[+] Lack of Flood Transparency Holds Back Melbourne Developers

Melbourne’s flood mapping is behind the times and the state government has just realised it. While overdue, changes to flood mapping announced by Melbourne Water last month — sparked by the 2022 flooding of the Maribyrnong River, which inundated more than 500 homes and businesses — have caused havoc in Melbourne planning. It has highlighted that the way flooding is dealt with in Victoria is not fit for purpose, according to the Planning Institute of Victoria vice-president and the director at planning consultancy Hansen Partnership, Jane Keddie. “There will be significantly greater areas and levels of impact from flood hazards as a result of climate change, but there is still a distinct lack of clarity as to what areas will be impacted and to what degree they will be impacted,” Keddie says. This is holding back developers looking at building in potentially flood-affected areas. Colliers Engineering and Design director for water and environment James Barker says the proposed changes have the potential to impact development feasibilities across the city as a result of further construction cost increases, especially in brownfield areas. “This will inevitably reduce the number of projects that are commercially viable,” he says. “Many infill development precincts, such as Arden, are constrained and impacted by flooding caused by historical issues building over time, exacerbated further by climate change.” Holding planning back Part of the problem is how Victoria approaches flooding overlays, making it a local council problem. “As the Catchment Management Authority (CMA) in the city, Melbourne Water is entirely reliant on local government in each municipality to bring flooding into the planning scheme and to put the overlay in place that triggers you to consider flooding and what the development response to that is. “That means that different subcatchments across metro Melbourne are working with different flood models from different points in time, so some of them are not up to date. “Sometimes even when Melbourne Water is up to date, they might be waiting years for councils to implement them.” ▲ Riverside Arden and neighbouring Macaulay are subject to urban renewal projects led by the Department of Transport and Planning. A state-level approach needs to be taken, she says. “They do it for bushfires, working with the CMA to identify areas subject to bushfire, and putting overlays in place that identify the extent of hazards. “With flooding, they hand it over to local government and they don’t have the resources, they’re already juggling a hundred strategic priorities, often on limited budgets, and amendments can be really controversial and require technical expertise, which is challenging for those local governments to deliver.” Impacting development Of course, flooding is not just a Melbourne problem, as climate change continues unabated. According to analysts Climate Valuation , 588,857 Australian homes are at high risk of becoming uninsurable for flood damage by 2030 because it is either prohibitively expensive or withdrawn. But what does this mean for developers? Well, if they have a project ongoing in these areas, expecting lower property prices and returns is one. At the Kensington Banks development, about 900 homes are projected to be affected by the flood mapping changes and local real estate agents anecdotally suggest house prices have dropped 20 per cent, according to the ABC this year . Going Under: The imperative to act in Australia’s flood-risk suburbs ▲ Source: Climate Valuation The other might even be avoiding these areas altogether, if projects become unfeasible. “Coming off a highly volatile construction environment for the past two years, the uncertainty presented around these new flood zones will only further dampen developer confidence in areas that are screaming out for new projects,” Colliers national director for residential Jozef Dickinson says. “Take Arden as an example, it’s a shame that this is only being revisited 12-18 months out from the station opening, which is going to be such a milestone for this location with so little in the way of new projects to complement it.” There is also a lack of transparency around the level of flooding an area might experience in Victorian flood projections, which is affecting development decisions. ▲ Plans were floated this year for a government buyback of apartments in Kensington Banks, which was newly designated as flood prone. “We only have overlays that say this area is subject to flooding, but they don’t signify the level of hazard,” PIA’s Jane Keddie says. “We’re of the view that flood mapping could be done in a different way, and determine whether it is a high hazard area, which might mean we don’t want to increase density in those areas, as we don’t want to put people in high-risk areas and flood mitigation would be so expensive as to make it unfeasible for developers. “If it ’ s low to moderate, then a good design response is probably fine, we can have some development in those areas. “Developers need to know if it will be impossible to develop in a feasible way, or if it’s flood affected but we can work with that and use it positively in terms of the design outcomes integrated into that site. “But the development industry needs that transparency in order to let them make those decisions.” Opportunity in a crisis Development is not dead in the water, despite these concerns. “The impact on greenfield development in Melbourne’s growth areas is far less impacted by these changes, with land set aside early in the rezoning process to provide flood protection safely and far more cost effectively, all controlled to the latest standards in flood mapping,” Colliers’ James Barker says. Melbourne Water understands the importance of updated flood mapping, he says, ensuring safer development of those areas through appropriate planning mechanisms. “The key is to create smarter development practices that achieve these flood protection requirements, whilst maximising the development potential of projects. “This will mean more viable development projects and more housing delivered to Melburnians.” ▲ A controversial flood wall at Flemington Racecourse showed the dangers of inappropriate flood measures; a report this year ruled it had contributed to increased water levels during the 2022 floods. The shifting sands of flood mapping also give us an opportunity to be more flexible in planning and our approach to development, Keddie says. “We’d like to see a shift to how the planning system deals with floods, so it ’ s more dynamic and it ’ s more like Queensland, where flood resilience design is not just about raising floor levels, but about materials, where you ’ re putting your electrical sockets, how many permeable surfaces do you have in those areas? “Basically thinking a little bit more holistically about the design of the buildings. “Queensland is 10 years ahead of us in this. We’ve had a system in the place for a long time and it ’ s just not fit for purpose anymore.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

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