Win For Brisbane CBD Landowners

The Land Court has allowed an appeal by Multiplex 240 Queen Street Landowner Pty Ltd (Multiplex), against the unimproved valuation of land at 240 Queen Street Brisbane (the Commonwealth Bank Building site) which had been issued by the Department of Natural Resources and Water (Department). The 26 storey building situated on the land is leased to a number of large commercial organisations.

The Department valued the land in its unimproved state at $15M as at 1 October 2003. Multiplex’s valuer, m3property strategists, gave evidence that the Department’s valuation was wrong.

During the appeal the Department asserted several different figures (the highest being $43M) as the correct unimproved value for the land, despite the issued valuation being $15M. Several methods, some of which could be described as novel, were argued by the Department to support its different valuations of the same land on the same date.

The Court, in upholding Multiplex’s appeal, found that the unimproved value of 240 Queen Street as at 1 October 2003 was $13.4M. This represented a reduction of $1.6M on the original valuation by the Department and was almost $30M less than the $43M value proposed by the Department during the appeal.

The Court found that:

• determining unimproved land value from analysis of sales of highly developed land is "difficult and unreliable". The Court rejected analysis of sales of highly improved properties;

• it could not accept the Department’s valuer’s theory that profit and risk should be "embedded" in the land value;

• residential sales are an appropriate basis for determining the unimproved value of the land despite the highest and best use of the land being found to be predominantly commercial with ground floor retail. The Court spoke of a "merged market";

• agreements for lease should not be discounted from the sale price – they "simply indicate the degree of ‘ripeness’ of the sale property"; and

• it did not think it appropriate to adjust for a sale on delayed settlement periods where there was no evidence to suggest that the sale price was increased because of the delayed settlement.

On Monday 26 February 2007 the Department issued its unimproved valuations for rates and land tax purposes for most properties in Brisbane.

The Valuation of Land Act has recently been amended to require any objection to be lodged within 45 days of the date of issue of the notice of valuation. For those valuations issued on 26 February 2007, the final date for lodgement of objections is 12 April 2007.

Our observation is that the 1 October 2006 valuations of CBD properties by the Department are in many cases showing increases of between 100% and 300%. Shopping centre owners also face significant increases. Many CBD and shopping centre property owners propose to lodge objections against those valuations.
by Planning and Environment Group, Brisbane

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