Historic drive-in joins cinema closures

Soaring land tax and rate bills equating to more than $1000 a day have forced one of Australia's biggest and oldest drive-in cinemas to close its doors permanently.

Lunar Drive-In, located in Dandenong in Melbourne's outer southeast, will shut down later this year after owner David Kilderry sold the 5.92 hectare site to developer Pellicano.

The site, in Melbourne's prime industrial zone, was listed with a $45 million asking price.

Lunar, which features four screens showing nightly blockbusters, opened in 1956 with a single wooden screen and space for 650 cars before it was closed and turned into a market site in the 1980s.

Mr Kilderry leased the land and reopened the drive-in with brother Matthew in 2002 before buying the site in 2016.

He blamed sky-rocketing land taxes and council rates for the closure.

"Those two combined this year are just under half a million dollars," he told AAP.

"That really does sort of take away the ability to make any real sort of profit ... It's just the rampaging costs, essentially, that led to this difficult decision."

The closure comes with an extra sting after Lunar's owners spent $3.8 million on a cafe that opened in 2020, just before cinemas were closed as part of the Victorian government's COVID-19 pandemic measures.

But Mr Kilderry said he had made peace with his decision after lobbying the state governments for several years about land taxes.

"We just tried to see if there's an alternative or an exemption like churches receive or caravan parks receive, but we had no luck," he said.

In Victoria, land used for outdoor recreation and cultural activities is exempt from the tax but only when used by non-profit organisations.

Lunar is one of around a dozen drive-in cinemas still operating in Australia.

They include three in Melbourne, including Lunar, and at least one in every state except Tasmania.

Mr Kilderry said the decline of drive-ins began nearly 40 years ago with the introduction of VCRs and video rentals.

Dromana Drive-In owner Paul Whitaker said the closure of his closest competitor Lunar was sad news.

Mr Whitaker's family has been involved with the Mornington Peninsula cinema for more than 60 years after his father built the drive-in.

He said he was in a favourable position as his land - which he described as cow paddocks - wasn't worth nearly as much as the Lunar site.

"We have no plans of going anywhere... it's in my blood," Mr Whitaker told AAP.

Dromana Drive-In was the first in the world to introduce FM radio sound to the outdoor cinemas and Mr Whitaker said it was important to keep innovating to stay relevant to customers.

Heddon Greta Drive In, in the coastal NSW city of Newcastle, will close its doors in July this year before the land is subdivided into 44 residential lots.

Owner Scott Seddon said that after 25 years he had "surrendered to the inevitable" and sold to a local developer.

"Historically, drive-ins were built on the outskirts of towns and cities on semi-rural land which, as the towns and cities grew, were taken over by suburbia," he posted on Facebook.

But it may not be the final show.

"We are looking at a couple of proposals to build in another location which is actually quite exciting," Mr Seddon added.