ALL EYES FACE NORTH: Why Invest in Queensland
Date Listed: 10 June 2015
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The future of real estate is looking very bright in the Sunshine State. Brisbane and the Gold Coast – the jewels in Queensland’s glittering crown – are together considered among the most desirable places in Australia to live. They also represent a wealth of opportunity for the savvy property investor, with recent data predicting these markets will experience boom conditions within the next three to five years.
With an abundance of affordable, attractive new property, a state focus on infrastructure to accommodate strong population growth, and a stunning natural environment, it is little wonder Queensland’s capital city was named the fastest growing mature economy in the world.
• Brisbane is world’s fastest growing mature city.
• Gold Coast among world’s most popular destinations.
• Fast growing populations and diverse economies.
Brisbane is a thriving multicultural hub of more than 2.2 million people, ranked as Australia’s third largest city and boasting the strongest rate of population growth of the nation’s capital cities. Over five years to 2014, Brisbane recorded population growth of 226 190, with the Bureau of Statistics projecting this to continue at an annual rate of 2.1 per cent to 2030.
With its progressive outlook and proximity to Asia, Brisbane’s leading industries include mining and resources, healthcare and science, creative industries, and information and communications technology.
The Gold Coast, the nation’s largest non-capital city, is also one of Australia’s fastest growing communities, with a population expected to exceed 700 000 residents by 2021. Famed for its stunning beaches, lush hinterlands and 287 days of sunshine per year, the Gold Coast attracts 12 million visitors each year. Beyond its stand-out tourism industry, the Gold Coast is diversifying into education, sports, the arts, manufacturing and more.
With a forward focus on cleaner gas exports, and shift away from traditional mining industries, Queensland is poised to reap the benefits of improved property and construction activity, with several major residential developments and infrastructure projects planned. This renewed growth will further stimulate the economy and create new jobs.
On the back of property investment and the state’s strong resources sector, Brisbane’s economy will grow faster than any other mature world city from 2012 to 2020, according to a study by market analysts, Jones Lang La Salle.
THE ONES TO WATCH
• Brisbane and Gold Coast to experience dramatic growth.
• Fast-moving property market with increased house sales.
• Significant infrastructure and housing development.
With Australia’s major property markets of Sydney and Melbourne close to overheating, Brisbane is poised as the market set to experience most dramatic growth in 2015.
Surging prices in the two largest residential markets throughout 2014 saw investors turn towards attractive and more affordable property in Brisbane and the Gold Coast, with analysts expecting property values to at least double in growth compared to Sydney.
Data from the Real Estate Institute of Queensland indicates investors are becoming quick to snap up their slice of real estate paradise, with the average number of days on the market for residential sales falling from 76 to 56 in Brisbane. Last year, Brisbane recorded 39 168 house sales, with a rise in volume of 9.43 per cent for house sales, and 6.81 per cent for unit sales.
Having weathered the fallout from the Global Financial Crisis, the holiday mecca of the Gold Coast is likewise poised to boom, attracting major foreign investment in both the residential and commercial sectors. The introduction of direct flights from China to the Gold Coast will continue to drive particular interest from the growth market of China.
Over the next five years, a raft of major projects, including Gold Coast’s $1 billion Jewel resort development, and the multi-million redevelopment of Brisbane’s Queen’s Wharf, will revitalise these most desirable Queensland cities as magnets for future fortunes.
• Affordable and attractive property.
• Abundance of quality new housing developments.
• Opportunities for local and foreign investors alike.
Brisbane and the Gold Coast are fast becoming most appealing options for buyers who are otherwise priced out of the market in the southern capital cities.
These investors would be wise to consider the Queensland cities, where median house price values in Brisbane were $416 500 less than in Sydney in 2014 (median unit value $235 500 less than Sydney), and renewed activity by developers has fuelled a strong supply of both new and established property.
With the Reserve Bank of Australia slashing interest rates to historic lows in the first half of 2015, investors including first-home buyers now have excellent prospects of obtaining finance.
Local investors, as well as foreign developers, are moving to take advantage of the benefits Queensland’s cities have to offer. For smaller foreign developers in particular, lower initial investment for quality sites is a particular draw, and is driving increased construction expected over the next five years.
RETURN ON INVESTMENT
• Rental yield above national average.
• High demand for rental accommodation.
• Strong capital value growth.
Investors can expect excellent returns on rental properties, with an average rental yield of 4.85 per cent for houses in Brisbane, and 5.32 per cent for units [Residex]. These median figures compare favourably with the national average rental yield of 4.60 per cent (houses) and 4.87 per cent (units). Brisbane’s median rent last year was $450 per week for houses, and $375 for units.
Investors are reaping the benefits of the region’s swift population growth causing a shortage of available rental properties (vacancy rates sit around 2.1 per cent, according to REIQ – well below market equilibrium of 3 per cent).
Yet with capital values for Brisbane houses recorded at 6.05 per cent for final quarter last year and expected to continue to climb, forecasters predict gross rental yields to experience slower growth as developers move to provide more residential property in the CBD area.
After ten years of limited developer activity, an expected medium term flurry of new residential supply will drive growth in capital value, with Brisbane now seen as a viable option by both local and foreign investors looking to maximize returns.
INVESTMENT IN INFRASTRUCTURE
• $134.2 billion spending on public infrastructure.
• Major public transport overhauls for Brisbane and Gold Coast.
• Event city Gold Coast hosts Commonwealth Games in 2018.
Queensland’s government is committed to meeting the demands of its growing population with delivery of well-planned infrastructure to facilitate amenity of life. In April 2014, the state announced its projected spending on public infrastructure of $134.2 billion – more than any of Australia’s other states.
Brisbane’s public transport network is set for major expansion through the CBD and inner city suburbs with the Bus and Train (BaT) project, slated to be completed by 2021. The project will comprise three new underground stations, along a double-decked tunnel running beneath the Brisbane River and CBD, from Spring Hill to Dutton Park. The stations, servicing Roma Street, George Street, and Woolloongabba, will each house integrated platforms for rail and bus.
The Gold Coast’s long-awaited $1 billion light rail system was also recently unveiled. The G:Link tram network links 16 stations, with a line running from the modern Gold Coast University to South Broadbeach. The light rail project, envisaged to provide the city with a sustainable alternative to driving, will also service several Commonwealth Games venues, as the Gold Coast draws on its history as an events city to host the 2018 Games.
Three new sporting venues, and major upgrades to eight others, will be completed ahead of the Games – the largest event to be held in Australia this decade – representing $320 million investment in sport and community infrastructure. An economic injection of $2 billion is expected to result from the international event.
Among several other significant developments planned for the region are the Chinese-funded $1 billion Jewel residential and resort project, to be completed at Gold Coast’s Broadbeach by 2018, and Brisbane’s Queen’s Wharf, a multi-million dollar resort project to comprise a luxury hotel, retail and recreation areas, convention centre and public spaces.
• World-class cities with stunning natural surrounds.
• Beautiful beaches and public spaces foster relaxed pace of life.
• Convenience of city with focus on families and recreation.
Brisbane is a world-class city, boasting an eclectic mix of contemporary buildings and historical architecture flanked by the picturesque Brisbane River. Yet while undeniably a national hub of business with a thriving commercial centre, Brisbane is a capital city with a difference.
Here, as in the southern Queensland city of the Gold Coast, importance is equally afforded to lifestyle; life proceeds at a more relaxed pace than the relentless march of Sydney and Melbourne.
Residents and visitors alike enjoy an outdoor lifestyle, facilitated by beautiful waterways including sparkling beaches, vast rivers and tranquil creeks, and large expanses of public spaces including national parks and rainforests.
Brisbane boasts more than 1820 parks and reserves, while the pristine beaches of the Gold Coast are world-renowned for their sweeping stretch of white sand and first-class surf breaks.