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Property sales bonanza to make way for Canberra light rail

Canberra Times, 8 April 2014

Canberra's light rail corridor is on track to become a river of gold for the ACT government with more than $200 million from property sales. Housing stock, ageing office buildings and special purpose premises will be considered for sale in a plan to “recycle" government assets.

Minister for Economic Development Andrew Barr conservatively estimates the value of the commercial property alone at about $100 million.

He said residential property along the corridor could be sold for even more while the federal government's 15 per cent incentive bonus to recycle assets would be added.

“So several hundreds of millions of dollars of property, plus 15 per cent as an incentive bonus from the commonwealth to recycle the assets," Mr Barr said.

Macarthur House, which is almost 50 years old, the visitor information centre along Northbourne Avenue, the Dickson motor registry and large chunks of housing stock including the Northbourne Flats and the ABC apartments in Civic have been identified as properties to be sold or with the potential to be sold.

Mr Barr said money generated from sales would provide improved accommodation for public servants and housing tenants, an injection to the ACT economy and a capital contribution to the light rail network.

The 15 per cent boost to public asset sales, recently announced by federal Treasurer Joe Hockey, comes at a time when thousands of public sector jobs are being slashed in the Territory and vacancy rates in commercial buildings rise above 10 per cent.

"We think it is a very good time to be in the market to get a good deal and we'll be going out to the marketplace looking for some new accommodation – either through the refurbishing of existing buildings or the construction of new accommodation," Mr Barr said.

ACT executive director of the Property Council of Australia Catherine Carter said Canberra had an historic oversupply of commercial office space at the moment.

“The reason that has come about is twofold," Ms Carter said. “We are coming off the back of a property cycle and a very significant property boom, the second part of that is related to the commonwealth government and their employment policies."

Meanwhile, the first stage of decade long redevelopment along the light rail corridor will begin with the sale of housing stock north of the visitor information centre. About 20 housing tenants will be relocated.

For some investors the reality of the light rail project is just hitting home.

POD Property Group managing director Paul O'Donnell recently snapped up a 6114-square-metre block of residential land along the corridor in Gungahlin for $2.9 million.

He said a year ago nobody really believed the government was actually going to build the light rail project.

“Now there is a lot more belief that it will happen and I think that is a pretty big driver," Mr O'Donnell said. “The more real it becomes the more people will get excited.

“When massive announcements like that come out people can be sceptical. But I can't wait. It will change our city."

Mr Barr said there were a range of leases that expire in 2017-18 in the CBD that would come into play within the light rail corridor as part of the government's accommodation strategy.

He said they remained committed to a "hub and spoke" approach for office accommodation, where public servants were spread across the ACT, but the government would look to divest itself of property in Civic.

“We'll approach the market now and give them two or three years to then be able to provide us with a variety of solutions to our accommodation needs," Mr Barr said

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