Terry’s View: Transport Infrastructure Turbocharges Target Markets

Nothing boosts real estate markets like major infrastructure projects and right now Australia is experiencing its largest and most sustained period of infrastructure investment ever.

This is a key factor to keep in mind during times of major disruption from government. Major infrastructure developments generate huge new demand from home buyers and from tenants – and those demand levels are largely unaffected by changes to taxation measures impacting investors.

Infrastructure covers many different types of community facility, including hospitals, universities, schools, power stations, data centres and a lot more – but the biggest single category is transport infrastructure – which includes motorways, rail links, bridges, tunnels and airports.

Across Australia there are 664 projects, worth more than $100 million each, that are either planned, in pre-construction or actively under construction — with a combined pipeline value of more than a trillion dollars – that’s over 1000 billion dollars.

Of those 664 projects, 300 are already under construction – and that constitutes a massive boost to real estate demand in the targeted locations.

Investment in upgrading and expanding Australia’s airports is surging. Major airport redevelopments or expansions are either underway or in advanced planning in nearly every capital city. These airport projects are massive generators of real estate demand in the surrounding areas because of the big employment zones that evolve next to major city airports.

The Aerotropolis surrounding the new Western Sydney Airport is expected to support more than 200,000 jobs and the Australia TradeCoast precinct next to Brisbane Airport already supports about 60,000 jobs.

And, given the desire by most people to live as close as possible to where they work, this generates big demand from renters and home buyers.

Rail also dominates the mega-project tier. Of the top 10 projects by value, the majority are rail-based rather than road. This marks a significant shift from previous decades when motorway construction dominated the national infrastructure agenda – although there are still a number of big road projects in the mix.

The biggest projects under construction include the $29 billion Sydney Metro West project, Brisbane’s $19 billion Cross River Rail, Adelaide’s $15 billion T2D Motorway development and Melbourne’s $15 billion North East Link Freeway.