One of the largest shopping centre operators in the country is looking at ways to build apartments on top of its properties.

Scentre Group owns and manages 42 Westfield shopping centres across Australia and New Zealand, covering 670 hectares of land, many of which are already supported by infrastructure like roads and public transport.

Chief executive Elliott Rusanow said the company was considering redeveloping its properties to incorporate residential apartments to ensure the company’s long-term growth and also help plug the gap in housing supply.

“Our Westfield destinations are located in and around existing civic and transport hubs — places where densification is already occurring,” he said.

Governments of all levels have introduced policies in recent weeks designed to stimulate sizeable housing developments to address the shortfall in housing.

In NSW, where Westfield has 15 centres, the Minns government finalised the rezoning of eight priority areas in Greater Sydney situated along train and Metro stations.

The Commonwealth passed build-to-rent legislation late last month, offering tax breaks to developers to encourage the building of 80,000 rental homes.

One of Westfield’s properties in particular could benefit from the NSW government’s new policy.

Westfield Hornsby’s potential height limits have been increased sixfold from eight to 53-storeys, with the state government hoping to add 6,000 new dwellings in the suburb’s town centre.

“The announcement regarding Westfield Hornsby is an example of this potential and we expect to pursue similar opportunities at many of our destinations throughout Australia and New Zealand,” Mr Rusanow said.

The potential opportunities and pitfalls

Hal Pawson, associate director at University of New South Wales City Futures Research Centre, said tapping into the airspace on top of shopping centres could provide an option for valuable housing stock.

But he cautioned each site would need to be assessed on its merits.

“It’s far preferable to be doing it in sites like that, than on the fringes of cities,” he said.

Professor Pawson believes shopping centre operators will be considering build-to-rent developments, where a landlord manages a property with more than 50 homes for 15 years, and leases them out to tenants for at least five years.

“If it’s a well-located shopping centre in terms of public transport, then it fulfils one of the most important requirements for the sort of build-to-rent model, which is trying to appeal to young adults,” he said.

Developers would be encouraged to focus on quality developments, he said, as money spent up-front would be saved in the long run with lower maintenance costs.

Flexible planning system needed to respond to needs

Other shopping centres owned by Scentre Group already have the green light for redevelopment.

Westfield Parramatta in Sydney’s west was zoned in 2021 to build commercial towers up to 220 metres tall but Scentre Group is now exploring the possibility of adding housing.

The popularity of remote work following the pandemic has dampened demand for office space.

Urban Taskforce is a non-profit lobbying on behalf of property developers and equity financiers.

Chief executive Tom Forrest said demand had fallen away in B- and C-grade office accommodation areas, with vacancies of up to 40 per cent vacancy in some buildings.

Scentre Group is also eyeing a redevelopment of Westfield Eastgardens in Sydney’s south after purchasing a 50 per cent stake for $750 million from Terrace Group in 2018.

It’s exploring a possible amendment to the shopping centre’s height limits.

“There is a longer-term aspiration to introduce new uses to the site such as BTR [build to rent] or student accommodation on the Northern Bunnerong Road frontage,” it says in a rezoning report.

Would people want to live there?

Elliot Vivian, who works in Hornsby, said rental options for him were either “too expensive or it doesn’t work out” and more homes on the nearby Westfield would be “very convenient”.

“Everything’s nearby, Coles, Woolies, train station,” he said.

“You can get to everywhere you need to, you can go up to the coast, down to the city, airport. Everything’s at your fingertips.”

But some are sceptical if this would address concerns about a lack of affordable housing.

Hugh Irish believes these developments would mainly benefit Scentre Group.

“I do feel for young people these days, and I honestly don’t know what the answer is, but I don’t think shoving up high rises is the way to go,” he said.

Sue Barca said, even if the development went ahead, housing affordability would remain an issue.

“It will not help the poor people, so many people want homes and they can’t afford it,” she said.