New York, London, Paris, Badgerys Creek: The developers' gold mine on Sydney's fringe

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New York, London, Paris, Badgerys Creek: The developers' gold mine on Sydney's fringe

By Michael Koziol

Turn off the M7 motorway and head towards the site of Sydney's second airport and you are bombarded with real estate advertising. Dozens of bright blue signs belonging to local realtor Chris Brophy stick out most of all - one is a countdown clock for the airport opening (301 weeks to go), while another cheekily proclaims: "New York, London, Paris, Badgerys Creek."

This sparse farmland is a world away from those bustling metropolises, but the property prices are starting to look similar. With the airport due to open in 2026, this area is poised to go gangbusters, and plenty of people are lining up to get on board the gravy plane.

"It's gone bananas," says Brophy. "There was a lot of panic back in the day when they heard the airport was coming, but they might stand to make a lot of money."

The site of western Sydney's new international airport at Badgerys Creek as it looked in August.

The site of western Sydney's new international airport at Badgerys Creek as it looked in August. Credit: James Brickwood

That's no understatement, with unimproved land values in the area increasing as much as seven-fold in as many years. And the biggest land owners on Sydney's south-west fringe include some of the state's best-known dynasties, from the Periches to the Mediches, Inghams and Waterhouses. They can now turn their vast holdings into lucrative developments - although they have had mixed fortunes getting what they want from the government.

Sydney's second major airport has been controversial since it was first earmarked in the 1980s, with an on-again, off-again debate about whether it was really needed, where it should be located and who would be adversely affected.

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But now it's the land deals around the aerotropolis that are making headlines, from the federal government's $33 million "Leppington Triangle" acquisition from the Periches which is being investigated by the federal police, to disgraced former state Liberal MP Daryl Maguire's attempts to shore up a preferable arrangement for Louise Waterhouse of the famous Sydney racing dynasty.

In the area surrounding the coming airport, even relatively small plots of land are worth a lot of money. Last year Coombes Property Group, owned by developer Michael Coombes, bought a 19 hectare quarry adjacent to the airport for $14 million (its value had increased 10-fold since 2007, Pricefinder records show).

Directly across Elizabeth Drive from where the airport earth movers have started digging is a 344 hectare piece of land that Ron and Roy Medich bought off the government in 1996 for $3.5 million. In 2017 they were close to a deal to sell it to a Chinese developer, Buoyan, for a figure reported to be in excess of $500 million.

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The land is part of the "Northern Gateway" to the airport and has been zoned for enterprise use. However, the sale to Buoyan never proceeded and the land is still owned by the Medich family.

Buoyan declined to comment on what went wrong. The Medich office confirmed the family still owned the land and said they were trying to resolve some issues involving transport corridors for the airport "so we can properly advance the appropriate planning outcome for the property".

It was the purported $500 million sale to Buoyan which led broker William Luong to estimate the nearby Waterhouse land could fetch somewhere between $330 and $360 million, as he later told the Independent Commission Against Corruption in the Maguire hearings.

Tony Perich, right, and his son Mark Perich at their dairy farm at Bringelly next to the site of the new airport.

Tony Perich, right, and his son Mark Perich at their dairy farm at Bringelly next to the site of the new airport.Credit: James Brickwood

But there is a key difference - Waterhouse's land isn't zoned for commercial development. Her 233 hectares of land starts at the western edge of the airport's commercial precinct and stretches westward, into what the Greater Sydney Commission has called the Metropolitan Rural Area. Despite the best efforts of the Waterhouse Group across numerous meetings starting in August 2015, the government refused to zone this area for urban development.

In a 2017 submission to the GSC, the Waterhouse Group asked for the Western Sydney Priority Growth Area to be extended westward to cover its land. Its proposal, called Smartwest.Sydney, would involve "an integrated innovation, logistics, employment and tourism enterprise park" pumping an estimated $1.7 billion into the economy and employing 5300 people.

This was rejected as inappropriate by the GSC, as its then chief executive Sarah Hill explained to Waterhouse in a March 2018 letter later tendered to the ICAC.

Construction progress on the site of Sydney’s second airport near Badgerys Creek.

Construction progress on the site of Sydney’s second airport near Badgerys Creek.Credit: Steven Siewert

Waterhouse was not the only landholder lobbying for the right to develop land near the airport. Developer brothers Randon and Glen Ilic, who own about 200 hectares adjacent to Waterhouse, submitted a proposal to the GSC in March 2017 for a new community called Bradfield.

The district would contain 10,000 to 20,000 homes, startup innovation hubs, health and education facilities - described as the Ilic family's vision "to create a place of lasting value for generations of people to work, live and play".

But in March 2018, the GSC confirmed in its Metropolis of Three Cities plan that land west of the airport would be designated "metropolitan rural", dashing the development hopes of landowners.

"The Metropolitan Rural Area is of specific importance for poultry, eggs, vegetables including
mushrooms, nurseries, cultivated turf and cut flowers. It is important to retain, and where possible, increase opportunities for agricultural and horticultural uses to keep fresh foods available locally," the GSC said.

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"Urban development is not consistent with the values of the Metropolitan Rural Area. Greater Sydney has sufficient land to deliver its housing needs within the current boundary ... this eliminates the need for the Urban Area to expand into the Metropolitan Rural Area."

Waterhouse quickly adapted to that dictum and had another crack in November 2018, this time pitching a "sophisticated, world-leading Fresh Food Precinct" and an agri-port connected to the western end of the airport.

That still would have required the Planning Department to adjust the boundaries of the Western Sydney Aerotropolis Growth Area to include Waterhouse's land, which it declined to do.

As we now know from the ICAC investigation, those decisions were made despite the best efforts of Maguire, who had given Waterhouse the private email address of his "on-again, off-again" lover, Premier Gladys Berejiklian, promising the Premier could give the issue a "tickle from up top".

Berejiklian told the ICAC that to the best of her knowledge she never responded to Waterhouse's email or acted on the request in any way. She has repeatedly pointed out that Maguire (and by extension Waterhouse) did not get what he wanted from the government.

But other landowners in the area have had better luck - or perhaps better representation - in their dealings with government. Directly south of the Waterhouse land is the Perich dairy farm, founded by Kolombo and Julia Perich in 1951 and continued by their billionaire sons Tony and Mark. The family also has huge tracts out west; the 10,000 hectare Billabong Station and adjoining 1500 hectare Lake Cowal property near West Wyalong.

Property records show the Periches own many other parcels of land around Bringelly, Leppington and Cobbity further south. They also developed a former landholding into Oran Park Town, a burgeoning satellite city on the planned South West Rail Link.

They have also relinquished plenty of land to the government as part of the acquisition process for the second airport, including the 12.26 hectare Leppington Triangle that is now subject to an AFP investigation. The federal government purchased the land for $33 million in 2018 but then valued it at just $3 million a year later.

The audit office was scathing in its report, and before Senate Estimates last week auditor-general Grant Hehir said the evidence suggested "the Commonwealth may have been defrauded".

As The Sun-Herald previously reported, this was not the first time the Periches cashed in from an airport land acquisition. In December 1999, following a long court battle, they negotiated a $21.5 million payment for a 38 hectare land parcel - which Tony Perich himself agreed at the time was a waste of taxpayers' money.

The Leppington Triangle scandal has reignited calls from many experts - and some MPs - for new mechanisms by which governments can claw back the huge increases in land value that arise from large taxpayer-funded infrastructure investments such as an airport and its associated transport.

So-called "value capture" or "value sharing" is used in many other countries to help fund those projects, but Australia has been happy to allow landowners to keep their enormous windfalls. Federal Liberal MP John Alexander says the continued failure to make landowners pay their fair share is "gross negligence".

Some developers are even happy to do so. Indeed, the Ilics raised the prospect of "value sharing" in their aforementioned plan for the Bradfield community, citing Hong Kong's Mass Transit Railway, a world-leading example of infrastructure funded by selling nearby property development rights.

When you examine the increases in land value near the forthcoming airport, you can appreciate how much value could be extracted for public gain.

For example, the Ingham Property group, a development firm started by the Ingham family when it sold its poultry empire to TPG Capital in 2013, has a 182 hectare piece of land at Badgerys Creek. Pricefinder records show the unimproved value of that land, adjacent to the airport on the south side, increased from $7 million in 2014 to $45 million last year - a 650 per cent rise in five years.

Over the past decade Ingham Property developed the Freemans Ridge estate at Carnes Hill, near Liverpool. The late Lady Mary Fairfax's Harrington Estates has developed three sprawling estates nearby; Harrington Park, Harrington Grove and Catherine Park, described as the realisation of Sir Warwick Fairfax's dream of turning his rolling hills into a "private and exclusive community".

Another chicken farming dynasty, the Baiada family, has also started transforming Sydney's west through its development arm Celestino. The company was named after the late family patriarch Celestino Baiada, who arrived in Australia from Malta at age 14 in 1916. Baiada Poultry, which owns the Steggles and Lilydale brands, is now run by his grandson Simon Camilleri.

Celestino developed the Gables estate on former dairy land at Box Hill, near Windsor, and recently sold the remainder of the site to the country's largest listed developer, Stockland for $415 million over seven years.

Celestino is also developing Sydney Science Park just north of Luddenham, close to the second airport. It is described as "a $5 billion mixed-use smart city that will create an internationally recognised epicentre for research, development, education, commercialisation and innovation".

The family owns a 54 hectare piece of land very close to the forthcoming airport, which is listed under parent company E.J. Cooper and Sons. Earlier this year they also reportedly purchased a grazing farm near North Richmond called Hambledon Park.

Brophy, the Badgerys Creek realtor, says land values on the south-west fringe have skyrocketed not just because of the forthcoming airport but because of the scarcity of industrial land.

"It's the next Parramatta. Some people have woken up to the fact that they need to be there," he says. He also has a reminder about the relentless nature of property price growth. "Today is the cheapest it's ever going to be."

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