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Final changes to the ASX Listing Rules announced October 15, 2019

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Melbourne GPO decision: valuation of heritage registered land

On 18 December 2018, the Victorian Civil and Administrative Tribunal (Tribunal) issued an important decision regarding the assessment of the site value of a heritage registered property (ISPT Pty Ltd -v- Melbourne City Council and Valuer General Victoria [2018] VCAT 1647).

The Tribunal determined that the site value of the subject property as at 1 January 2016 is $1. The fact that the subject property is the Melbourne GPO, a strongly trading retail property in the CBD, is of interest.

The Valuation of Land Act 1960 (Act) requires the site value (and capital improved value) of heritage registered properties to be assessed on the following hypothetical assumptions:

  • that the current use of the land is the only permissible use
  • that the improvements on the land may be continued and maintained in order to continue the current use
  • no improvements other than the existing improvements may be made to the land (unless a permit has been granted by the Heritage Council).

The definition of site value also requires an assumption that the subject land is unimproved and vacant.

Given the absence of any sales of vacant land subject to heritage restrictions, these assumptions render the task of valuing heritage registered land exceedingly difficult. This was recognised by the Tribunal in considering the most appropriate valuation method.

In summary, having regard to these difficulties, the Tribunal found as follows regarding the value of the heritage registered land occupied by the Melbourne GPO:

  • In the absence of comparable sales, the hypothetical feasibility method (as advanced by the owner’s valuer) is a permissible approach to the calculation of site value.
  • Although not an ideal basis to assess site value, the feasibility method supported a site value of $1.
  • The ‘rent differential’ method (as advanced by the Valuer-General’s valuer), was not supported, despite its approval by the Supreme Court of New South Wales in relation to valuation of heritage registered land. This appears to have been due to its particular application in this case. The rent differential method, as its name suggests, seeks to measure the effect on land value of heritage registration on the earning capacity of the land.
  • Given the real practical difficulties of applying the statutory assumptions under the Act, the Tribunal regarded the current heritage provisions as anachronistic, leading to inconsistent outcomes and litigation. The Tribunal commented that it was desirable that the legislation be clarified to simplify the exercise of valuing heritage registered land.

The full decision can be found here.

On 18 December 2018, the Victorian Civil and Administrative Tribunal (Tribunal) issued an important decision regarding the assessment of the site value of a heritage registered property (ISPT Pty Ltd -v- Melbourne City Council and Valuer General Victoria [2018] VCAT 1647).

The Tribunal determined that the site value of the subject property as at 1 January 2016 is $1. The fact that the subject property is the Melbourne GPO, a strongly trading retail property in the CBD, is of interest.

The Valuation of Land Act 1960 (Act) requires the site value (and capital improved value) of heritage registered properties to be assessed on the following hypothetical assumptions:

  • that the current use of the land is the only permissible use
  • that the improvements on the land may be continued and maintained in order to continue the current use
  • no improvements other than the existing improvements may be made to the land (unless a permit has been granted by the Heritage Council).

The definition of site value also requires an assumption that the subject land is unimproved and vacant.

Given the absence of any sales of vacant land subject to heritage restrictions, these assumptions render the task of valuing heritage registered land exceedingly difficult. This was recognised by the Tribunal in considering the most appropriate valuation method.

In summary, having regard to these difficulties, the Tribunal found as follows regarding the value of the heritage registered land occupied by the Melbourne GPO:

  • In the absence of comparable sales, the hypothetical feasibility method (as advanced by the owner’s valuer) is a permissible approach to the calculation of site value.
  • Although not an ideal basis to assess site value, the feasibility method supported a site value of $1.
  • The ‘rent differential’ method (as advanced by the Valuer-General’s valuer), was not supported, despite its approval by the Supreme Court of New South Wales in relation to valuation of heritage registered land. This appears to have been due to its particular application in this case. The rent differential method, as its name suggests, seeks to measure the effect on land value of heritage registration on the earning capacity of the land.
  • Given the real practical difficulties of applying the statutory assumptions under the Act, the Tribunal regarded the current heritage provisions as anachronistic, leading to inconsistent outcomes and litigation. The Tribunal commented that it was desirable that the legislation be clarified to simplify the exercise of valuing heritage registered land.

The full decision can be found here.