Perth is emerging as one of the most exciting contenders for Australia’s property investment hotspots. Major inner city development projects combined with critical housing shortages and a mining boom that’s set to accelerate are expected to lead to burgeoning opportunities for property investors. In this article, we take a closer look at some of the ways Australia’s fourth largest city is set to further grow as an attractive destination for property investors.
Perth: a Quick Snapshot
- Population: 1,700,000
- Major Industries: resources and services, including iron-ore, gold, bauxite, alumina, liquefied natural gas, and agricultural commodities such as wheat.
- Home to: major ASX listed companies such as Woodside Petroleum, Pilbara Iron, Rio Tinto’s Iron Ore group, and many others.
- Liveability: Ranked equal eighth place with Adelaide in the Economic Intelligence Unit’s August 2011 rankings.
The Most Radical Redevelopment in a Century
The Perth government has released a major parcel of land that connects Perth’s CBD and the inner city suburb of Northbridge. The Perth City link project has been described as being the most radical redevelopment of the city in a century. The decision will be made in late 2012 by the East Perth Redevelopment Authority, which is overseeing the lot’s development.
- The 5.2 hectare lot will be sold off to a winning developer as part of the Perth City Link project.
- The government is seeking submissions that include 1,650 residential dwellings along with retail and hotel spaces.
- The project will amount to around $3 billion dollars and involve around 15 separate lots including the 5.2 hectare lot connecting Northbridge.
The Perth City Link project will create new public spaces, residential dwelling, transit area, and commercial and retail zones. It is expected to attract billions of dollars of investment dollars into the city.
Looming Housing Shortage on the Horizon
Western Australia is facing a looming housing shortage which has been projected by the Housing Industry Association (‘HIA’) to reach 100,000 dwellings by 2020. The HIA’s chief economist has predicted that housing prices will grow much faster in the coming decade and growth could potentially exceed 10 per cent per year.
One of the key factors driving growth is the restricted land supply in the state in the past decade. Another factor is labour shortage, which will see businesses bringing in more workers from interstate or overseas.
The HIA’s Housing to 2020 report suggested that the industry would need to boost residential construction by a massive 43 per cent each year to cover the current undersupply and meet the demand for housing to be generated by new arrivals.
Accelerating Mining Boom
Australia’s mining boom is set to intensify in the coming years, led by Western Australia. The following figures are an indication of the accelerating mining boom.
- A staggering $120 million is invested every day in Western Australia as companies seek to capitalise on the intensifying boom.
- ABS figures for the June 2011 quarter reveal that companies have been investing in buildings, machinery, and engineering equipment.
- Private expenditure grew 4.9 per cent in the June quarter, reaching record levels of nearly $34 billion.
- Mining firms spent 14.4% more in the June quarter compared with the previous period. There was a 22 per cent increase in spending on plant and machinery.
- Capital spending in the mining sector is around $82 billion (out of $149 billion for the entire economy), almost 50 per cent high than one year ago.
All of these figures point to very strong confidence in the industry and intensifying activity in the mining sector over the coming years, which bodes very well for property demand and investment property in Western Australia.