Warnervale Town Centre - will it ever be built?

In late October 2008, Premier Nathan Rees announced that State Government approval had been given for the rezoning of the Warnervale Town Centre. The Premier said, “Seven thousand new jobs and $1.9 billion of investment could finally become a reality.

What the Premier didn’t say was that in view of Wyong Council’s Section 94 Contribution Plans for the land, plus Special Infrastructure Contributions (SIC) of $14,000 per hectare, no developer is likely to want to take the risk. And so far that has proved to be the case.

In a submission to the NSW Department of Planning at the time the Warnervale Town Centre (WTC) and Warnervale Employment Zone (WEZ) plans went on exhibition (prior to the State Election), the Urban Development Institute of Australia (UDIA)’s Central Coast Chapter said, “UDIA NSW is deeply concerned that the proposed development contributions when combined with the costs of land, construction, associated holding costs and overheads, will provide conditions prohibitive to urban development in the short to medium term.” This was long before the global financial crisis had hit the financial markets in Australia.

 Feasability Analysis*

*Table shows development costs, expected realisation price and profit or loss on development of two land lots and one dwelling.

This Feasibility Analysis reveals that development of the residential components of the WTC is unviable, the UDIA points out. Put more plainly though, it shows that no profit margin is available to the developer to induce them or a financier to invest.
The UDIA also points out that while the combined contributions for the WEZ are less that the WTC they are still such that the development of employment lands is marginal in terms of risk and profit. This level of contribution is neither economically sustainable nor reasonable.

Depending on the Precinct within the WTC, Council Section 94 contributions range from around $700,000 to $930,000 per hectare of developable land for residential dwellings plus a road contribution rate of between $9,000 and $13,000 per dwelling, apartment or townhouse.

Furthermore – and clouding any decision to invest in the WTC – is the fact that land adjacent to the WTC does not incur any Section 94 contributions. Property valuations are therefore influenced by the lower cost of land.
One well-known property surveyor said, “Developers are just walking away. There is no land in Gosford anyway, very little left in Wyong and nothing in Lake Macquarie”.

Low interest rates of no benefit to new home builders
With no land on which to build on the Central Coast there is little likelihood that the regional economy will benefit from lower interest rates. Traditionally the Central Coast has been dependent on the building industry to support its economy. New homes mean new furniture, carpets and blinds plus all the other fittings and accessories.

The region – once seen as a first home buyer’s paradise – is now set to miss out on the inevitable upswing that will occur in the next year or so.

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