Four of Australia’s largest developers are pitted against each other in the shortlist for Sydney’s $4.4 billion Waterloo Estate housing project, described by one close observer as “the most complex property deal done by government in recent times”.
Mirvac, Lendlease, Frasers and Stockland are each leading a consortium that will go into a request for proposal stage early next year before two finalists are chosen in mid-2023 and the contract awarded by year-end.
The plans include 3000 dwellings and a 2.2 hectare public park next to the Waterloo metro station. 
What’s at stake for the developers and their financiers is not just the first stage Waterloo South development with a $1.7 billion construction budget, but also the subsequent Waterloo Central and Waterloo North parts, which together will cost $1.8 billion.
The NSW government’s Land and Housing Corporation is seeking to establish a Master Development Agreement that will start with the 3000-dwelling Waterloo South component but then offer the same developer – subject to value for money – development rights for the remaining sections of the project that has a $4.4 billion end value.
“We’re excited to keep this project moving – a renewal partner will deliver new buildings and infrastructure and collaborate with government to support residents through change, to create a vibrant and mixed inner-city community,” LAHC chief executive Simon Newport said.
Mirvac has partnered with community housing operators Community Housing Limited, Aboriginal Community Housing Limited and National Affordable Housing Consortium Limited to bid for the project.
Lendlease is bidding with St George Community Housing. Frasers Property Australia has partnered with Bridge Housing and Stockland is bidding in partnership with operators Link Wentworth Housing, City West Housing and Birribee Housing.
City of Sydney director of planning, development and transport Graham Jahn said a planning agreement soon to be made public would show the project would deliver 24,000 square metres of open space and 2400sq m of facilities for the Waterloo community.
The inclusion of community housing operators as partners in the consortia reflects the fact that more than one-third of the 3012 new dwellings planned for Waterloo South will be social dwellings for low-income residents (847) and affordable (227) key worker homes.
The remaining 1938 will be for-sale homes sold by the consortium winning the right to develop the site.
“This is about breathing new life into an old social housing estate to support the needs of the growing number of people who call – or want to call – Waterloo home,” NSW Minister for Planning and Minister for Homes Anthony Roberts said.
The project around the 19-hectare site will take more of a partnering approach with the winning consortium, to more equitably and affordably manage risk over the likely 30-year lifespan of the full project.
In contrast to previous – and shorter duration projects – in which the government agency would have allocated all risks to a delivery partner at the time of bidding, the procurement project is likely to be structured in a way to exclude unknown potential risks such as unexpected land contamination.
One estate, three contracts: The master development agreement will give the winning consortium development rights on Waterloo South and subsequently – subject to meeting value requirements – the Waterloo Central and Waterloo north development rights.  
Rising construction costs and uncertainties driven by the pandemic have driven calls for a more collaborative approach in large commercial construction projects. Pushing all risks on to a contractor for a decades-long project could make contractors or consortiums raise prices to cover their risks.
“We more and more often are getting called in by our clients really early,” Multiplex chief executive John Flecker said in July.
Unpredictable weather and supply chain shortages are also prompting developers to take on more risks in construction and infrastructure contracts from builders to ensure that projects get completed.
LAHC will also acquire 165 social dwellings outside of the Waterloo Estate precinct for residents to temporarily live in while their current homes are demolished and rebuilt. These include 70 units on the adjacent Waterloo Metro Quarter site, which will be ready in 2024, and 95 in nearby Redfern, which will be available in 2028.
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