The old adage⏲️time = money💰is particularly pertinent when it comes to project feasibility.
The planning system is lengthy, complex and uncertain, leading to significant delays and increased expense. In Victoria, assume for an #apartment #development: 🙈 Rezoning: 3-5+ years 🙉 Planning Permit: 12-24 months (assuming you receive it) 🙊 Building Permit: 4-6 months
This is (mostly) before developers go to market to obtain presales to make the project fundable and actually start #construction.
Delays increase: ⏳ holding costs – land tax, rates, interest.
💵 construction costs – they seldom go backwards 🚑 project risk – market assumptions on purchase #feasibility change substantially by the time the project is ready to proceed.
😇 overheads – the longer between start and completion, a greater project margin is necessary to cover company costs (or you go broke).
End prices must be higher to cover all these additional costs. I estimate planning delays add 3% ($45k) to 10%+ ($150k+) on end prices, depending on project scale, timeframe, complexity and prevailing interest rates/tax settings.
Streamlining bureaucratic process is essential. Potential solutions (and likelihood of implementation on 0-5 scale): ✅ strict, enforceable timelines for each approval stage (2️⃣) ✅ deemed to comply – fail on timeframes = automatic approval (0️⃣) ✅ allow suing authorities for poor/non decision making (0️⃣) ✅ central coordination of authority and internal referrals (4️⃣) ✅ appeal rights on rezonings (3️⃣) ✅ larger councils, regional planning panels or centralised planning – to allow better resourced/more capable decision making (3️⃣) ✅ removing politics from decision making – local or state – decisions on planning/project merit (2️⃣) ✅ planning scorecards – compare performance across councils/states (3️⃣)
Some of these solutions require changes to planning legislation, but most just rely on using current systems but holding decision-makers to account – something that is painfully absent.
What have I missed? 👇🏻
Note: this post focuses only on the impact of delay itself. Specific planning provisions will be covered in future posts.