Development at Mirvac Group’s Burswood Peninsula is set to resume after a long hiatus, with the property giant capitalising on demand for mid-rise apartments.
It has been more than 20 years since Mirvac first set its sights on The Peninsular Burswood, a 17-hectare parcel of land five kilometres east of Perth CBD.
Progression of the development has been beset by delays, with Mirvac’s Tower six-apartment complex shelved several times since initially proposed more than a decade ago.
Mirvac’s recent plans to proceed with Ador, an eight-storey, 88-apartment complex alongside its existing Fairways apartments, reflects positive sentiment in Western Australia’s apartment sector.
The ASX-listed property group plans to start constructing Ador next year, more than 10 years since its last apartment tower at Burswood was constructed.
Mirvac Group general manager residential development WA, Paige Walker, said the Burswood Peninsula deal was unique.
History
Mirvac’s strategy of buying significant portions of land it can develop into estates is reflected in its purchase of the site.
In 1998, BL Developments – part of Mirvac Corporate Group, bought 1.6ha of vacant land on Burswood Road for $32 million, which Business News understands formed part of The Peninsula.
Ms Walker would not reveal how much the company paid for the entire 17ha.
“[Finding] 17 hectares of developable land this close to the city is rare,” Ms Walker said.
“These opportunities are few and far between.”
She likened The Peninsula to Mirvac’s residential development at Leighton Beach, where it has just completed a $350 million infill precinct, and to its Swanbourne and Mindarie Quays developments.
“It was definitely the focus to buy larger pieces of land [where] we could actually create a variety of residential dwellings, deliver open space and cafes – really create that community for residents,” Ms Walker said.
Construction of the first of the apartment buildings at Peninsula started in 2003 and five apartment towers were built in the eight years to follow.
Close to 500 apartments are contained within the five towers, ranging from 15 to 21 storeys.
Mid-rise apartments, including the four-storey Fairway apartment complex, and 24 townhouses are dotted around the site.
Mirvac plans to develop a retail precinct between the towers when its development is closer to completion.
Structure plan
As Mirvac purchased The Peninsula site, it devised a structure plan with the Town of Victoria Park and WA Planning Commission, governing land use.
The 2003 plan set a maximum building height of 21 storeys and 66 metres.
But the 24-storey Crown Towers development, completed in 2016, altered the horizon of the Burwsood Peninsula.
Mirvac intends to change the structure plan, to align with its second phase of development in the area.
Its Tower 6 proposal, at 31 storeys and more than 180 apartments, drew criticism from parts of the community for its divergence from the plan.
Fairway resident Neil Kidd told a joint development assessment panel meeting the plans for Tower 6 contradicted the parameters set out in Mirvac’s initial guidelines.
He called for a revision of the plan before the development could be approved.
Mr Kidd also opposed the Ador complex, which gained approval in September, for similar reasons.
“This current application is yet another significant deviation from the plan and represents continuation of a death by a thousand cuts approach to planning and development on the Estate,” Mr Kidd told the JDAP.
Town of Victoria Park mayor Karen Vernon said the Ador complex “attracted a number of objections from nearby landowners” but the panel was satisfied the development was appropriate.
Ms Walker confirmed Mirvac was in talks with local government to amend the Burswood Lakes Structure Plan and make an application to change it later this year.
She said the area had changed vastly since the plan was formulated in 2003, particularly through Crown’s developments.
“We always do the community consultations with residents and understand what their concerns are,” Ms Walker said.
“Tower 6 is a lot taller than a lot of the buildings, but I think the whole landscape of that area has changed in the last 20 years.”
False starts
Mirvac’s recent deferral of Tower 6 was not the first time this phase of its development had hit a stumbling block.
The property giant received approval for a similar iteration of the tower, at 23 storeys and 176 dwellings, in 2014.
This was three years after council resolved to approve Mirvac’s application for a 23-storey, 93-apartment luxury complex, which was later revised to accommodate more dwellings.
In 2015, the state government formulated the Burswood Peninsula District Structure Plan, which was designed to work with Mirvac’s plan to govern land use on the site.
Mirvac requested an extension to develop Tower 6, citing uncertainty around the WAPC’s structure plan and a softening apartment market. Its development application was extended twice, before it expired in July 2017.
The latest iteration of the tower was granted development approval in October 2018.
Mirvac has not set a date for when it will build Tower 6, instead turning its attention to Ador, a $52.5 million complex.
Local voices
Residents in the existing Peninsula apartments are frustrated by delays in the development and by the changing nature of the project.
“We are 16 years into a 10-year project,” Peninsula resident and Burswood Residents Association president Shaun Westwood said.
“We are keen to see the estate finished. It still feels like a construction site.”
Mr Westwood, who has lived in the area since 2005, said he and others were affected by sand being blown from the undeveloped land into existing residences.
He said changes to Mirvac’s initial plans also presented issues for some locals, who had mixed feelings about the direction of the development.
“I think we all want the estate to be finished. The biggest complaint people have is around the height,” Mr Westwood said.
“They have definitely moved the goal posts, but times change, we’ve got to move on.”
He said he was under the impression Ador would be closer to the height of the four-storey Fairways apartment complex he lived in, but instead it had been approved for eight storeys.
Other residents say while they acknowledge the new developments will block their views, Crown Towers had already done so.
Changing demand
Ms Walker attributed Mirvac’s shifting focus to the market forces driving apartment sales, which she said currently favoured the downsizer market.
“We are experiencing demand from all segments, but the majority are downsizers and retirees who are driven by the desire to own a well-designed, low maintenance home with great lifestyle amenities,” she said.
From 2016 to 2020, Mirvac designed and released its Peninsula townhouses.
“In the more recent years, we have seen this demand in the form of boutique mid-rise apartment living, which is a key driver in the decision to release Ador ahead of Tower 6,” Ms Walker said.
Australian Apartment Advocacy founder Samantha Reece said when Mirvac took on The Peninsula, it was the first time WA had seen a boom in 10 years.
The market picked up again in September last year, after a prolonged period of stagnation, Ms Reece said.
“For them it was a lower-risk option to proceed with for a lower-rise apartment, because they can get the pre-sales, they can start construction and they can monitor costs much better,” she said.
“September 2020 was when things started to shift.
We saw price growth, an increase in sales and more optimism in the marketplace – this is why we are seeing a number of projects getting approval.”
Director of property and economics research group Urbis, David Cresp, said data showed high-rise apartments, buildings of nine or more storeys, accounted for 56 per cent of active apartments but only 26 per cent of developments.
“High-rise buildings are not appropriate or allowable in all locations but there certainly continues to be good demand for higher buildings,” he said.
Mr Cresp said Urbis continued to see owner occupiers as a key buyer group in Perth, however, as property prices and rents continued to increase, investors were starting to return to the market.
Renewed investor confidence would make developments such as Tower 6 more feasible, as Mirvac would have a higher likelihood of securing off-the-plan pre-sales.
Adaptation
The Peninsula is not the only occasion where Mirvac changed tack in line with economic conditions.
In 2016, it delivered more affordable dwellings at its Leighton Beach and Claremont projects instead of its initially planned luxury apartments.
The first stage of Latitude at Leighton Beach consisted of luxury apartments, while the latter half was made up of more affordable offerings.
At the time, Mirvac Group told Business News the market for luxury apartments had all but dried up nationwide.
It made a similar move at Claremont, where it trialled a rent-to-buy initiative.
Future plans
Ms Walker says the company is committed to building two more towers at Burswood Peninsula, including Tower 6 and a yet-to-be-planned additional tower.
She said at the time Tower 6 gained development approval in 2018, Mirvac did not feel it was the right time to take it to market.
“Over the last sort of 18 months we’ve really looked at the site and what was left to be developed and understanding where the customers and what the market demand is,” Ms Walker said.
“We are absolutely committed to developing Tower 6 and Tower 7 … but the focus of the moment is here on delivering Ador.”
Mirvac plans to start construction on Ador in late 2022 and anticipates it will take up to 24 months.
