Where is the next Capital Growth location?
Fundamentals required to successfully underpin capital growth comes from :
- Industry Investment
- Government Investment
- Both creating new jobs
- Attracting Population Growth
- Low supply of property
- Increasing demand
“Queensland offers more scope for property growth and development than any other state”, says renown demographer Bernard Salt
July 2015 Headlines
- The Queensland Government announce an $18.8 billion dollar investment into the State’s overall transport infrastructure in the next 4 years (covering roads, rail, marine, public transport and active transport infrastructure)
- Brisbane’s mega casino approved for development includes 5 hotels and 50 restaurants creating 3,000 new jobs during construction and 8,000 permanent jobs after that
Overview of Brisbane
South East Queensland is experiencing the largest Infrastructure public investment in Australian History.
$134 Billion Infrastructure Spend.
Employment Market | Economy
Did you know that in Brisbane alone another 98,840 new jobs are expected to be created between now and 2031! White collar employment growth is expected to drive residential demand in inner Brisbane.
South East Queensland region will produce over 200,000 new jobs by 2031.
Brisbane has a low vacancy rate of only 2.2% over past 4 years with demand for rental dwellings on the rise. Rental yields sitting on average at 5%
Brisbane is Australia’s New World City with Brisbane rapidly emerging as the city of choice of major companies and new residents based on a thriving economy which is diversified and sustainable rapidly expanding to be worth $135 Billion Dollars representing 48% of QLD’s economic output.
The economy is projected to grow to be worth over $217 Billion by 2031. Brisbane is strategically located as a gateway for trade with Asia further boosting economic growth and cultural exchange.
Being economically resilient yet well connected to global markets Brisbane has strength in key industries such as mining, construction, coal seam gas and infrastructure. The average income forecast per person in Brisbane by 2031 is $75,000.
There has been a 66% increase in median total personal income per week since 2001.
Brisbane has a vision to be regarded as a top ten lifestyle city and global hub for resource and related service industry businesses. With its airport being serviced by 33 airlines and located only 20 minutes from the CBD managing in excess of 21 million passengers a year, Brisbane is on track to achieving its goal.
Residents love Brisbane for its 1,820 parks, subtropical sunshine, only one hour from Gold Coast, Sunshine Coast or Moreton Bay getting away is easy.
Tourism plays a major role in the SEQ economy having received 6,123,000 total visitors bringing an expenditure of $4.73 Billion Dollars from countries such as New Zealand, China, UK, USA, Germany and Singapore being most prevalent.
Another major economic drawcard is the export of education from Brisbane with over 120,000 higher education students within 3km of Brisbane CBD generating $5.1 Billion Dollars annually for the city’s economy and supporting more than 20,000 jobs. Each international student contributes around $70,000 per annum to the Brisbane Economy with around 65% going towards living expenses.
Australia is adding 400,000 people to our continent every 12 months. Immigration to Australia has increased to 240,000 pa nationally and the balance natural growth.
400,000 people require 180,000 dwellings!
The Queensland Office of Economic and Statistical Research has projected the population within the Brisbane Local Government Area (LGA) to increase from 1.11 million residents in 2013 to approximately 1.38 million by 2031.
This strong population growth equates to a population increase of more than 247,000 new residents by 2031 all requiring a dwelling over their heads. Majority wanting to reside in the inner city suburbs placing further increased demand on these suburbs.
This growth equates to around 14,000 pa in the LGA alone requiring 5,289 new dwellings pa up until 2031 to accommodate this planned for growth. This equates to approximately 84,624 new dwellings in Inner Brisbane LGA.
Highest projected growth is between now and 2021 meaning 14,000 new residents pa with 20,000 new residents between 2003 & 2013 exceeding expectation on projected growth.
Growth is coming from Interstate migration and from international migrants into Australia and current trend demonstrating that international migration is now exceeding interstate migration. Natural increase equates to 49% followed by net overseas migration of 43% in Queensland on the back of rising employment opportunities and a strong growth in the education sector.
This shift in demographics will influence demand and supply patterns which will differ from previous decades, Brisbane and SEQ is changing in demographic and thus in demand for type of dwellings required to meet their needs.
There is a demographic shift towards apartments with Gen Y being 33% of the population having a strong shift towards apartments. Gen Y will thus be a driving force behind Brisbane’s apartment markets as they continue to form independent households, advance in their earning potential and play a bigger role as apartment renters and purchasers.
Internationals demand is for inner city living, being close to where they work creating a strong demand for inner city rentals significantly benefiting the local residential market.
Baby boomers are equity rich and looking to downsize into low maintenance lock up and go dwellings and represent a large proportion of buyers in Brisbane being the wealthiest demographic group.
Apartment Market Drivers
Population pressures and land scarcity within the metropolitan area has driven land values to a position of being unaffordable for the majority of residents wanting to live here.
The apartment vs house affordability gap continues to widen and is a major driver behind the shift towards alternative dwellings being townhouses and apartments (primarily apartments) and thus the infill development across the country.
Apartment prices are relatively affordable in comparison to increasing median house values compounded by increasing population growth and land scarcity, thus promoting the development of infill or density development as alternative dwelling options.
Apartment sales now represent 37% of all residential transactions and is a growing commodity linked to a shift in demographics, centralised employment opportunities, housing affordability and improved infrastructure amenities – driving the demand for centrally located accommodation and low maintenance dwellings.
The need to be centrally located to employment nodes, public transport, walking distance and access to key infrastructure is a strong driver placing further pressure on demand for inner city lifestyle options.
Based on current trends, apartment transactions will represent the majority of transactions by 2031 with Brisbane emerging to resemble Sydney and Melbourne as apartment cities.
Supply of infill land is scarce causing a lag between demand and supply could place increased pricing pressure on supply of current developments. The current median price for apartments in Brisbane LGA is $420k over September 2014 quarter with higher values recorded in inner Brisbane.
According to RP Data Suburb Scorecard for September 2014, the Brisbane apartment market has shown strength in key investment criteria. Brisbane is now the most affordable major capital city for investment, prompting interstate investors to invest in Brisbane currently demonstrating the highest capital city return of 5.1% for gross rental yield. A valid indicator for investor demand in Brisbane.
Brisbane apartments are $30,000 and $155,000 more affordable than Melbourne and Sydney respectively with all 3 capital cities showing median price growth through and up to 2015.
Affordability is not the only driving factor in the apartment market, major contributing factors supporting demand is the shifting age demographic and emphasis placed on urbanization, work life balance and proximity to amenity and infrastructure being key to current and future demand on the apartment market. ie a desire for accommodation which maximises quality of life while minimising the cost of living.
Investors are in a prime position to seek positively geared investments due to increased demand for rental dwellings in inner Brisbane returning 5.1% gross rental yields and a lagging supply. Brisbane provides more affordable price points and a superior rental yield to Sydney and Melbourne.
Limited supply coupled with strong demand has driven increased competition for rental dwellings leading to ongoing rental growth. One bed apartments over the past 5 years have shown an average of 4.6% rental growth pa.
Inner Brisbane has shown ongoing rental growth and a rental premium over the wider Brisbane LGA.
Where to invest in Brisbane
Not all property is Investment Grade or makes for a sound and astute investment vehicle. One has to understand the underlying fundamentals and future demographics and investment into the area in determining the location.
Followed by the type of dwelling, number of units within the development and coming out of the ground in the area, who the developer and builder is, current rental demand plus a host of other factors in doing your own due diligence.
Demographer Bernard Salt recent paper stated “the next best thing” over the coming decade is Brisbane’s middle suburbia located 6km – 20km from Brisbane CBD. Attracting 12,000 people to this ring each year. The past 20 years has ensured increase in density up to 5km, the next decade will focus on 6km outwards with the intensification of middle suburbia.
Mr Salt speaking at a real estate industry conference at the initiative of News Corp that the outlook was “very strong” for Queensland.
Why properT network
With access to the majority of off the plan apartments, townhouses, units and apartments in Brisbane, we at properT network will work with you helping you source a selection of properties that best match your investment strategy and preferences saving you time, stress and probably money in doing it yourself.
Share with us your goals and preferred investment strategy / requirements and we will point you in the right direction by providing you with a selection of properties plus market reports and our due diligence as to ‘why these’ properties. You undertake your own due diligence and if your research and our research ticks the same boxes come to an informed decision. It is that simple …
Queensland Transport and Road Investment Program (QTRIP) $19bn announcement article here
Brisbane market comment July 2015 here