The level crossing removal program (LXRP) is a major state government infrastructure initiative that will see the removal of 50 dangerous and congested level crossing across Melbourne, with at least 20 to be completed by 2018. The significant infrastructure works associated with the LXRP provide the potential for value creation and value capture opportunities through the redevelopment of adjacent land and/or decking – referred to as Integrated Development Opportunities (IDOs) – as part of the grade separation solution.
As part of the engagement by the LXRA (and previously the Department of Treasury & Finance), NAVIRE undertook an initial analysis of the potential IDOs associated with nine level crossing removals between Caulfield and Dandenong (referred to as the CD9 package of work). NAVIRE was then engaged to assess the IDOs offered by the two bidders on the CD9 package.
In addition to CD9, NAVIRE has provided similar value creation and value capture advice on numerous other level crossings in the LXRP.
As part of our work on the LXRP, we have become very familiar with identifying and assessing the value creation and capture opportunities for land adjacent to and over rail infrastructure.
In undertaking our role with the LXRA, NAVIRE’s responsibilities included:
- residential, commercial, retail, industrial and civic market research and demographic analysis to inform the value creation assessment;
- input into the assessment of value capture potential for each IDO in conjunction with the LXRA’s architects / urban designers;
- completion of a bespoke development feasibility model for the agreed IDO opportunities at each level crossing location to determine the residual land value (RLV) of each IDO against three different commercial transaction structures;
- preparation of a development feasibility report showing the financial impact on the RLVs of different development opportunities and sensitivities to the State; and
- recommended value capture process and negotiation strategy for each level crossing/IDO.