Meriton Halts Sydney Development, Cites Planning System Concerns
Australia's largest apartment developer, Meriton, has announced a significant boycott of Sydney, opting to shift its focus to Queensland for future projects. This move highlights serious concerns about New South Wales' planning system, which the company claims has become too costly and slow.
Developer Blames Government for Rising Costs
Meriton has stopped purchasing development sites in Sydney, a decision driven by what it describes as increasing costs imposed by the state government. According to the company, these costs have rendered many projects unviable, forcing this strategic pivot. For over six decades, Meriton has been instrumental in shaping Sydney's iconic skyline, but this era may be coming to an end as the firm reevaluates its operations.
"It doesn't stack up. Adding cost, adding cost. In the last, say, five years, six years, we haven't bought any land in Sydney," said Meriton Deputy Managing Director Daniel Hendler. He emphasized that the financial burden has made continuing in Sydney unsustainable under current conditions.
Queensland Offers Faster Approvals
In contrast, Queensland presents a more favorable environment for development, with approval times dramatically faster than in New South Wales. Hendler noted that while approvals in NSW typically take three to four years, the same process in Queensland can be completed in just five to six months. This efficiency is a key factor in Meriton's decision to head north, where the company plans to leverage quicker turnaround times to accelerate project timelines.
The shift has raised alarm bells within the industry about Sydney's housing future. "Australia's biggest developer shifting out of Sydney and heading to Brisbane is a very bad sign indeed. We can't afford that. We've got to make it viable," stated Urban Taskforce CEO Tom Forrest, underscoring the potential impact on housing supply and urban growth.
Government Promises Reforms
In response to these concerns, the NSW government has pledged changes to the planning framework. NSW Planning Minister Paul Scully announced that the largest reconstruction of the planning system in 50 years is underway, with major reforms set to take effect from July 1 this year. "Once some of those major changes come into effect from the 1st of July this year, you'll see a marked change," Scully assured, aiming to address the issues raised by developers like Meriton.
Currently, Meriton has 6,000 apartments under construction in Sydney, but these are being built on land purchased years ago at lower costs. Despite the boycott, the company remains hopeful for a return to Sydney in the future. Hendler expressed optimism about recent improvements in planning, saying, "I think there has been some improvement in planning recently. We'd like to get back to doing what we do best, which is building apartments in Sydney."
Calls for Further Action
However, industry experts argue that more needs to be done to ensure long-term viability. Forrest added, "The planning reforms that have been put in place are a very good start. But there's more to be done. We need to see fees, taxes and charges reduced, as well as building regulation." This sentiment reflects broader calls for comprehensive changes to support sustainable development and housing affordability in Sydney.
As Meriton embarks on its new focus in Queensland, the situation underscores the critical need for efficient and cost-effective planning systems to foster growth and address housing challenges in Australia's major cities.
