‘Gobsmacking’ $1 per year lease for Festival Plaza tower land revealed
InDaily can reveal the price paid to lease the land for a controversial second tower going up in Festival Plaza, and why a hundred-strong community group say it’s “the worst deal ever”. The government says the low rent is not an accurate representation of the deal.
Developer Walker Corporation are leasing the land for its 38-storey tower being built behind Parliament House in Festival Plaza for one dollar per annum, according to lease documents.
The ground lease granted to Walker Riverside (Office) Pty Ltd by the state’s Urban Renewal Authority expires on March 4, 2085, but a second lease extends the deal to 2116.
A condition of the multiple leases is that the developers build the office tower described in a Development Agreement dated 2016.
The Development Agreement document – which InDaily understands includes further amounts paid by Walker Corporation – is not publicly available, unlike the lease which is public through Land Services SA.
Planning Minister Nick Champion was not available to comment on the matter, but a state government spokesperson said “the notion that the state government was only paid $1 for this land is not accurate” but further details were commercial-in-confidence.
Save Festival Plaza Alliance has called for more transparency on what Walker Corporation is paying and “to know that due process has been followed without fear or favour”.
Group convenor Robert Farnan told InDaily “it was truly gob-smacking to see the contract because this would appear to be about the worst deal ever”.
“The tower would occupy much of the remaining plaza and displace the low-rise open plaza that was promised, so the city would lose enjoyment of the space, but much worse again, these spaces, sensibly designed, generate tens of millions of dollars for their cities year after year,” he said.
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“So with this proposal Adelaide will be losing tens of millions, each year, compared to what would be expected with a workable design, and not even getting the one-off cost of the land back.”
The Save Festival Plaza Alliance group was formed early this year in a campaign to stop the 38-storey tower, and is made up of planners, architects, lawyers, ex and current politicians including former SA Premier Lynn Arnold OA and former Legislative Council President Anne Levy AO.
A state government spokesperson said Festival Tower 2 “will generate an estimated billion dollars in annual economic activity”.
“Walker Corp secured a development agreement with the state government in 2016 following a competitive tender process, covering the site of the current tower, carpark, and the location for a second development at Festival Plaza,” the spokesperson said.
“The agreement was based on a proposal for a single office tower (One Festival Plaza) and a three-storey retail building, or an alternative development that delivered greater benefit to the state.
“It is important to note that because of that contract, that there is no scenario in which some kind of building is not going to be built on this site.
“While the commercial terms of the Festival Plaza redevelopment and associated lease arrangements are commercial-in-confidence, all negotiations and subsequent agreements were assessed through a formal process using defined criteria to ensure rigorous consideration of both commercial value and public benefit.
“Tower 2 will enliven Festival Plaza by bringing a new population of workers and visitors supporting a diverse retail and hospitality precinct.”
Land economist Geoff Hayter, also a Save Festival Plaza Alliance member, told InDaily “although ground leases do have a longer life and can span decades, this is extraordinarily long.”
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He pointed to Victoria Square’s state admin building, which he says is 60 years old and soon due for a complete renewal.
“By 2116, Festival Tower 2 would be well past its use-by date. In 30 years, it will just be another office,” Hayter said.
A spokesperson for the Auditor-General Andrew Blaskett told InDaily a follow-up review of the Festival Plaza Redevelopment is not on its agenda at the moment, but it will continue to monitor the project in the future.
“The Audit Office of South Australia has received correspondence from the Save the Festival Plaza Alliance outlining questions it has about the development,” the spokesperson said.
“The Audit Office has a rolling three-year Performance Audit plan, which comprises an annual plan for 2025-26 and a forward plan for 2026-27 and 2027-28.
“A follow-up review of the Festival Plaza Redevelopment is not currently on our Performance Audit annual plan or forward plan.
“We will continue to monitor matters in relation to this project along with other matters as we continue to shape our rolling annual and forward plans.”
Farnan said this would be “too late to be useful”.
The Auditor General produced a scathing 2017 report, which detailed historic problems with the development.
The state’s financial probity watchdog found a long list of problems with the original process including lack of transparency and documentation; no financial analysis on key parts of the deal (like the $30 million car park lease); no effective governance structure; no compliance with mandated planning, evaluation, approval and procurement frameworks.
Property Council SA Executive Director Bruce Djite told InDaily “Walker Corporation is heavily invested in South Australia and make a significant and valuable economic contribution”.
“With projects such as One Festival Tower, Two Festival tower and their Property Council, Rider Levett Bucknall State Development of the Year, Riverlea project, the organisation is creating thousands of local jobs.”
Walker Corporation was contacted for comment.
