Value uplift heuristics for the Wyndham Westlink development
The Challenge
Westlink is a major new infrastructure project planned within Wyndham City Council, one of the fastest growing councils in Australia. To underpin the major growth in Wyndham, the state and local governments need to invest in major infrastructure to support the requirements of this community. These investments in supporting infrastructure increase the value of the land and properties to be developed in the region. This uplift in land value not only benefits the landowners and developers, but also results in improved land tax contributions to the local council and state government. The aim of this project was to estimate an approximate economic benefit for building Westlink over a three-year period instead of the proposed 10+ year timeline.
Partners
The project partners were Wyndham City Council and the University of New South Wales (UNSW).
The Solution
This project undertook an initial data-driven approach to understand the magnitude of economic benefit created in realising the Westlink project. The analysis considered the benefits and disbenefits of the proposed new road alignment and rail infrastructure comprising the Westlink project. It also considered the total government revenue expected by local and state government.
The study undertook a comprehensive literature review of previous reports which considered the value uplift associated with the following infrastructure relevant to the Westlink project – road, rail, bridges, and stadiums. The analysis conducted in this study focused on the economic benefits associated with residential land and property only. Commercial, industrial and other land use, and their associated land value increases and employment benefits, were beyond the scope of this initial study.
The analysis conducted was based on a combination of heuristics and spatial analysis methods. The heuristics were derived from a hedonic price model developed in Sydney. This model was used to determine key heuristics in relation to proximity to arterial roads, distance to on and off ramps, and proximity to new train stations. The Sydney study was considered comparable to Melbourne, and more specifically Wyndham, for a number of reasons including similar population and property market conditions. Noting that the Sydney property market is more expensive by 20-40% than Melbourne, percentage values of property value uplift rather than absolute values were used in the analysis. Spatial analysis techniques primarily based on network analysis and buffer analysis were used to transform the heuristics into metrics applicable to the Westlink project.
Impact
The data driven assessment of the economic impact of the Westlink project was an initial study to determine if additional, more detailed benefits modelling is required. Based on these initial findings, additional detailed modelling is recommended to better quantify the range of benefits across the economy and help improve and stage the infrastructure project itself. Proposed future work would look at utilising a Hedonic Price model and other land and property valuation modelling proposed across all of Metropolitan Melbourne (including Wyndham City Council) in 2020-2021. Such modelling which will also include the latest in machine learning and artificial intelligence approaches, will be undertaken in the second half of 2020 as part of the Value Australia project, led by FrontierSI in partnership with the City Futures Research Centre, UNSW and other parties.
Once such modelling has been developed and calibrated, it is expected that a more refined economic assessment of the value of transformative infrastructure projects such as Westlink will be possible. This will enable the determination of economic benefits of not just residential land release, but broad economic value attributable to other land uses including industrial, commercial, education and health facilities, and open space. Analysis of the impact of the bridge and stadium which comprise key elements of the Westlink development should also be included in a future economic assessment.
Contact
Please contact us at contact@frontiersi.com.au or Project Manager Jessica Keysers at jkeysers@frontiersi.com.au.