Devaluation is unlikely to have any influence on the planning department as it is not something that I think they have to consider. The applicant will argue that noise will be dealt with though building regulations and nowadays the standards are pretty stringent and they will have to deal with this properly.

The issues you raise in the rest of your email are surely much more pertinent:
- Negative impact on the character of a Victorian Street
- density of development in appropriate to the surrounding street(s)
- Design issues related to the detailed proposals (are you in a Conservation Area?)

Rights to light or overlooking may also be important if the site has been empty for 50 years?

Also, I am not sure they are allowed to join onto your dwelling without a party wall agreement, even if there was one there before, but you will need to get some proper advice on this - possibly from a party wall surveyor?

Good luck!