One of the major barriers to apartment construction in A will be dismantled through a new $80 million fund that will allow developers to offset the cost of upfront headworks such as water, sewerage and electricity connections.

Half of the cash has also been reserved for workers accommodation projects in the bush, where critical housing shortages are a major impediment to recruitment — including for public sector workers such as police officers, social workers and teachers.

Premier Mark McGowan will announce the new Infrastructure Development Fund on Wednesday as part of his Vision or the State address at a lunch event being hosted by Property Council WA at Optus Stadium.

“The fund is designed to unlock a new pipeline of apartment developments in metropolitan Perth and new worker housing opportunities in regional areas,” Mr McGowan will say. “Of this, $40 million will be allocated to developments in metropolitan areas.

“This means developers can offset costs of providing water, sewerage, and electricity infrastructure for infill apartment developments.
“There will be certain criteria — the medium or high-density development will need to be in a priority infill location or METRONET station precinct, for example.”

The remaining $40 million has been allocated to country WA and will be made available to projects seeking to deliver work accommodation in key regional centres.

Both private firms and local governments can apply to access the fund, which offers up to $10,000 per dwelling in a proposed development.

That means a 100-apartment complex would be eligible to receive $1 million to be put towards the cost of connecting electricity, water and sewerage.

Those so-called headworks must be paid for upfront by developers, creating a financial disincentive that is particularly acute in the case of infill which often requires extensive upgrades to power, drainage and sewerage, telecommunications and water infrastructure.

Rather than being handed to the project proponent, any money provided through the fund will be released directly to the authority responsible for completing the infrastructure work — such as Water Corporation or Western Power.

Developers will not be expected to make a matching contribution to access the cash but will have to cover any difference between the amount awarded through the program and the total cost of the headworks.

Mr McGowan said the initiative — a key proposal in Property Council WA’s pre-budget submission — demonstrated his Government’s commitment to delivering “better, safer and more amenable neighbourhoods”.

The fund looms as a lifeline to WA’s struggling high-rise sector, which for the first time on record failed to launch a single project in the third quarter of 2022.

Supply chain disruptions during the COVID pandemic and skyrocketing labour and materials costs dramatically reduced the appetite for apartment development, with many firms electing to sit on their hands rather than risk unsustainable cost escalations during construction.

Those escalations meant developments with pre-sales completed a year earlier — as is customary for multi-storey projects — risked having their profit margins evaporate completely. Blackburne was last year forced to raise the price of units at its exclusive $350 million The Grove development in Peppermint Grove by about 15 per cent midway through the pre-sale campaign to offset projected jumps in build costs.

The West last year revealed some property developers had resorted to attempting to sell apartment sites that had already secured building approvals because they could no longer afford to proceed.

The McGowan Government has a focus on promoting infill development near METRONET stations.