Property Commentator Anna Porter gives her opinion on the ten residential real estate markets in Australia likely to benefit from infrastructure benefit
Adelaide is benefitting from multiple major investments in infrastructure, which will more than compensate for the downturn in manufacturing in recent times,
Expansions to Adelaide airport, based on the government’s 30-year master plan, are forecast to require $1billion to be spent in the next five years on major projects. The projects include an expansion of the southern end of the terminal, a 250-room hotel and an office complex. Passenger numbers are expected to more than double for both domestic and international flights and jobs associated directly and indirectly with the airport are expected to more than double over the same period,
Upgrades to Adelaide Riverbank, a $1 billion redevelopment encompassing 380 hectares around the River Torrens that coincides with the Adelaide Oval upgrade, consists of three key precincts; the health and wellbeing precinct, the core entertainment precinct and the cultural and education precinct. The projects consist of the Festival plaza upgrade, redevelopment of the Adelaide convention centre, redevelopment of the casino, and establishment of the South Australian Health and Biometrics precinct,
The new Royal Adelaide Hospital, located close to Adelaide’s CBD was completed in early 2017. The hospital will have a patient capacity of 80,000 per year, is the state’s greenest hospital and is one of the world’s most technologically advanced hospitals. The cost of construction was $2.4 billion, making it (at the time of construction) the third most expensive building in the world and the most expensive building in Australia.
Adelaide has been confirmed as the hub for Australia’s future submarines construction contract. This is set to create thousands of new jobs in the area with the raw materials to be sourced in Australia as well, reportedly. The most recent data from outgoing SA Defense Chief Andy Keough reveals that there is an anticipated job creation of around 6,000 to Adelaide off the back of this project. We’ve heard projections of 6000 new jobs by 2020, and many moreover the life of the project (some 30 years).
In the pipeline for 2018 there are also a large number of patrol boats or ‘corvettes’ to be built and then further in 2020 a frigate fleet will also commence construction. These are put at accumulatively approximately $39bn and set to create approximately 2,500 jobs as well over the course of their respective contracts.
Property market performance
In years gone by, Adelaide has had annual growth rates typically sitting in the low 2-3 percent range, but with this boost to infrastructure and subsequent job creation starting to filter through, LGAs like West Torrens, the home to suburbs like Plympton just to the south west of the airport and the CBD have seen an average annual growth rate of 8.49% to July 2017 (according to Corelogic).
2. Wollongong Metro
The last three years have seen infrastructure investment in and around Wollongong which will benefit existing and early-2018 investors,
A number of sizeable developments having taken place over the past 3 years in Wollongong. A $16.5million purpose-built facility for Wollongong University, and the building of the $90million private hospital building operated by Ramsay Health opened in January 2016 have contributed to the outperformance factor this city’s property market has seen over the past few years.
The West Keira development, a $200million upgrade by GPT Group for a new shopping precinct just north of the current Crown Street precinct will benefit the LGAs growth also. It is a three level center, within a 18,000 square meter building.
Wollongong LGA has experienced an average growth rate of 14.09% for the 12-months to July 2016 and 15.54% to July 2017 (according to Corelogic). The market was going through a growth stage of the cycle at this time anyway, but the renewal of infrastructure has seen it achieve even greater growth. This is quite contrary to similar satellite cities, and the likes of Newcastle, which had more modest performance across the LGA, 6.67% and 6.25% for the 12-months to July 2016 and 2017 respectively. The lack of major projects and renewal has certainly seen this market underperform in comparison to Wollongong.
I have aggressively acquired properties for our clients in the Wollongong area for many years in the lead up this infrastructure roll out, and actively avoided Newcastle.
One such example is my clients Leanne and Mike Chalk from Sydney’s Sutherland Shire. They purchased a freestanding three-bedroom villa in Dapto under our advice in September 2015 for $385,000. An almost identical villa in their same complex has just traded on the 18th September 2017 for $580,000. They’ve invested in some renovations and will reap the benefits of the continuing capital growth in that market.
Located to the south of Wollongong, Shellharbour has also seen significant upswing in values due to the anticipated marina development that is currently under construction,
Sydneysiders have flocked to the area even prior to the marina development beginning, based on the anticipation of the impact. The development was given the go ahead in 2012, with completion expected in 2018. The marina is at the heart of the $3.7billion master planned community, according to Glenn Colquhoun of Frasers Property who manage the project.
As part of the construction of the community center, a golf course, shops, playing fields and wetlands will also be completed in the years to follow.
This new development has seen values in the Shellharbour LGA shoot up 14.5% for the 12-months to July 2017, which is a strong performance for a location that falls outside of a CBD locale.
4. South East Melbourne
South East Melbourne has seen significant infrastructure by way of transport facilities developed benefiting the likes of Dandenong and Frankston. Upgrade to transport from Melbourne CBD to the area has seen a significant rise in buyers moving from the inner CBD locations to these outer areas,
The projects include the Eastlink Freeway, which opened in 2008 and starts at Carrum Downs, connecting to the existing Monash Freeway, allowing for a 35 minute commute to the CBD. This together with the 2013 opened Peninsula Link Freeway, now connecting the Eastlink and Monash Freeway, allows access to both CBD and lower bayside suburbs. The $115million Bayside Rail Project, too, has provided easier and faster access to the south eastern suburbs of Melbourne; areas that offer coastal lifestyles that are becoming more and more popular with Melbournites.
Construction of the $80.9million Stage 3 development of Frankston Hospital was completed and officially opened by the Minister for Health in early 2015.
These projects have seen Frankston experience 19.5% average growth for the 12-months to July 2017, according to Corelogic, outstripped nearby Port Phillip Council in Melbourne’s inner metro for the same period, at just 11.15%.
5. Gold Coast
The GC, as it fondly known by most Australians, has traditionally struggled to keep pace with Brisbane’s growth rates, but infrastructure required for hosting the Commonwealth Games has created a construction boom,
Almost $1billion is reportedly being sunk into the local economy for ‘games related’ projects.
This past 12 months has seen the GC outstrip Brisbane LGA growth by a 1.62% differential to the 12-months to July 2017, at a rate of 7.76% for Gold Coast LGA and 6.14% for Brisbane LGA.
6. Sunshine Coast
The Sunshine Coast area typically struggles to hit large growth numbers in the property stakes due to it being a regional tourism hub that historically lacks the stronger employment drivers. But recent infrastructure projects will change that,
The Sunny Coast has benefited by the opening of the $1.8 billion University Hospital about 20 minutes south of the CBD in Birtinya. As well as a $5billion development (“Aura”) by Stockland, and some $500m spent on improving the CBD in Maroochydore.
Due to the opening of the Hospital, Birtinya saw a 9.32% increase in values on average for the 12-months to July 2016 (according to Corelogic). In the same period the epicentre of the Sunny Coast, Maroochydore only saw 5% growth. The 2017 data is still to be released.
7. Brisbane Metro
A massive revamp of Brisbane’s CBD is set for completion in six years,
Destination Brisbane Consortium’s development of the Queen’s Wharf is already setting this market up for a strong few years. The project will be a $3billion project that is set to include over 50 new restaurants and food outlets, an outdoor riverfront cinema, 6 new premium hotel brands including Brisbane’s own 6 star resort, a new high rise signature building labeled the ‘arc’ and also 12 football fields equivalent of new public open space. The project is set to add approximately $4billion to the Gross State Product providing a huge boost to the economy along with creating 2,000 construction jobs and upon completion a further 8,000 ongoing jobs. The project is set to be fully completed and operational in 2022 and will be a strong addition to the already performing local economy in Brisbane.
This Brisbane story is not finished yet. We are only just at the opening chapter of how this project will impact the market. As the completion of it is yet to drop and is only in the early stages of construction, the data not in yet as to how much this project will boost the local property market, but the outlook is strong with the anticipated completion date being 2024.
8. Toowoomba – our regional pick
This relatively independent and isolated market continues to receive more infrastructure and investment year after year,
Toowoomba is one of our strongest regional performer’s in the infrastructure race and has been so for some time now. The area saw great benefit from a number of projects, most notably the Wellcamp Airport and the second range crossing.
This has seen the Toowoomba postcode record a 12-month growth rate of 8.13% for the year to July 2017, and also hit double digit growth for 2013 and 2014 with steady growth every year since. This is a good outcome for a market as isolated as Toowoomba.
Sydney broadly has certainly had its fair share of growth but we have seen markets around Liverpool go from strength to strength in recent times,
With the south western Sydney areas seeing strong infrastructure investment over the past few years, including the construction of an intermodal freight terminal and port shuttle operation to and from Port Botany, there were reports of over $11billion in economic benefits and the creation of around 6,800 jobs, according to Moorebank Intermodal Company.
This investment saw the property market in the LGA of Liverpool rise by 12.88% according to Corelogic, for the 12-months to July 2016: the period just after the commencement of the project. This growth puts it in standing with markets closer to Sydney CBD such as the Inner West and Eastern suburbs.
A collaboration between Deakin University, the City of Greater Geelong and the G21 (Geelong regional alliance) is part a strategic vision of Geelong’s economic future, capitalising on existing resources and infrastructure and reducing reliance on Government investment. Geelong’s growth has frequently outperformed Melbourne and great Victoria,
Located to the South West of Melbourne, Geelong has also seen its fair share of major projects including the major upgrade to Geelong Hospital, receiving funding from both the Federal and State government to the tune of $128 million.
Coupled with the ‘Securing a bright future’ project, Geelong is fast becoming one of the more livable cities in greater Victoria. The collaborative partnerships have created four major projects worth about $2billion in new investment to the region.
A $1billion Avalon Freight Precinct will become Victoria’s largest, lowest cost interstate and seaport, road and rail freight terminal; a $600-$800million high-security water solution will work to drought-proof regional food production; and a $300million investment at CSIRO’s animal health laboratory at Geelong alongside an injection of $70 million to Deakin’s Carbon Nexus research centre will further drive opportunity for the region.
Off the back of these projects, the area has seen incredible strength through the property market in recent years. It has gone from being the laughing stock of Melbourne through the antics of (then) council mayor Mayor Darryn Lyons (who was relieved of his role in 2016) and the council going under administration, to becoming one of the powerhouses of the Australian property market.
Geelong city recorded 14.46% growth for the 12-months to July 2016 and then backed that up with a solid 8.3% growth for the 12-months to July 2017, accruing to corelogic. With some suburbs like Belmont seeing a strong 16.7% growth for the same period to July 2017. This was a growth statistic that outperformed many other areas in Melbourne and greater Victoria.