate of 2.5% per annum.

Source: ABS; APM PriceFinder; Urbis

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Pric

e G

row

th

Est

imat

ed C

ompl

etio

ns

Period (Annual)

House Completions Unit CompletionsHouse Price Growth Unit Price Growth

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Scenario 2 – Adjusted for Prevailing Economic and Market Conditions Emerging Future Prospects

Whilst historic patterns can give an indication as to future growth, there are many factors to consider in regard to the reasoning for this historic growth and whether or not these circumstances will be present in the future. We have considered some of these conditions to provide an adjusted scenario if they were to occur. National Economic Conditions

Australia’s economic growth for calendar year 2015 remained positive; marginally below trend levels in the face of a slowing world economy and, substantial decline in commodity prices.

Business investment has fallen over the past year and is expected to decline further over the coming year as mining investment adjusts to lower commodity prices. Mining investment is set to become a significant negative impact on national growth.

Government spending has lifted over the past year, providing support for the economy. Given the constraints on the public sector finances this support may not be sustained in coming quarters.

Key future risks facing the global economy include: political uncertainty and a strong euro in Europe, Japan taking a hit from weak global demand, a larger-than-expected slowdown in China and falling oil prices. The state of the global economy will be a significant driver of Australia’s performance over the medium and long term.

In the face of slower rates of growth in the national economy, low national business and consumer sentiment, the RBA has decreased interest rates to a record low of 2.0%. Any short term movement is likely to be down, however the market is expecting a gradual increase in interest rates sometime late in 2016 or even after.

State Economic Conditions

In contrast with the national sentiment the more diverse Victorian economy has performed relatively well in recent years due to strong population growth and a lack of exposure to the mining downturn. The economic outlook for Victoria remains cautiously positive again due to continued population and employment growth as well as an increase in infrastructure investment. The economy is benefitting from the low interest rate; in particular the construction sector. The low interest rate has resulted in an increase in home buyers and the low exchange rate has encouraged overseas buyer activity in the market. This increase in demand has given the housing construction industry a boost. Victoria is currently the fastest-growing economy on the eastern seaboard, overtaking NSW for the first time

since 2008. Victoria’s Gross State Product growth of 2.5% for 2014/15 exceeds the budget estimate of 2.25%.

Treasury expects growth to continue to improve towards the trend rate, driven by strengthening household consumption and higher export growth aided by the lower exchange rate.

However, a number of commentators are predicting lower growth in the housing sector as a number of factors combine to cool the market, including the tightening of lending requirements and capital controls for Chinese purchasers, as well as oncoming supply of apartments in inner Melbourne.

Economic Prospects Anticipated to Influence the Housing Market

1. CPI Forecast The Reserve Bank of Australia aims to hold inflation between 2 – 3%. In 2015, CPI was measured at 1.4%

for Melbourne. A slight increase in inflation is attributed to Australia’s terms of trade in 2016 which are increasing the price

of imported goods. Urbis forecasts that in 2016, CPI will increase to 2.1% and increase to as high as 3% in 2017 before reverting back to the long term average of 2.5% over the ensuing years.

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Forecasts for inflation remain within the RBA’s target rate which will mean that there should be limited pressure on inflation in the short term. This is positive for the property market as low interest rates have been a key driver for growth in recent years.

2. Household debt & Income Growth Household debt has increased significantly over the past 25 years. As at 2013, total household debt was

measured at $1.84 trillion, equivalent to $79,000 for every person living in Australia at that time. Since the GFC, real household debt per person has slowed. Between 2001 and 2007, real household debt

increased by 10% per annum. However from 2008, possibly as a result of the tightening in mortgage lending standards, real household debt grew at a much slower average rate of 2% per annum.

Comparing debt to income; debt increased more rapidly that household income from 1993 to 2007. Since the GFC, debt has trended in line with household income growth. As at 2013, the amount of debt owed by households was nearly 1.8 times the amount of disposable household income.

Wage growth averaged 2.6% for the year, and National Gross Household Income was 3.6%. Treasury forecasts indicate wage growth to return to the long term average of 3.5% over the medium term which should result in solid household income growth.

Stonnington Population Forecast

As at the 2011 census, there were approximately 98,850 people in the Stonnington LGA. This is forecast to grow to 133,250 by 2030.

This is growth of 24,200 residents between 2015 and 2030, representing total growth of 23% (1.2% per annum), over the 15 year period.

In 2011, the total number of occupied private dwellings was estimated at 46,800 for Stonnington, and this is estimated to have increased to 51,600 in 2015 (based on 97% of approvals having been completed).

This recent increase has seen a high amount of supply come to market and has put pressure on unit prices. This is consistent with the broader Melbourne market view that there are currently high amounts of supply

coming to market which is expected to hold unit price growth over the coming years. House price growth in Stonnington is somewhat protected from these supply numbers, since the suburbs

within the LGA are established and considered to be of high quality housing, and therefore in high demand. Population growth and the desire to live within Stonnington are expected to continue to push house prices, albeit at a lower rate than the past.

POPULATION – HISTORIC AND FORECAST FOR STONNINGTON

Source: ABS; Victoria in Future; Urbis

88,250 92,893

109,050

126,592

0

25,000

50,000

75,000

100,000

125,000

150,000

-500

500

1,500

2,500

3,500

4,500

5,500

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

Growth - Historic Growth - Forecast

Population - Historic Population - Forecast

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Implied Future Growth

The outlook for population growth in Stonnington is positive, with forecasts indicating 1.2% per annum growth over the next 15 years.

CPI and economic growth in general is expected to see an uptick over the next year or two and then reverting back to the long term target of 2.5%.

This implies stable future growth of a similar rate to what we have seen in the past. Potential for Stonnington to Outperform Melbourne Market

Desirable area in terms of amenity, proximity and connections to Melbourne infrastructure. High concentration of white collar workers, with higher level of educational attainment and earning potential. Proximity to key employment centres, in particular the growing and diverse service based economy as

opposed to the declining production industries. Road, tram and rail access as well as proximity give Stonnington enduring appeal as a place to live, close to employment opportunities.

Risks to Stonnington underperforming the Melbourne Market

The current pipeline of units in inner Melbourne, including Stonnington presents potential for unit price growth to taper off as supply is absorbed.

Houses on the other hand will remain in shorter supply given the emergence of apartment development and the lack of opportunity for major additions to detached housing stock (as can be seen from chart 2, the recent continued growth in house prices is not being met with a supply response for detached houses – this dwelling requirement is instead being met by greater volumes of unit development). If historic patterns are anything to go by, this could lead to a continued divergence between house price and unit price growth in the next few years.

UNIT SALES CYCLE - STONNINGTON

Source: APM PriceFinder; Urbis

$575,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

0

500

1,000

1,500

2,000

2,500

3,000

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Period (Annual)

Median S

ale Price

Num

ber o

f Tra

nsac

tions

No. of Transactions Median Sale Price

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HOUSE SALES CYCLE - STONNINGTON

Given historic patterns of growth, the timing of peaks and troughs in accordance with supply additions, as well as the prevailing economic conditions, the table below presents an adjusted price growth scenario.

This scenario assumes the following:

Some level of mirroring from previous cycles, with 2016/17 seeing a lower rate of growth following a price peak and subsequent additions to supply; and transitioning back up towards longer term average rates over time.

Subdued global and national economic context to some extent offset by greater economic diversity and resilience in Melbourne, tempering the rate of growth in the next 2-3 years.

Continued demand from population growth in Victoria, relative attractiveness to overseas purchasers due to the lower AUD and liveability, albeit with slower rates of sale for off-the plan property due to capital controls for Chinese purchasers and tighter lending restrictions.

A slightly lower rate of growth overall in the next few years due to relatively high levels of household debt to income, but with income growth reverting back to trend rates of growth as forecast by Treasury over time.

Stonnington outperforms the Greater Melbourne average due to the white collar focus of workers/residents and a continued wider shift to the service economy in Melbourne.

House price growth exceeds unit price growth due to greater scarcity and land value appreciation.

SCENARIO 2 – ADJUSTED HOUSE/UNIT PRICE GROWTH OVER TIME 1 Year 5 Years 10 Years 15 Years

House Unit House Unit House Unit House Unit

Greater Melbourne 0.2% 0.1% 2.0% 1.0% 5.0% 2.5% 6.5% 3.5%

Stonnington 3.0% 1.5% 6.5% 2.0% 7.5% 4.5% 8.0% 5.0%

CPI 2.1% 2.6% 2.6% 2.5%

Source: APM PriceFinder; Urbis

$1,610,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Period (Annual)

Median S

ale Price

Num

ber o

f Tra

nsac

tions

No. of Transactions Median Sale Price

Page 58: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

Punt Road_EMR Component_160129\ Page 8

This scenario has been viewed on a 15 year time frame. Growth over the longer term of 35 years could be anticipated to be similar to the assumed growth rates over the 15 year time period as provided here. This is indicative only, and the further out in time that projections are provided, the more uncertain they become.

It should also be noted that this scenario presents median price growth for Stonnington as a whole. Properties within particular areas of Stonnington will experience greater/lower rates of growth than the median. With reference to the properties in question along Punt Road, it would be anticipated that these properties are likely to achieve a lower rate of growth than the Stonnington median price, since owners of these properties are less likely to invest further capital due to the PAO.

I trust this research provides useful insight into the long term rates of growth that have been achieved and an indication of how the current conditions could impact upon this rate of growth over the short to medium term.

Regards,

Mark Dawson

Page 59: Punt Road Public Acquisition Overlay Valuation & Economic Advice · 2018-01-15 · condition and state of accommodation of each individual property. My indicative valuation assessments

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