Ruakura Variation ISSUE – Feasibility EXPERT – Douglas Saunders 3 rd and 4 th August 2016
Introduction The effect on property value from 1. Intensification of land use through change of zoning and from “unpopular” land use 2. Fragmentation of land ownership ahead of planned land use change 3. Allowing non compatible land uses to develop adjacent to each other Summary of changes in notified version (November 2015) • The Percival Road enclave will be zoned Large Lot Residential • Reduce minimum lot size from 2ha to 5000m²
Key Issues for Valuation • Land value increases through intensification of land use • Effects of unpopular land use – NIMBY • Fragmentation of land ownership • Residential development adjacent to an industrial area
Intensification of land use The value of a property is a reflection of the “highest and best use” • Value will increase with the transition of rural use through to urban use • typically dictated by zoning. Other influences include market factors such as supply and demand, • location and the physical attributes of the land The Percival Road enclave has transitioned from Rural with close proximity • to the City, to being within the City and being rezoned Recommendation: Retention of the Large Lot Residential zone but with provision for transition to Ruakura Logistics zone
Intensification of land use Tasman Road, Rotokauri Case Study
Unpopular Land Use A typical market response to the announcement of an unpopular use • within a locality – NIMBY, usually created by the fear of the unknown The pattern that generally emerges can be represented by a “trough • shaped” curve, which will vary in length (period of influence) and depth (measure of effect). The greater perception of effect or more negative the use is perceived, • the deeper and longer the curve. If an effect is real and measurable it may have a permanent effect on • value The Percival Road enclave already experiences influences that may create • the above market responses – Transmission Lines – Railway line – Waikato Expressway – Ruakura Research centre
Unpopular Land Use • Measuring effect on value (% adjustment) – +/- 2.5% – +/- 5% – +/- 10% • The quantum of effect relative to the Percival Road enclave will vary in accordance with the trough shaped curve, the expected outcome at Percival Road is; – A less than minor effect upon operation of the inland port – An anticipated long term substantive increase in value when demand exists for industrial use Recommendation: • Maintain the potential for the Percival Road area to transition to a Ruakura Logistics Zone
Fragmentation of land ownership The locality currently has 35 titled properties and 30 individual owners. • Allowing the minimum lot size to be reduced as proposed from 2 hectares would potentially create the following – 5000m² would potentially create an additional 25 titles or a total of 58 separate properties. – 2500m² would potentially create an additional 92 titles or a total of 125 separate properties The future use of the land for logistics would require amalgamation of existing • titles to provide an efficient development proposition and the highest and best use of the land. Recommendation: Minimise the impact of fragmentation by retaining 2ha minimum lot size or at least 5000m² minimum lot size
Residential Development Adjacent to an Industrial Area Without the prospect of transition of land use from rural residential to • logistics, the area will remain a secondary rural residential location. The residential amenity will be detracted by the cut off of direct access to • Hillcrest and the University Capital investment in residential improvements is likely to be limited • The lack of residential amenity in the immediate area will detract from • use Potentially more suited to a rental market • Reverse sensitivity issues most likely to arise • Recommendation: Maintain the potential for the Percival Road area to transition to Ruakura Logistics zone
Conclusion Land value will increase with intensification of use on the weight of • demand, balanced by supply controlled through zoning and availability of services. Potentially there could be a shallow curve below market value until • such time as demand exists for logistics and industrial use at which point the curve will be expected to move up through the market value as rural residential quite substantially. Reducing the minimum subdivision size is likely to create a greater • degree of fragmentation that will in the long term potentially lead to inefficient use of the land for logistics and reverse sensitivity issues as residential use is retained in areas because it is not economically feasible to develop the small parcel
Conclusion Cont’d Retaining the Large Lot Residential zone is likely to maintain the • suppressed rural residential value and potentially contribute to further decline below comparable rural residential development as the locality becomes more isolated by logistics development on the surrounding land. The locality has been influenced in the past by factors that include • the railway, transmission lines and the Waikato Expressway designation. The Board of Inquiry decision in September 2014 instigated Logistics and Industrial zoning through the Ruakura locality as part of the Operative District Plan.
• Questions on Feasibility?
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