Partial heritage-registered properties present valuation challenges: A collection of Melbourne’s most notable buildings, including 333 Collins Street and the Myer Emporium, could reasonably have their site valued at $1 following VCAT’s recent Melbourne GPO determination, according to Fitzroys.

In December, the owners of the Melbourne GPO were able to have their site value reduced to $1, from $14,800,850 as at January 2016, and hence a nil land tax liability.

However, there are a number of heritage properties across Victoria that may not benefit from the decision.

Fitzroys Associate Director, Chris Nicodimou said properties that have only part heritage registration would present challenges throughout 2019 and beyond following the determination.

VCAT’s GPO decision established that for the parts of the land that do not contain the heritage-registered building, it remains relevant that these areas form part of a larger parcel of land that is affected by the heritage registration, and which may therefore create some impediment to their development or use.

Nicodimou said that it followed that buildings with partial heritage registration should in most situations also be valued at $1.

“Our experiences with properties including The Duke of Wellington, 333 Collins Street and 318-332 Flinders Street (Rendezvous Melbourne), 1 Collins Street, 345 Collins Street, 100 Queen Street, Myer Emporium,

David Jones Melbourne, 170 Russell Street, Melbourne and the Nylex site in Cremorne, among others, demonstrate there is a case to have these site values reduced to $1,” he said.

All the above properties are having their current site values objected to.

Fitzroys had previously successfully argued that the site value for 142 Flinders Street – the Duke of Wellington, on the corner of Russell Street in Melbourne’s CBD – should be reduced to half of $9,600,000. The property comprises a 706sqm parcel of land, with 250sqm heritage registered and 456sqm unencumbered.

“The basis for the reduction was that the heritage registered part of the land was nil value given the now-accepted GPO principle that the cost of the existing heritage building exceeded the market value of the property, while the balance of the land carried all the reassessed site value,” Nicodimou said.

“According to the recent GPO decision, given the integration and connection of the two parts of the buildings (where there is a modern addition), and that services, infrastructure, common areas and so on are shared, the ‘total value of the land’ ought not to be assessed on a ‘piecemeal’ basis. Rather the entire property must be considered as one.

“Hence, the heritage registration ought to flow across the entire property.”

Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys. Terms/Privacy © Copyright 2019 Fitzroys.