The federal government could make almost $1.3 billion if the Defence Department sold its three Victorias: the military barracks in Sydney, Melbourne and Brisbane named after the former queen, which sit on some of the country’s prime real estate.
Defence Minister Richard Marles on Monday announced an audit to consider whether Defence should sell part of its $30 billion property portfolio – which includes 70 major military bases – with a particular focus on bases in high-density urban areas.
The $30 billion valuation of Defence’s estate portfolio would be even greater if the properties were to be sold and transformed into residential properties, said Raelene Lockhorst, deputy director of conservative think-tank the Australia Strategic Policy Institute.
“When you look at the use of the land, they count the number of assets on the land compared with land size and how they use it. A lot of the land is underutilised,” said Ms Lockhorst, who has been involved in previous Defence audits.
The Victoria Barracks Sydney, which is 12.5 hectares, has a residential land value of $875 million, according to industry sources familiar with the value of Defence real estate.
The Victoria Barracks in Melbourne and Brisbane each have a value of $200 million. Defence’s 14.2-hectare site HMAS Penguin in the exclusive Sydney harbourside enclave of Mosman has a residential land value of around $675 million.
Work has already started on selling the Melbourne Victoria Barracks and a sale could be completed within 12 months, sources said.
The Albanese government has indicated it was open to acting quickly, but divestments can take longer than anticipated, Ms Lockhorst said.
“Each site is unique. Decisions about whether to keep, consolidate or sell Defence estate are heavily influenced by the location, the size and value, the current use in the electorate in which it sits, and the attitudes of local community,” she said.
Plans were made to sell Leeuwin Barracks – based in Western Australia’s affluent suburb of East Fremantle – eight years ago. It is still Defence-owned.
Defence in 2015 announced the disposal of that site, but has faced numerous delays as a result of changing governments having different views on what to do with the asset.
Ms Lockhorst said the federal government’s goal of completing the real estate audit by the end of 2023 was ambitious, and questioned whether the audit’s terms of reference would appropriately consider how to best accelerate planning and delivery mechanisms.
Construction lobby group Master Builders Australia’s chief executive, Denita Wawn, said the audit should require that disposed assets be designated for residential and commercial construction to ease Australia’s housing shortage.
“Selling for residential and commercial would make the value higher. You would hope that if there was consideration by government to sell, they would get it revalued and rezoned accordingly to give the best return to the taxpayer,” Ms Wawn said.
Where Defence has managed to make significant divestments in the past, they have since become residential or commercial assets. These include Lendlease turning a $250 million site into the Moorebank Intermodal Terminal; Mirvac transforming a $100 million North Sydney site into a resident development; and Macquarie turning a $200 million Canberra site into Canberra Airport Corporate Park.
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