Planning reforms drive uplift in airspace projects

SOME of Australia’s biggest cities are witnessing a surge in airspace development on the back of changes to planning laws and property supply constraints. 

Griffith University real estate lecturer Rachel Gallagher said airspace development – builds that create new homes above existing buildings – was on the rise, especially in Sydney. 

Gallagher said land scarcity and high land values, especially in inner and middle suburbs of Australia’s largest city, was a key driver for the lift as land became “extremely expensive” and meant “building up becomes more financially attractive”. 

Other factors, she said, were planning reforms that relaxed height, floor space ratio or zoning controls near centres and transport hubs. 

And asset-rich but cash-poor owners, including strata bodies, are funding maintenance or capital works by selling rooftop rights.  

She also pointed to construction innovation, including lightweight and modular systems, which reduced structural and disruption challenges of building on top of structures. 

“I’d characterise it as emerging and opportunistic, rather than a major shift in housing delivery. There’s definitely increased interest, particularly in Sydney, driven by planning changes and very high land values,” Gallagher said. 

“But it is not yet a high-volume pathway for new housing supply in Australia.” 

Airspace development, a relatively new concept in Australia – is common in major cities overseas. London, for instance, has seen a steep increase in such developments in recent years and the industry is said to be worth close to an $86 billion across the UK. 

In Australia, it is estimated that up to 250,000 new rooftop homes could be constructed, with most potential in NSW, which has approximately 90,000 strata apartments or blocks.   

Gallagher said, at the moment, airspace development tended to “occur in high-value, well-located areas, not where housing need, including affordability need, is greatest”.  

“Outside Sydney, it’s mostly speculative rather than widespread,” she said. 

Her view was that airspace development could help the housing crisis “only at the margins”. 

“Airspace development can add some dwellings in very constrained locations and that’s not nothing. But it is not scalable enough to materially shift housing affordability or supply shortfalls,” she said.  

“These projects are complex, slow, capital-intensive and usually only viable at the top end of the market. 

“They should be understood as a supplementary infill mechanism, not a solution. Framing them as a serious response to the housing crisis risks distracting from the harder reforms around zoning, land supply, social housing investment and infrastructure coordination,” she added. 

Warren Livesey, who owns Sydney-headquartered Buy Airspace, was more bullish, saying that there was big demand for rooftop builds, especially at the top end of the market. 

Livesey said trade at his firm, which facilitates airspace developments in NSW, had increased significantly in the past 12 months, helped by more relaxed planning laws. 

He points to the state government’s Low and Mid Rise (LMR) Reforms, which he said gives developers and owners corporations a key opportunity to cash in on airspace rights. 

“There wasn’t much airspace before in Sydney because most buildings over the last 50,60,70 years have already built up to as high as they could go,” Livesey said. 

“What’s happened now is the NSW government has released this $180 billion worth of airspace and allowing everybody to add one to two additional stories within an 800m radius of 171 business areas,” he said.  

“They’ve created this particular market which wasn’t there before.” 

He said the company was in talks with the government about supercharging airspace developments by enabling a “targeted assessment pathway” for property owners. 

The option would be similar to that for granny flats, allowing owners to “bypass council and build a certain amount in a certain place and you can just do it via a private certifier”. 

“That’s what we’re ultimately trying to push for to expediate rooftop airspace development because they’re getting bogged down into these new big builds that councils are having to deal with and they’re knock down rebuilds, they take a lot more time.” 

Many owners found the option attractive as they could either partner with developers that would fund the builds or manage the process internally, said Livesey, who also pointed to a surge in demand in other capitals such as Brisbane. 

“They’ve got two options – they can either get a developer to do it or they can manage within themselves. That’s what we do, we have a group of architects, town planners and engineers and work with buildings that won’t see a developer come in,” he said. 

“We’re actually going one apartment block to the next apartment block to the next apartment block speaking to the strata managers and alerting them to this new uplift.”