Project Overview
Client
Government - State
Property Type
Mixed Use (Retail, Commercial and Residential Redevelopment)
Reason for Service
Feasibility studies - Acquisitions & disposals - Investment & Development Discounted Cash Flow Analysis
Preston Rowe Paterson was engaged by the New South Wales Crown Solicitor, acting on behalf of the Valuer General, to provide independent expert valuation advice for Land and Environment Court proceedings.
The assignment focused on determining statutory land values for a major mixed-use development site, addressing objections lodged by institutional landowners and ensuring compliance with the Valuation of Land Act 1916.
The assignment required a robust, defensible valuation methodology addressing one of the largest and most complex mixed-use development sites in metropolitan Sydney.
Summary of Scope of Services
Preston Rowe Paterson was instructed to:
- Provide independent expert valuation evidence for court proceedings
- Assess statutory land value (unimproved basis) in accordance with Section 6A of the Valuation of Land Act 1916
- Determine value assuming removal of non-land improvements
- Consider market value under the Spencer test and IVSC framework
The assignment required integration of multidisciplinary expert inputs, including:
- Town planning
- Economics
- Architecture
- Construction programming
- Quantity surveying
Asset Overview:
The subject property comprises a significant 11.07 hectare B4 Mixed Use zoned landholding located at 197–223 Herring Road, Macquarie Park, within one of Sydney’s major employment, education and transport precincts.
Strategically positioned opposite Macquarie University and benefiting from proximity to key metro and motorway infrastructure, the site features extensive frontages to Herring Road, Waterloo Road and Talavera Road.
With an estimated development capacity of approximately 387,450m² GFA, the asset represents a large scale, staged mixed-use redevelopment opportunity, supporting the integration of regional retail and high-density residential development within a single master planned precinct.
This engagement demonstrates Preston Rowe Paterson’s expertise in:
- Delivering complex, court-ready valuation advice for large-scale mixed-use development sites
- Applying robust and defensible methodologies aligned with statutory requirements
- Undertaking advanced residual land valuation using Discounted Cash Flow (DCF) modelling
- Integrating multidisciplinary inputs across planning, construction, economics and market analysis
- Assessing development-intensive assets where direct sales evidence is limited
- Providing transparent, evidence-based opinions suitable for litigation and cross-examination
Scale and Complexity
The subject site is exceptionally large and development intensive, requiring staging over an extended period and integration of multiple asset classes.
Absence of Comparable Sales
There was a paucity of directly comparable land transactions, particularly for:
- Mixed-use sites of similar scale
- Regional shopping centre development land
- Integrated retail/residential precincts
Statutory Valuation Constraints
The valuation was required to:
- Assume removal of improvements (with limited exception for “land improvements”)
- Reflect highest and best legally permissible use
Align with hypothetical prudent purchaser assumptions under statute
Court-Ready Analysis
All opinions needed to be:
- Fully transparent and auditable
- Supported by evidence and expert inputs
- Defensible under cross-examination
Limited Reliability of Direct Comparison
Conventional land sales comparison was considered inappropriate as the primary approach due to:
- Material differences in site scale and development capacity
- Mixed-use development complexity
- Significant subjective adjustments required
Preferred Methodology - Residual Land Value (DCF)
Preston Rowe Paterson adopted a Discounted Cash Flow (DCF) residual land value approach, which:
- Models the real-world development process over time
- Incorporates staging, construction timing, and sales absorption
- Reflects financing costs and holding risks
- Aligns with the behaviour of a hypothetically prudent purchaser
This approach was considered the most reliable method for a development of this scale and complexity.
Development Scenarios Analysed
Multiple development scenarios were modelled based on expert architectural inputs, including:
- Base case scheme
- Three retail expansion options
Each scenario incorporated:
- Retail shopping centre development
- Residential towers (approx. 2,500+ apartments)
- Supporting uses including cinema and strata retail
Key Valuation Inputs
The DCF analysis incorporated:
- Construction costs and escalation (WT Partnership)
- Development timing and staging (CPM Consulting)
- Market demand and absorption (Ethos Urban)
- Retail and residential end values informed by market evidence
- Financing assumptions, including debt costs and development margins
- Statutory assumptions, including GST treatment and land tax impact
Tax & GST Consideration
- Review of GST implications and Margin Scheme impacts
- Consideration of how transaction structure affects:
-
- Development costs
- Effective acquisition price
- Tax leakage
Approximately
387,450m²
Development capacity
We Deal with the Mainstream & Specialise in the Complex for all asset classes
