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News release

Perth

Capital values in Perth CBD’s north-west precinct to increase

Area’s heritage to capture market interest


​PERTH, 9 July 2014 – Perth CBD’s large urban renewal projects will stimulate substantial capital appreciation over the next three to five years in the city’s ‘north-west precinct’, an area bounded by Hay, Milligan, Wellington and William Streets, and characterised by a large concentration of heritage-listed buildings.

According to JLL’s Managing Director for WA, John Williams, an increase in capital value in areas adjacent to the Perth City Link and Kings Square developments is an inevitable by-product of urban renewal, driven largely by improvement of amenity and local infrastructure. 

While the benefits of the Perth City Link and Kings Square projects to West Australians are well documented, little has been discussed about how these projects will affect change in the city’s older precincts.

The north-west precinct, positioned between St Georges Terrace and Wellington Street, and abutting the Perth City Link project area, contains the highest concentration of heritage listed buildings in the Perth CBD. 
Due to its positioning, the area is set to provide a crucial thoroughfare connecting the office district on St Georges Terrace and Northbridge cultural and entertainment precincts.

“Increased pedestrian traffic through the north-west precinct will generate private interest and create opportunities for retail and dining.

“Ironically in this development-driven CBD economy, it will be the absence of development and large, developable land holdings in this area that will prove a significant source of value. 

“Sites in this precinct are typically smaller, below 1000sqm with many less than 500sqm, with fragmented ownership, so it has been difficult for developers to amalgamate sites and facilitate economic development on a large scale. 

“This has involuntarily assisted the preservation of many of the area’s heritage buildings such as those in King and Queen Streets, as well as the Mortlock, Rechabite and Bugalow buildings on Hay Street, to name just a few,” said Mr Williams.

Many of the precinct’s 19th and early 20th century buildings were originally constructed for warehousing and manufacturing applications; a built form that has in the past proved difficult to repurpose and subsequently, difficult to let.

Due to low market rent levels inhibiting rental returns, speculative refurbishment on the majority of the area’s heritage buildings has not been viable and many of the buildings’ basements and upper levels have remained underutilised.

“It has only been in the last 10 to 15 years that some sympathetic refurbishment has been actioned, producing some unique refurbishment of office and living spaces. Take, for example, the Country Road building on Murray Street, and the Butterworth buildings on Hay Street.

“Urban rejuvenation in the north-west precinct will be affected through the creation of bespoke refurbishment outcomes that honour traditional built form, the identity and character of the area.

“As progress on the City Link development ramps up and the first buildings in Kings Square are completed and occupied, so too will the area’s appeal to occupiers. 

“In the next three to five years we will see demand increase, causing rent increases that will in turn justify refurbishment of buildings, further enhancing the area’s desirability,” said Mr Williams.

According to Mr Williams, the increase in property values will be a direct consequence of the increased levels of interest from occupiers, creating an opportunity to lease space that was previously unoccupied. 

“The end result will be an increase in potential net income, which when capitalised, will increase values. And so the cycle continues,” said Mr Williams.​