Why long-term investors are optimistic about Brisbane
With an unprecedented number of major infrastructure projects currently underway, along with strong population growth forecasts, industry experts are telling investors to “get in early” in the Brisbane property market.
“You need to look at the scale of infrastructure projects currently underway and think about how these will impact the city and your investment,” says Adam Di Marco, Founder and CEO of The Urban Developer magazine and Brisbane-based property developer.
The Urban Developer recently conducted one of the largest surveys in the property industry to determine community sentiment about the residential property market. Di Marco says the results show that industry confidence is tracking at or above long-term averages.
“In Queensland, it’s all about affordability – the median house price is about half of that of Sydney. What was holding us back for a little bit was jobs creation, but now we’re starting to see jobs turn around – we’ve got some major infrastructure projects either underway or about to kick off in Brisbane and South East Queensland. I genuinely believe that the ingredients for an upswing are in place and we start to see that reflected in the results of our survey,” he said.
“Invest for your children and grandchildren,” he added. “Think long term about where you’re investing because that’s the mindset of our Asian neighbours as well.”
The strongest property market in Australia in the next 5 – 6 years
Leading real estate figure John McGrath predicts that the Brisbane property market boom will happen much sooner than that.
Speaking at a function this week, Mr McGrath, founder of McGrath Real Estate, said: “We think South East Queensland, and Brisbane is a focal point, is going to be one of the strongest markets in Australia.
“We think it is going to be the strongest market in Australia for the next five or six years.”
Mr McGrath said that the Brisbane market was currently undervalued and is “due for a catch up,” especially when considering that quality properties in Brisbane are available at often half the price of Sydney or Melbourne.
“The market here is not expensive, I think the market here is value for money. Brisbane is obviously showing some signs of improvement, and South East Queensland in general,” he said.
According to CoreLogic Home Value Index figures released this month, the median dwelling price in Sydney was 77% more than in Brisbane.
Brisbane also delivered strong returns for investors with rental yields of 4.1% for houses and 5.2% for units – which was higher than Sydney (2.8% and 3.7%) and Melbourne (2.6% and 4.2%).
Source: CoreLogic
Once-in-a-generation infrastructure boom, which will define the city
Brisbane is transforming at a rapid pace, with significant investment into big ticket infrastructure projects including the Brisbane airport expansion, Queen’s Wharf development, Howard Smith Wharves and Cross River Rail.
“When you really look at what’s being built, these are serious projects. These will be our Southbank moments. Where we’re building infrastructure that defines the city,” Di Marco says.
The Queen’s Wharf development is the largest development application in the state’s history, encompassing a 27-hectare area of riverside real estate at the southern end of the city. Construction commenced in January this year, and will cost an estimated $3 billion by its completion in 2024. It is predicted to add more than 56,000 people a day to the city and transform the CBD.
“Brisbane has a lot of change going on… it’s this evolution taking place, of which Queen’s Wharf is a part, that will help to put Brisbane on the map as a global city,” said Geoff Hogg, Queensland managing director of the Star Entertainment Group, which is a member of the development consortium.
“The Queens Wharf development will create 2000 jobs and another 8000 once complete. The requirement for formwork in the project alone is roughly twice the existing marketplace in Brisbane. So there are genuine skills gaps that need to be addressed… the job creation associated with that is going to drive the uptick in our investments sector and the development cycle,” added Mr Di Marco.
Source: Destination Brisbane Consortium
An airport comparable to Singapore and Hong Kong
The expansion of Brisbane airport involves the construction of a second $1.35 billion runway (due for completion in 2020). It will create 2,700 jobs at peak construction and 7,800 jobs by 2035 due to additional capacity. Capacity at Brisbane Airport will essentially be doubled, to provide the same level of volume as Hong Kong and Singapore airports today.
“The average punter isn’t aware that of the fact that we’re going to have airport capacity of Changi airport in Singapore, we’re going to have a 24-hour airport, compared to Sydney which has a curfew. We have a two-hour time difference, or advantage to Asia, which is going to help serious investment decisions around convenience,” said Di Marco.
The new runway forms part of a larger $3.8 billion investment in a number of Brisbane airport infrastructure projects, which also include the expansion of the International Terminal Concourse and the International Northern Apron and an Airport Industrial Park.
More Australians moving to Brisbane from other capital cities
The population of greater Brisbane is expected to grow to 3.18 million by 2031, making it one of the fastest growing capitals.
A significant driver of this growth is interstate migration, with Australian Bureau of Statistics (ABS) figures released earlier this year showing that Brisbane is Australia’s most popular capital city to move to interstate.
The figures reveal that Brisbane had the highest internal migration net gain of all capital cities (10,149 people) to 2016, at a time when Sydney lost double that number (-23,176).
Young people were the largest group heading to Brisbane, with the largest net migration gains in the 15-24-year-old category (4,200 people), followed by 25-44-year-olds (2,700 people).
Better lifestyle at half the cost
Pam and Steve Brossman are one couple who found themselves priced out of the Sydney market after selling their Mosman apartment in 2010. After renting an inferior property in Mosman – a highly desirable Sydney suburb – for a number of years, they made the decision to move to a six-bedroom waterfront mansion in Queensland, cutting their accommodation expenses in half.
“Every car [in our suburb] is a sports car, either a Porsche or a Lamborghini. It’s that kind of lifestyle – for half of what we were paying,” Ms Brossman told news.com.au.
“It wasn’t a matter of wanting to leave Sydney, but when we came up here and saw what we got for what we were paying, we just had to do it,” Ms Brossman said.
According to Ironfish National Housing Manager, Josh Ure, Brisbane has an understandable appeal, especially to those priced out of the Sydney market.
“Given NSW has become the most unaffordable state in Australia, people are looking for an affordable alternative – somewhere with job opportunities, comprehensive infrastructure investment, and ultimately, somewhere that will offer people a great lifestyle that puts less strain on them financially. Brisbane and SEQ tick so many of these boxes, making this location highly appealing to both investors and families,” said Mr Ure.