Welcome to the October Edition of KLM Spatial’s Industry Updates.
Greater South East Melbourne (GESM): Australia’s manufacturing powerhouse
Greater South East Melbourne: Australia’s manufacturing powerhouse.
Deloitte Access Economics has released a report warning the Greater South East Melbourne (GSEM) manufacturing region should not be ignored in policy making.
GSEM is Australia’s leading manufacturing region, contributing $54 billion annually—more than any other region in Victoria. It accounts for 35% of the state’s manufacturing output and employs over 75,000 people across diverse sectors including food, pharmaceuticals, and advanced manufacturing.
Greater Dandenong is the most significant, accounting for approximately one third of GSEM’s manufacturing output including a large transport equipment sector. Despite this dominance, GSEM faces significant disadvantages compared to Melbourne’s North-West when it comes to future growth and infrastructure investment.
The North-West has benefited from strategic planning, better freight connectivity, and more available industrial land, making it a preferred location for new developments. In contrast, GSEM suffers from land shortages, especially in key precincts like Greater
Dandenong, Monash and Knox, where industrial vacancy rates are below 5%. Freight infrastructure is also a challenge: GSEM relies heavily on congested road corridors and lacks direct rail access to ports and airports, limiting its logistics efficiency.
Moreover, GSEM’s manufacturing workforce is aging, with only 17% under 30—below the national average—raising concerns about future skills renewal. Despite its economic strength, GSEM risks being overlooked in policy and investment decisions unless these structural challenges are addressed. GESM are advocating for targeted infrastructure upgrades, land use reforms, and workforce development.
Advocacy / opportunities:
- Alignment of GSEM’s strengths with key federal and state initiatives including the Future Made in Australia and Made in Victoria 2030 provide funding, tax and procurement opportunities, as well as R&D, commercialisation and scaling support.
- Major industrial precinct developments such as Officer South are adding modern warehouse, light-manufacturing and logistics capacity. While there are further opportunities to unlock new industrial land around the Port of Hastings.
- Several major infrastructure projects are proposed in the region to strengthen transport links, including the Thompsons Road upgrade, the Dandenong South Intermodal Terminal, and the proposed South East Airport.
- Record container volumes at the Port of Melbourne demonstrate strong trade demand and international connectivity.
Melbourne Water System Updates
In response to internal and industry feedback, Melbourne Water are improving how it manages, triages and responds to applications to reduce unnecessary delays and make processes easier to navigate.
Development Services Scheme (DSS) change requests
Improvements have been made to internal processes and systems, by streamlining workflows and introducing flexible pathways via the Melbourne Water website to allow early review of a Change to DSS request.
There is a dedicated application pathway within the Stormwater Management Strategy (SWMS) Review webpage, which assists in automating the officer referral.
The different pathways are as follows:
• Pre-development advice
• Changes proposed to DSS or its assets
• Changes proposed to DSS or its assets (with SWMS information)
• Stormwater Management Strategy (SWMS) Review
Guidance materials
A Guidance Note has been developed to help applicants determine if a proposed change within the development proposal is likely to require an amendment to the DSS. It clarifies when a change is considered minor and can be managed through a standalone SWMS review or will require a planning application in the future.
There is updated template guidance for SWMS submissions.
Referrals for Planning Permit amendments
Section 72 and Secondary Consent amendments now include clearer assessment requirements/pathways, helping to streamline the process and improve efficiency. The minimum submission requirements are referred to in Melbourne Water’s checklist.
Response timeframes
Major Projects has received from Melbourne Water, a table of service level agreement response
times for standard and complex applications within the Urban Planning and Development area. In most cases, a reduced timeframe is applied for RFI status. To achieve their KPIs, some improvement is expected. Contact Roger Wills with any concerns regarding Melbourne Water responses.
Cultural Heritage Reform
UDIA and PCA have been advocating to government on the urgent need for reform of Cultural Heritage Management Plan processes. Government has recently appointed an Executive Director of CHMP Reform, who is overseeing this work. Last week and industry expert reference panel was held on exploring ways CHMP processes
can be improved to reduce the considerable cost and impact on development.
Along with taxes and drainage, CHMP reform is necessary to address a major impediment to the
delivery of homes (development). It is also impacting Victoria’s standing as an investment
destination, compared to other jurisdictions.
UDIA recently submitted a discussion paper to the review, with short- and long-term recommendations, with the most pressing being:
• Establishing a concierge program to support timely delivery.
• An industry-wide accreditation scheme for relevant contractors.
• Consistent policy regarding on-site attendance, fees and CHMP timeframes.
• Improved induction processes.
In its 2024 submission to Plan for Victoria, the Property Council highlighted inconsistent and
changing requirements are causing significant delays.
It called for clearer timeframes, a transparent decision-making hierarchy with clearly defined roles and responsibilities, a standardized approach to testing/protection and even consideration of MSA style mapping, with a pre-determined outcome in exchange for protection. A government update is pending.
Consumer and Planning Legislation Amendment
CONSUMER AND PLANNING LEGISLATION AMENDMENT (Housing Statement Reform) ACT 2025 (this item was sourced from Planning Matters)
The Consumer and Planning Legislation Amendment (Housing Statement Reform) Act 2025 legislation.vic.gov.au (CPLA Act) has been passed by Parliament and received Royal Assent on 18 March 2025.
The Act includes amendments to the Planning and Environment Act 1987 and the Victorian Civil and Administrative Tribunal Act 1998 in relation to planning matters. It includes amendments to:
• Planning scheme amendment and planning permit processes;
• Compensation claims for land reservations;
• Planning panels;
• Certain proceedings before VCAT;
• Ministerial call-ins; and
• Metropolitan Planning Levy exemptions.
Part 9 Amendments in relation to Planning Panels and Part 10 Amendments in relation to certain proceedings before VCAT of the CPLA Act are scheduled to be proclaimed by the Governor in Council on 14 October 2025 to come into operation on 15 October 2025.
The default commencement date for the remaining amendments is 25 November 2025. DTP is currently working through implementation activities including any amendments required to the Planning and Environment Regulations 2015.
DTP will provide further advice on the commencement date of the remaining parts and further details to assist with the implementation of these reforms in due course.
A significant raft of updates to the Planning and Environment Act 1987, will be made public as early as November. The government is reforming parts of the Act to make it more ‘fit-for-purpose’ in modern society
State of the Apartment Market H1 2025
National Residential Build to Sell & Build to Rent Apartments, CKC
The Charter Keck Cramer (CKC) H1-2025 report reveals that Australia’s apartment markets are in varying states of distortion and dislocation, with Melbourne notably dislocated due to pricing and sluggish sales.
While political and economic clarity has improved—thanks to rate cuts and housing incentives—apartment supply remains critically low nationwide. Melbourne’s Build to Sell (BTS) market hit a record low with only 3,070 completions in FY2025, underscoring severe undersupply. Three times this figure are currently under construction (9,242).
However, Build to Rent (BTR) projects have surged, delivering 3,444 apartments, accounting for over half of Melbourne’s new supply. Encouragingly, Melbourne is showing signs of recovery: planning approvals and finance access have improved, construction costs are stabilizing, and developers are reporting faster project completions.
BTS launches in 2025 are up 127% on a year ago at 6,326 and 7,277 are in marketing. Despite this, CKC are forecasting a shortfall of more than 20,000 apartments through 2026-29.
Demand is buoyed by strong net overseas migration and returning interstate residents, attracted by relatively affordable prices and rents comparatively to other leading capital cities. Yet, BTS sales remain slow, with larger, owner-occupier-focused apartments dominating the market.
For Melbourne’s BTS sector, this means cautious optimism. The market is poised for a rebound, but success hinges on pricing adjustments, continued rate cuts, and policy support (including stamp duty concessions).
Developers must adapt to evolving buyer preferences and consider post-construction sales strategies.
It would also appear that a rise in the price of existing stock for sale (i.e. up to ~50% discount) would boost appeal for new apartments.
Residential Summit – Property Council
\\klms-fs\admin\Planning\Presentations\PCA Residential Summit 09.10.25
Members of KLM’s Planning and Major Projects teams attended PCA’s Victorian Residential Summit last week at the Convention and Exhibition Centre. Keynote speakers included Terry Rawnsley (KPMG), Jeroen Weimar (DTP), John Rintoul (Denton Corker Marshall), Belinda Coates (Harper B), Michael Staedler (RPM Real Estate Group).
The thread was, while the market outlook is showing signs of improvement, new ideas and innovation will be required to generate meaningful volume in the housing pipeline.
The focus areas discussed were:
• Increasing density – across all markets
• Continuous improvement in planning reform and administrative efficiency
• Expanding tax reform for off-the-plan and foreign investor surcharges.
Other things of note were:
Greenfield Market
• Slight uptick in MD housing for ‘24/25, but still 80% detached approvals.
• Value of homes approved in ‘23/24 predominantly $700-800K, up from $500-700K bands in ‘18/19.
• Supply/demand is best balanced for sub 350m2 product. Worst is over 500m2
• From 2010 to 2025 (and forecast to 2030), SLHC and townhouse sales will rise from 1% to 45% of all sales due to affordability.
Apartments
• Build-to-sell has a faint pulse and developers want market conditions/demand to return to pre-pandemic levels. Tax is a major impediment.
• Melbourne is leading the nation in build-to-rent and co-living floor plates. These have rising demand from young professionals with a fixed living cost and hotel style amenities.
Planning/Tax Reform
• There has been an 80% uptick in multi-dwelling applications since Clause 55 became ‘deemed-to-comply’. Minor changes to the code are still forthcoming.
• Suburban townhouses are an opportunity to lead the state in short-medium term housing supply. This would be boosted if the government includes non-strata titles in the off-the-plan stamp duty concession.
• A reversal in the rise of foreign investor surcharges is needed to supercharge investment in new housing. The combination of higher duties and vacancy taxes is unnecessary when trying to attract new investment for 800,000 homes.
PSP approvals
• Costs 15 years ago were a steady $1m, now increased to ~$6m.
• Timeframes are 8-10 years from developer purchase to occupancy. NDA reductions
of up to 50%. Delays/costs due to environmental overlays, cultural heritage,
bushfire, distinctive area and landscape legislation. Examples
Whips are cracking on more than one thousand new homes at Moonee Valley
More Than One Thousand Homes In The Fast-Lane | Premier
The Development Facilitation Program has approved the state’s biggest project, consisting of 1092 new homes at the home of the Cox Plate – Moonee Valley Racecourse.
The site of the existing grandstand will make way for the homes in a combination of studio to three bedrooms, across four apartment buildings – including more than 500 build-to-rent homes.
The $709 million development also includes a 184-room residential hotel, more than 3,000 square metres of retail and office space creating local jobs and business opportunities – while just minutes away from public transport, jobs, shops and services. The transformation will deliver new green spaces including an extension of Tote Park, a new pedestrian link known as Cox Place and a pocket park at the corner of Dean Street and Feehan Avenue.
The project will form part of the broader Moonee Valley Racecourse redevelopment, which also includes rebuilding the public grandstand after this month’s Cox Plate. Completion is expected by 2027.
The concept was floated in 2009 as a way to secure the Club’s independence. State parliament introduced an Advisory Panel in 2013 to consider the redevelopment of the racecourse, which faced fierce opposition from Moonee Valley Council and local residents. In 2015 the club fell out of favour with Racing Victoria and was encouraged to merge with Caulfield or Flemington.
