‘Business As Usual’

COVID-19 (Coronavirus) –
An update from The Herniman Group

To our clients and industry partners,

The Herniman Group is closely monitoring the spread of COVID-19 (Coronavirus) across Australia using information and updates provided by the Australian Government Department of Health and The World Health Organisation.

We are committed to playing our part in helping to minimize health risks to our staff, clients, industry partners and the wider community and although it’s ‘business as usual’ we have implemented some measures and adapted how we operate in response to COVID-19.

These measures include but are not limited to the following:
• Minimising face to face meetings – these will be replaced by teleconference or video conference
• No external visitors to our office unless it is project critical and by appointment
• Increased awareness and practising of social distancing
• No handshakes
• Heightened focus on good hygiene practices
• Adherence to client / site specific policy changes implemented as a result of COVID-19.

The Herniman Group will continue to be focused on supporting our clients and industry partners and will work with you all to achieve successful outcomes during this challenging time. If there is anything you would like us to do to meet your organisation’s response to the COVID-19 crisis, please reach out to us.

Our team will keep in regular contact with you all regarding existing and upcoming projects by telephone and email and we encourage you to do likewise.

Keep safe and healthy.

John Herniman

environmental-sustainability

People become amazingly confused when they hear the dreaded words: ESD

What does it really mean? Environmentally Sustainable Development.

This is nothing to do with climate change although, in my opinion, actioning most of these points contributes significantly to reduce the impact of climate change.

Some large strides have been made since the dreaded days of the 1970s:

  • New projects require ESD statements and calculations and these pro formers are becoming tighter
  • Harvesting of rainwater reducing public pipes and development pipes
  • Significantly heavier insulation
  • Double glazing
  • Thorough consideration of orientation
  • Better connection of private indoor and outdoor spaces

On the other hand other things have slid backwards:

  • Recycling seems to be totally disorganised

 

Where to from here?

  • Plant more trees and foliage
  • Use more public transport
  • Use electric vehicles
  • Produce vegetables and fruit from our private gardens
  • Generate more electricity in our homes, townhouses and apartments

 

Buildings

  • More insulation
  • Sealing gaps
  • Using electricity generated by recyclables such as solar, wind, and hydro
  • Geothermal heating and cooling
  • Eliminating airborne pollutants from various chemicals
  • Harvesting more rainwater
  • Treating sewerage more locally
melbournecbd

Town Planning Changes

 

 

WARNING: this is dry!

 

Way back in mid-2018 the Victorian State government made a number of planning changes called Amendment VC148.

It seems as though their main thrust is to simplify, and reduce the number of applications through common sense. Also being able to fast track small projects is easier.

What does this mean in review in a practical sense?

  • Reduce car parking requirements for new uses of many existing buildings in commercial areas
  • No visitor parking within 400 m of public transport (PPTN)
  • No permit to reduce the required number of car parking spaces for a new use in an existing building, providing certain requirements are met
  • Reduced car parking within 400 m of PPTN resulting in significantly fewer car parking numbers
  • Integration of VICSmart (fast tracking) into relevant zones
  • Heritage overlays more transparent and easier to discover
  • Applications for land adjacent to a Road Zone are now exempt from notices and reviews.

 

For us this means fewer car parks on site which could even improve yield! Also more fast tracking of smaller projects.

elevation

What is going to happen with dwellings in 2020?

The current situation
“Borrowing costs were not going to rise anytime soon” source HSBC chief economist says in mid-2019 and the Reserve Bank governor repeatedly saying that interest rates are going to stay lower for a considerable period of time.

Meanwhile dwelling values in Sydney and Melbourne finished the year up with 6.2% in Sydney and 6.1% and Melbourne in the final three months of 2019. HSBC forecasts dwelling prices to rise nationally by five – 9% in 2020 Sydney eight – 12% and Melbourne 10 – 14%. Commercial assets could rise even faster.

The ANZ/Property Council quarterly survey showed that industry professionals expect the rate, or yield, of prime assets to contract by a further 2.7% point over the next 12 months. “We see rates of 4% are unprecedented and, in some respects unsustainable. We are going to see a lot of global capital flow into our market pursuing core assets this year” said non-bank lender MaxCap.

The value of lending for owner-occupied dwellings increased by 2.0% over November nationally and was 12.6% higher than recorded over November 2018. Although investor lending increased the monthly total remained 3.2% lower than recorded over November 2018. “However, investor lending remains 20.3% lower on the same year to date comparisons”, says Metropole’s Michael Yardney.

ABS shows a drop of 10.8% for dwelling approvals in the year up to November 2019.

Forecast
This means that the pent-up demand for dwellings increased significantly during 2019.

What does this mean for dwelling approvals and for the requirement for more housing in Australia?

We believe that this means that the current backlog of dwelling numbers will only be improved by several years of significant dwelling construction increase. This means more townhouses and apartments in the capital cities and single dwellings on city fringes and country areas.

What does this mean for house prices?
This will mean a significant increase of house prices in the short term which will be borne by the individual owner occupier. The credit squeeze imposed by the reserve bank over the past few years has had its effect, and decreased demand, especially for investors. But it has had its toll. Owner occupiers will purchase existing dwellings and probably pay more than it’s worth.

Those same people may choose to build on greenfield sites, which will be a boon for land developers and for housing builders. The developer of apartments and townhouses in built-up suburban areas is still finding it hard to obtain money. Eventually, this will ease and there will be a boom of townhouse and apartment construction in the next few years.

What are the risks of this having a crash?

elevation

What is going to happen with dwellings in 2020?

The current situation
“Borrowing costs were not going to rise anytime soon” source HSBC chief economist says in mid-2019 and the Reserve Bank governor repeatedly saying that interest rates are going to stay lower for a considerable period of time.

Meanwhile dwelling values in Sydney and Melbourne finished the year up with 6.2% in Sydney and 6.1% and Melbourne in the final three months of 2019. HSBC forecasts dwelling prices to rise nationally by five – 9% in 2020 Sydney eight – 12% and Melbourne 10 – 14%. Commercial assets could rise even faster.

The ANZ/Property Council quarterly survey showed that industry professionals expect the rate, or yield, of prime assets to contract by a further 2.7% point over the next 12 months. “We see rates of 4% are unprecedented and, in some respects unsustainable. We are going to see a lot of global capital flow into our market pursuing core assets this year” said non-bank lender MaxCap.

The value of lending for owner-occupied dwellings increased by 2.0% over November nationally and was 12.6% higher than recorded over November 2018. Although investor lending increased the monthly total remained 3.2% lower than recorded over November 2018. “However, investor lending remains 20.3% lower on the same year to date comparisons”, says Metropole’s Michael Yardney.

ABS shows a drop of 10.8% for dwelling approvals in the year up to November 2019.

Forecast
This means that the pent-up demand for dwellings increased significantly during 2019.

What does this mean for dwelling approvals and for the requirement for more housing in Australia?

We believe that this means that the current backlog of dwelling numbers will only be improved by several years of significant dwelling construction increase. This means more townhouses and apartments in the capital cities and single dwellings on city fringes and country areas.

What does this mean for house prices?
This will mean a significant increase of house prices in the short term which will be borne by the individual owner occupier. The credit squeeze imposed by the reserve bank over the past few years has had its effect, and decreased demand, especially for investors. But it has had its toll. Owner occupiers will purchase existing dwellings and probably pay more than it’s worth.

Those same people may choose to build on greenfield sites, which will be a boon for land developers and for housing builders. The developer of apartments and townhouses in built-up suburban areas is still finding it hard to obtain money. Eventually, this will ease and there will be a boom of townhouse and apartment construction in the next few years.

What are the risks of this having a crash?

Successful Apartment Development

Obtaining Competitive Prices

 

In obtaining competitive prices or tenders it is important that builders have exactly the same drawings, specifications schedules and documents. If they vary or are incomplete the prices you obtain will be meaningless. This is critical.

 

Only obtain prices from builders that you know or have researched thoroughly as being excellent in this type of work and who are not too far away. That way you will be confident that you will get a great result from whoever wins the tender.

 

Your Architects should check the builders who should have a demonstrable track record of carrying this out for other clients. Good tight pricing carried out by your Architects acting as project managers will save you a lot of money and you will end up with a tightly controlled project.

 

When all the prices are received they should be analysed carefully. Often small anomalies can be sorted out at this time which may include some repricing of some small items.

 

It is time to go back to your feasibility to make sure that the money is still on target. If not you will need to adjust the building price.

 

It should also be even-handed. It is not good to have a contract that is less fair on one party. You will end up by suffering the consequences! After all it is you who is taking the risk!

3

Planning Permit Stage

Nurse, nurse, nurse the way through!

Your drawings, other documents and forms and fees have to be lodged with Council. It will take Council a couple of weeks to assess the information. Council have 60 days in which to issue a permit unless the “clock stops” for any particular reason.

Council may request further information where they believe you have not fully complied with the level of documentation required.

Council may also strongly suggest that you make some design changes to fit their requirements. The officer assessing your application will probably have assessed your application in conjunction with the senior planner to whom they report. At this stage it is critical for your Architects to be fully aware of what Council are trying to achieve and also what you are wanting. Very often your Architects will have a better design that satisfies both.

Once Council are satisfied that you have provided all the information and fit with their requirements they will instruct you to advertise. Advertising generally takes the form of posting letters to surrounding neighbours and placing a sign on each street frontage. Some Councils will advertise entirely themselves on your behalf. Other Councils will direct you to carry out the advertising yourself.

At this point the Council planner will write a report hopefully in your favour. If there are very few objectors Council will issue a favourable Notice of Decision. If there are lots of objectors the matter will go to a committee of Councillors who will recommend to full Council the outcome.

If you do not agree with Council you have 60 days in which to appeal the decision to VCAT. The objectors have 21 days in which to appeal.

Generally the cost of going to VCAT is substantial and risky. For a small development the cost is excessive and an alternative should have been found before this point. However it only takes one neighbouring zealot for you to end up at VCAT! If they are unreasonable you are very likely to win, if they have substantial grounds you will lose. And you will probably deserve to lose! You probably should have seen it coming and should have found alternative strategies to not be in this position!

Once you have a Planning Permit you will find the permit comes with conditions. Your Architects will have also read those conditions and assessed what needs to be carried out at this stage to be included in the set of drawings and documents. They should be sent back to Council for Council to stamp those drawings.

Once those drawings and documents have been stamped you can celebrate!

York Avenue - Under Construction

What Council is Mainly Concerned About

Council are concerned about a number of issues and here are some of the major ones. Going to Council with these sorted out is essential for your credibility.

Council are mainly concerned about a thorough site analysis plan, shadows onto neighbours or onto other units and private open space in the development.

Open space for each unit needs to open off living areas and be secluded. It should have good sunlight access.

Security and surveillance of the front door also concerns Council for the occupant’s safety!

Workability of car parking and turning circles into and out of car parking is essential and has to be in accordance with Australian Standards. Council require cars to exist the site in a forward direction.

Rubbish bins, air –conditioners, hot water services, solar panels and service pipes will also be on the list.

Preserving the natural environment, ESD, energy efficiency, water run-off, sewerage and stormwater availability regularly are raised.

Landscape copy

Dealing with council

Warnings and allowances

Council officers aren’t idiots! They have heard all the tall stores before! And a lot worse! Many times!

Always be respectful of council officers. They are the professionals! Not the politicians! Openly discuss what you want to achieve and seek their honest feedback. Discuss issues without heat and be prepared to offer alternatives to any of their comments. Take on board their comments and adjust your design if appropriate.

Remember you are creating your business.

At this stage also you might find it beneficial to discuss points that you think are contentious with your neighbours. We find that it is usually well received and makes the process smoother.

Your Architects should now make the necessary changes to satisfy you and also Council. The design itself must be buildable and fit within your costing feasibility.

Your Architects can proceed to complete the design and all the necessary drawings and coordinate documents that are necessary for lodgement for a Planning Permit.

eastgatefront

Point of Difference

And diversity in the market place

Too many developments look the same, have the same accommodation, and cost the same. Are the same!

 The beauty of having a strong body of information outlining who your target markets are, what your target markets want and what is currently offered in the market place for your target market is … you can easily assess what you can offer that is a point of difference that will give prospective buyers and renters a clear choice.

Important considerations include not less than 50m2 of unit area, creating a connection with the locality through the name, built material, and reference to local icons and attractions.

Consider ceiling heights and window heights as sellable luxuries.

Indoor/Outdoor access and rooftop gardens add extra space and liveability.