Time Running Out to ‘Save’ Byron Bay

EXCLUSIVE PHIL BARTSCH 08 JUL 22 The Urban Developer

“Have you ever been to Santa Barbara? ...well, that’s what you’re going to have here.”?

The fate of Byron Bay—at least, how Tower Holdings’ Terry Agnew sees it—is spelled out in no uncertain terms by the Sydney developer in a YouTube interview.

“Your hippies are gone and even your backpackers they’re going to go, and you’re going to have very wealthy people owning this stuff,” says the property tycoon behind?West Byron's controversial Harvest Estate.

“They’re going to want better restaurants, better coffee shops, better houses.?

“It’ll just keep going. All the peripheral areas will go as well and are already going … you can’t stop it.”?

Agnew’s straight-from-the-shoulder comments—posted online more than a year ago—were recently revisited at a council-run housing forum as a presage of what is to become of Byron.?

And while the words of developers normally don’t hold much water in this environmentally-minded most easterly patch of the Australian mainland, they clearly hit a nerve that is rawer than ever.?

The inevitable morphing of Byron into the next Santa Barbara—California’s well-established enclave of the super-rich—that Agnew envisioned is happening faster than even he imagined.?

Byron’s median house price has more than doubled during the pandemic hitting $3.09 million—significantly higher than most Sydney suburbs.?

It also recently has been ranked the top residential hotspot for the world’s ultra-wealthy and property prices are forecast to soar a further 30 to 35 per cent in the next five years.?

But with the well-heeled influx pumping up home prices and rents, key workers—including hospitality staff—have been pushed out, severely impacting the tourist town’s service economy.

Last year, the northern NSW coastal shire declared a housing emergency due to a dire lack of affordable homes and rental accommodation that has since worsened in the wake of devastating flooding.?

Such is the shortage, most local businesses are struggling to hire staff and there are concerns the popular town could be in “real trouble” during the busy summer holiday season this year.?

“We’re past the tipping point,” Byron Shire mayor Michael Lyon says. “It’s a full-blown crisis … something has got to give.”?

And if it doesn’t??

“[We'll] become Santa Barbara … end up with a smaller economy just servicing high-end clientele,” he says without hesitation.?

“The number of permanent residents will go down, a lot of businesses will close, schools will shut down, it’ll be bad for jobs, it’ll be bad for the economy.?

“Eventually an equilibrium will be reached but it’ll be a really shit outcome. We just can’t let that happen.?

“I’m all for letting the market do its thing but when the market is clearly failing you need to regulate and get the settings right.?

“There has been massive displacement. We had already lost 20 per cent of our housing stock to Airbnb and then with the pandemic and the floods ... it doesn’t get much worse than what we’re seeing now.”?

Unlike Agnew, however, he believes the rise of Byron as?Australia's most exclusive beachfront bubble?of wealth is not a fait accompli and can be stopped—but it will need to be soon.?

?“What happens over the next couple of years is really going to define what happens to our area over the longer term,”?Lyon says.

To free-up existing housing a new 90-day annual cap on short-term holiday letting of properties has been introduced.

But more significantly in a shire well-known for its anti-development vigilance, rezonings for “sustainable and senstive” residential development with increased density are on the planning table.?

Under a new contribution scheme, at least 20 per cent of the lots will have to go to the council or a community housing provider for the provision of affordable housing.

Byron Shire is the first council in NSW to be given the go-ahead for the initiative. Currently, it applies only to council-nominated sites but the plan is to expand it to any new land release that has a rezoning attached to it???

Crucial to the council's new housing strategy is getting the NSW government to unlock key corridors of so-called “regionally significant farmland” to accommodate new homes.?

“We’re a highly constrained area and one of the reasons is because we’re one of the only places in the state that has this thing called regionally significant farmland mapping,” Lyon says.?

“But at the moment a lot of it is not being utilised as farmland and just forms acres and acres of lifestyle properties so the designation is kind of irrelevant.?

“If we can get this regionally significant farmland mapping removed from key areas and somehow find room for another 5000 or 10,000 dwellings that'll be huge.

“That’s all we’ll need to take care of future growth and current requirements. It's not a lot.”??

But according to local developers, builders and property owners, there is another major stumbling block—the council's fees and charges for construction.

Described as “manifestly unreasonable” and “completely out of step with all other councils”, they are currently under review with stakeholders lobbying to get them reduced to stimulate investment in the region.?

“Even if someone wanted to build affordable housing or key worker housing these fees would apply,” an industry source told?The Urban Developer.?

“The existing fees are a real inhibitor to the development of any kind, add hundreds of thousands of dollars to construction costs and make most projects unviable.”?

Nevertheless, one Sydney-based developer is pushing ahead with an affordable housing development play at Byron’s Suffolk Park.?

Of the 23 residential units in Denwol Group's recently filed plans for a boutique mixed-use project, 12 will be designated as affordable rental accommodation to be operated by a third-party affordable housing group for 15 years.?

Earmarked for a 4000sq m site on 9-13 and 15 Clifford Street, the proposal also includes ground floor commercial and retail space.?

“Prices have gone absolutely crazy in Byron,” a Denwol Group spokesperson said.

“It has become very unaffordable, the pandemic and incredibly tragic floods have brought all sorts of changes and there is already a very different feel to the place.?

“We are a long-term developer with a strong interest in Byron ... it's one of the best places on Earth.

“We just saw this as an opportunity not only to do an attractive development overall but to provide something for the community at the same time.

“Otherwise, why would we commit ourselves to 15 years of reduced rentals?

"Suffolk Park has gone from a once very sleepy little place to a high-end area and if we just built units and sold them off they'd be worth a lot more than doing this

“But from day one we’ve been trying to provide a publicly stated much-needed commodity ... [and] on a site previously approved for much more intensive use, with the greater clearing of the land and no components of any nature that we’re talking about.

“Conceptually, we’re trying to do the right thing here and we're still very committed to doing that but it's definitely not easy."

North Coast Community Housing chief executive John McKenna says if the Byron council is serious about addressing the housing issue “they’ve got to look at where they can smooth the way for proper developments”.??

“Both sides need to work on this … developments should meet where possible as much of the planning regulations as they can and anything else should be negotiated.

“But nothing should be off the table because we need between 300 and 500 new social and affordable housing properties a year for the next decade to alleviate this problem.”

McKenna says Byron's affordable housing crisis and acute employment shortage are crippling the town, forcing many businesses to reduce trading hours.

One local restaurant owner, he says, moved into a caravan so he could?accommodate staff in his own home.

“It was the only way he could get staff to work at the restaurant because there's nowhere else for them to live.

“This is what happens in a tourist town when the real estate market goes upside down.

“Byron just hasn't been building enough housing at the right end of the market, certainly nothing of any scale.

“And the?developers who are realistically and authentically trying to make a difference and address the affordable housing issue in a small way are getting stonewalled and throwing their hands in the air.”

The opportunity for shop top housing in “a little town with such a big CBD” was one of the ideas raised at the recent housing forum, McKenna says.

“But I honestly think people are gun-shy ... if it gets too hard, developers go somewhere else or, ironically, just put something in that meets council's planning but doesn't help the affordable housing issue."

Lyon says a reluctance towards development still pervades but Byron has “moved on from that conservative Green era”.

“We’re all still very environmental around here but we’re not sort of?weathered to that no-development philosophy that once was”.

However, he also concedes, “It's almost impossible to get affordable housing up if it's just a standard development.

“Despite whatever the need might be, firstly, you still need to work within the constraints of any given site and, secondly, get community support broadly at least.

“Long-term I think the solutions are there," he says.

“One of the upsides of having such high property values in our area is that it?makes it a very viable propspect for a developer, even if they're losing 20 per cent of their lots, to make the numbers work.?

“But the cookie-cutter developer approach is not the answer. That's not the future. We need to live a lot more sustainably, a lot more densely and with a lot less impact as well.?

“It’s about coming up with a new model, something that will work for Byron but also more broadly in the region.

“Some of the more innovative eco-village models, I think that’s the potential future."

He cites Witchcliffe Ecovillage—one of the world's first fully-integrated residential developments to be self-sufficient—in Western Australia's Margaret River region as an exemplar.

"We’ve got to break that reliance on that standard model and find patient capital that can play the long game to get some of these innovative proposals through.?

"If Byron is going to do this once-in-a-generation expansion, we need to do it right.”

AUTHOR Phil?Bartsch: The Urban Developer - Writer