The next big thing in real estate investing is ‘air rights’, and the NSW government is capitalising on this trend by approving new abilities to control and develop air space above heritage listed sites.
Concerned citizens say new heritage listed purchases in Sydney are yet another example of unethical overdevelopment in the region, and a means for developers to circumvent planning control laws.
WHAT ARE ‘AIR RIGHTS’?
Such ownership allows developers to bank the space reserved to expand their properties elsewhere.
The legal concept of air rights is based on the Latin phrase, “Cuius est solum, eius est usque ad caelum et ad inferos” (for whoever owns the soil, it is theirs up to Heaven and down to Hell).
In the early 1900s, however, after the invention of airplanes and increase of air traffic, the space above the soil was amended to “within the range of actual occupation.”
Typically, legal rights to the physical land described on title and rights to the air above land are left as one, and this leaves potential for the current owner to further develop the land vertically.
Increasingly though, developers are becoming aware of the possibility of purchasing air rights, particularly in areas of existing medium and high density housing and mixed use zones, as a means of significantly expanding the current stock of inner-city developable land.
Likewise, land-owners are awakening to the possibility of selling the development potential created by air rights to developers or adjoining landowners.
In most purchases, developers look to purchase air of that site off the adjoining owner so that they can maintain complete vision through, across and out towards the city.
Citizens are now concerned state governments are allowing the rules to bent to accommodate for private business interests, and that the aftermath threatens heritage listed sites across Australia.
According to reports, the City of Sydney Council have approved a $20 million sale of “air rights” to the 200-year-old heritage-listed Hyde Park Barracks near NSW Parliament House.
Private developers, including Lendlease (which owns Quay Tower) purchased more than 12,000 square metres of the barracks’ heritage space for up to $1,500 per square metre.
The City of Sydney is hoping to sell off another remaining 38,000 square metres of heritage space — which includes Qantas House in Hunter Street — and use the revenue to fund the conservation of the historical sites.
This follows similar trends across the state, from Penrith to Bondi, where the war zones are green spaces, heritage buildings and community facilities.
The terms of conflict are consistent: the government is attempting to override local opposition to overdevelopment in underserviced suburbs.
The NSW government is also selling thin air above the western entrance of the newly opened Wynyard walk in the Sydney CBD.
As development sites in the city become increasingly rare, the airspace above 26-38 Clarence Street is being sold as part of a 99-year lease by the government.
Such a purchase is now allowing developers to ‘bank’ the space reserved for the heritage sites, where development is forbidden.
Historically, developers stockpile air rights from properties surrounding their public businesses or private homes for a number of reasons, such as to ensure the views around it remained unimpeded.
For example, Queensland homeowners recently purchased their neighbour’s air rights to preserve their views of the Brisbane skyline.
Why are developers buying air rights to parts of the city that are forbidden from development?
Why is the NSW government giving away right to control, occupy, or use the vertical space above heritage listed properties? Who are these developers?
A City of Sydney spokesperson said the ‘award scheme’ was an “incentive for conserving and maintaining heritage buildings” and cited similar initiatives in New York City.
Look around Sydney and you’ll see battles being waged in nearly every suburb between resident action groups and the state government.
As we examine the trends dominating real estate, urbanization efforts in major cities is hard to ignore – especially in downtown areas, where urbanization leads to more crowded regions.
As development and density reaches capacity in Sydney, purchasing the empty skies above heritage-listed sites is now one of the few avenues for developers to outgrow planning controls.
The Greater Sydney Commission (GSC) — a government agency overseeing planning across the city — has set districts and councils housing-supply targets to keep up with future demands.
NSW Planning Minister Anthony Roberts said Sydney needed to provide 725,000 new homes to meet population growth in the next 20 years.
The GSC has set a target for eight councils in Sydney’s western city district, in the south-west and west, to build new homes between 2016 and 2021.
The figures show the majority of development is concentrated in Sydney’s west and south-west in councils like Canterbury-Bankstown, Liverpool, Blacktown, Parramatta and The Hills Shire.
Residents are also echoing questions about exemptions for some areas from taking on their fair share, while allowing other communities to be clobbered.
The NSW Premier last year said immigration had been allowed to “balloon out of control” and called for a “return to Howard-era immigration levels in NSW”.
She also said “some parts of greater Sydney in particular cannot handle extra development”.
It seems the government are going to greater lengths to ensure a balance of development and sustainability in Sydney, even if it ultimately is an unsustainable model for the future of Australia.
What is next? A reversal on restrictions for development of heritage listed sites themselves?
A City of Sydney spokesperson said there were currently no other UNESCO-listed heritage buildings in Sydney whose floor space was being considered for sale.
Government selling thin air above Sydney’s Wynyard station as land for development dries up | CommercialRealEstate.com.au
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