The extract below is an independent opinion piece prepared by Urbis Pty Ltd (Urbis). Urbis advise developers, property owners, investors, private firms, community groups, industry associations and all levels of government to help shape the cities and communities of Australia for a better future. Urbis design and master plan urban developments; guide development projects through the process of planning approval; assist in the build of new places of work, leisure, entertainment and commerce – from shopping malls to business parks and retirement living, and provide property market and economic analysis.
Urban Renewal shaping the future of cities
Australian cities are experiencing profound change.
Global megatrends of unprecedented population growth and urbanisation are propelling cities rapidly to futures vastly
different than today. The complexity, speed and scale of change are challenging traditional approaches to planning and
developing cities, with large scale urban renewals now superseding traditional organic city growth models.
Urban renewal, redevelopment, and revitalisation projects are crucial to the success of the city as they stimulate the
economy, accelerate housing supply, enhance property values, instil a sense of community, reduce crime, assist current
businesses and attract new ones.
The urban renewal global phenomenon
Urban renewal is the significant transformation of existing urban areas to accommodate much denser, generally mixed
use environments. Echoing the journey of many Global Cities, Australian cities are now experiencing rapid transformation
through the regeneration of areas to create contemporary, more dense living and work spaces.
Urban renewal is characterised by the unlocking of under-utilised areas for jobs, investment, and housing. It typically
involves rezoning land whilst investing in hard and soft infrastructure required to cater for the desired new future of an
area. Overall, urban renewal enables the use and development of an area to better align with the current and future needs
of a growing city.
Urban renewal is not a new phenomenon – the redevelopment of inner city areas such as Pyrmont in Sydney and Subiaco
in Perth from low density industrial to higher density, mixed used areas represent ‘first generation’ renewal projects.
The ‘current generation’ of renewals are of significantly larger scale, including Docklands in Melbourne, Green Square in
Sydney, The Bays Precinct in Sydney, Fortitude Valley in Brisbane and Elizabeth Quay in Perth. ‘Next generation’ renewals
promise to be on a broader and more intense basis, including places in the middle and outer areas of cities.
Drivers of renewal
Understanding the forces driving change and renewal in cities provides the basis to identify potential significant future
real estate investment and development opportunities.
Urban renewal is the centrepiece of the planning and development of all cities. Governments everywhere are increasingly
recognising the critical importance of consolidating and renewing established urban areas for new, higher density
development as opposed to allowing a continued low density, outward ‘sprawl’.
Sprawl places a burden on governments to build ‘new infrastructure’ networks such as new roads and services which only
exasperate the issue of homes being further away from jobs. Urban renewal areas generate greater patronage to existing
infrastructure networks such as rail, metro and bus which in turn reduces traffic and enhances connectivity.
The shift in density from horizontal to vertical planning for the future of cities is driven by many environmental, economic
and social factors not least being the increasing desire for residents of cities to live in mixed use areas offering high public
transport connectivity to jobs, services and leisure/health facilities.
With the growing interest in environmentally sustainable development, future generations understand that density
creates efficiencies over horizontal ‘sprawl’ such as central sources of heating and cooling, central waste collection,
central power reticulation, central online connectivity and reduced traffic generation/dependency. Governments and
future generations will demand higher standards of sustainability moving forward which is more easily achieved in urban
renewal projects than ‘sprawl’.
Metropolitan plans in most Australian cities now clearly emphasise urban consolidation as the dominant focus to satisfy
future housing supply over traditional greenfield development, with urban renewal being the focal point for areas requiring
the greatest change. Key drivers in the embracing of urban renewal as a dominant metropolitan planning strategy include
- all cities are experiencing unprecedented levels of population growth and demographic change (such as the rapidly
ageing of population and the challenge of affordability). This has created an imperative to identify areas capable of
accommodating intensive, mixed use urban density.
- large and growing populations demand excellent access to public transport and other non-private vehicle movement
modes. In congested and sprawling cities, resident decision making regarding living choices are influenced more
than ever by transport other than personal vehicle, the ability to access heavy rail, metro and other regular, high
speed public transport facilities offered by inner city locations.
- economic efficiencies and benefits gained from optimising development densities in established urban areas
compared to greenfield development.
- environmental constraints to continued outward sprawl are reduced through planning more sustainable, higher
density mixed used environments.
Overall urban renewal is recognised to generate significant benefits – better utilisation of existing and proposed
infrastructure; increased city productivity from the co-location of more intensive jobs and housing; attracting visitors
and additional expenditure; and new employment opportunities. Renewal projects can also offer more sustainable
development through lower greenhouse emissions and more affordable housing compared to ‘business as usual’.
Government at Federal, State and Local levels need to meet the growing demands of our cities through a range of holistic
renewals founded on ‘smart planning’ initiatives that seek to renew areas while achieving a high standard of liveability,
sustainability and productivity. The Australian Federal Government recently reinforced this approach in its ‘Smart Cities’
national policy, supported by the innovative ‘City Deals’ funding for a coordinated approach to large scale urban renewals
at the three levels of government being Federal, State and Local.
Metropolitan and regional planning across the country include specific directions facilitating major urban renewals as
catalysts and enablers to accommodate the demanding city growth targets. The demand for jobs, housing, health care,
education and associated amenity in Australia is at an unprecedented level. Traditional planning methods that allow for
organic development are failing to achieve such demanding targets and as such the federal and state governments are
having to intervene with strategies designed to stimulate large scale urban renewal. City deals and precinct planning
being the most relevant examples.
The DNA of successful urban renewal
The shape and form of urban renewal varies depending upon the urban context, however there are definitive elements
that characterise successful renewals:
whilst facilitated primarily by government, urban renewal encapsulates a very broad spectrum of stakeholders
including all levels of government; multiple service and infrastructure agencies; existing and desired future residents
and workers in the area; and developers and financiers who bring the projects to life. The planning for renewal must
engender a ‘shared value’ outcome for this broad spectrum of stakeholders necessitating lengthy, consultative and
collaborative planning processes in order to achieve the collective objectives.
- renewals must adopt long term views. While some short-term opportunities may be crystallised, typical renewals
adopt longer horizons and result in substantial uplift in land values.
- high quality built form outcomes are not-negotiable. High density living requires comprehensive masterplanning
supported by effective infrastructure and services to be successful. Ideally, urban renewals are designed and planned
to embody a distinct local character and avoid imposing built forms inappropriate to the existing area.
- the effective integration of a mix of land use and activities is essential. Contrasting to the land use segregation
imposed by traditional (and rapidly outdated) singular land zoning approaches, urban renewals strive to create a
complex mixture of activity and use that characterise the most successful cities.
- desired financial outcomes need to be supported by effective value capture strategies. Urban renewal causes
significant change in land economics, driving land values and development outcomes to much higher levels. A
holistic and clear structure to value capture and developer contribution is essential to underpin the funding of costly
infrastructure critical to the success of the renewal.
The investment opportunity
Urban renewal transforms the shape of our cities in response to how people want to engage with the built environment
as well as meeting the requirements that growing populous creates. The ability to analyse and interpret the drivers of
changes in the urban environments is key to informing decisions to invest in real estate which will experience uplift and
value improvement over time.
Urban renewal should be a major focus for investors and developers in real estate, however often overlooked and
incorrectly modelled. Enormous opportunities are available to participate in or benefit from renewal projects in Australia
and offshore, with the ability to invest in ‘core’ or ‘peripheral’ aspects of projects.
Core investment is characterised by involvement as Principal of government released renewal areas and in which firms
such as Lend Lease have dominated in Australia through their ‘end to end’ business model. Peripheral investment is the
opportunity to acquire and/or develop real estate that is adjacent or near core renewal areas and which will benefit from
the renewal process, typified currently in Sydney by the acquisition of assets around future Metro rail stations.
Mapping opportunities for investment in areas affected by urban renewal is possible through developing a strategic
understanding of why, how and when changes in government policy, planning and infrastructure will occur.
Urbis is Australia’s leading specialised city shaping advisory practice – providing independent advice regarding the use,
development, design, investment and governance of property and communities. Operating throughout Australia, Asia and
the Middle East, Urbis specialises in the areas of:
- statutory and strategic urban planning;
- property economics and market research;
- real estate advisory including property valuations, asset consulting and project facilitation;
- urban design; and
- public policy.
Urbis advises clients on future commercial opportunities based on a holistic and comprehensive understanding of the
social, economic, environmental, design and public policy factors driving changes in cities.