Australian real estate investors are gearing up for a lucrative few years thanks to the country’s ongoing transport infrastructure boom. Over AUS$70 billion has been fed into projects that are ongoing or are in their nascent stages, with the aim of improving the efficiency of travel in Australia’s major cities and increasing productivity. As such, real estate developers and investors interested in transport finance have been given a valuable opportunity for growth in otherwise tough economic times.
Whereabouts will these new developments take shape?
Sydney is the city where most of the transport infrastructure projects will be taking shape. Developments already under construction include the Westconnex Motorway, a secondary airport at Badgery’s Creek and a new intermodal terminal at Moorebank. Investors looking at other parts of the country, however, should also note that Brisbane, Melbourne and Perth, which houses the Forrestfield Airport Link, are all major hubs for development and innovation.
Why is now the time for a focus on transport?
Australia is currently experiencing a level of population growth that the current transport infrastructure will not be able to handle for much longer. This does not just affect passenger transport, but industrial occupiers and investors. Indeed, Australia’s industrial markets have experienced a knock-on effect from the country’s transport issues, as various precincts within major cities have shifted from industrial zones to residential zones. As such, transport infrastructure has been under greater stress and industrial occupiers have had to move away from metropolitan hubs, creating a whole new set of transport issues.
While relocations have produced opportunities for cheaper rents, transport costs have had a detrimental effect on many industrial organisations. The issue of carbon emissions should not go unmentioned here, either, as an increased need for transport has a detrimental impact on environmental impacts and a more energy efficient transport infrastructure.
How will new transport links impact those outside major cities?
As the populations of major cities such as Sydney grow, new homes will start popping up around its perimeters, and even further afield. Indeed, the need for suburban homes with strong transport links is likely to increase dramatically thanks to sustained population growth, leaving real estate investors and private lenders with a glut of opportunities over upcoming years. Areas that do not have adequate transport links and accommodation will be left behind quite rapidly, meaning it is important for developers and investors to identify growth areas quickly.
A new, more connected Australia
Australia has traditionally been thought of as somewhat antiquated in its slow uptake of cutting-edge transport infrastructure technologies and connectivity trends. Indeed, the efficiencies of road, rail, sea and air infrastructure have long been challenged for their damaging effect on supply chain networks, meaning the new focus on transport is more than welcome in the country. It is also a great time for players interested in equipment finance, as projects get underway and require huge amounts of manpower and materials.
Developers identify hot competitive opportunities
As an increasing number of developers and real estate investors cotton on to the new transport trends, there has been a spike in demand from occupiers and developers hoping to take advantage of the areas around new transport nodes.
The cost savings that will come out of reduced transport times should not be underestimated. When brand-new transport infrastructure projects come together with commercial development, time and delivery costs are hugely improved and can create huge appeal for investors.
Having said this, developers and occupiers that do not have access to the same level of multi-modal transport options as those in big cities such as Sydney should not worry. Those in small cities with single-mode transport options are still open to lucrative opportunities, holding broad appeal to a number of clients.