Foundations set for sustained resurgence in investor activity in a 21st Century Sunshine State Capital
BY MARK COURTNEY, GENERAL MANAGER – QUEENSLAND, MACROPLAN
Brisbane is the capital of Queensland (QLD), often referred to as the Sunshine State. Brisbane is a city of 2.5 million, located in the South East Queensland (SEQ) region with a population of 3.6 million. It is experiencing an unprecedented phase of investment and development. Several significant projects have commenced construction while others have just been completed. 2020 sees several other transformative projects about to commence construction.
Most of the projects will be completed over the next five years. The timing of these projects is welcome as property investor activity in the QLD and Australian housing market has been generally falling since early 2015, after macro-prudential policies were implemented in Australian mortgage lending.
Despite a brief improvement in 2016, investor participation has been consistently trending lower. The latest Australian Bureau of Statistics (ABS) housing finance data shows the portion of housing finance for the purchase of property lent to investors fell to a fresh record low of 23.5% in August. This is significantly lower than the decade average of 36.1%.
The falling share of property investor finance has been brought about by: temporary policies implemented between 2014 and 2019, which limited lending products favoured by investors; mortgage rate premiums for investor loans; less appetite for high loan to value ratio (LVR) and interest only lending from the banking sector; falling confidence around potential for capital gains; excessively high levels of housing construction which have softened rental returns; and COVID 19 which has negatively impacted the rental market, thereby impacting returns.
By Mark Courtney
Comparsion between Australia and Queensland Investor Share
Source: ABS Macroplan
In QLD, investor participation in the dwelling market shifted significantly lower over 2017, and again with the onset of the COVID-19 pandemic. Inner Brisbane has seen high levels of unit development, which has placed downward pressure on rents over time. Since the onset of Stage 2 pandemic restrictions in March, Inner Brisbane unit rents have declined a further -4.8%.
Despite a long period of high supply and subdued investor participation, gross rental yields across QLD are far higher than the more populous states of NSW and VIC, largely due to relatively low dwelling values. A typical dwelling value in September was around $505,000 across Brisbane, and $388,000 across regional QLD. Gross rental yields across the state were 4.8% in September, down from 5.0%a year ago.
Each of these projects will have their own impact on Brisbane’s and SEQ’s economy through their construction and operational phases. All combined they will make anotable contribution to the total amenity package of SEQ for residents and visitors.
The following provides a concise outline of each of these major projects.
Queen’s Wharf Precinct
Queen’s Wharf is a $3.6 billion-dollar integrated casino resort precinct which includes 50 new bars, cafes and restaurants, a public Skydeck known as the arc which straddles four buildings as well as urban fabric refurbishments to the North Bank of the river. The project also involves the transformation of the current heritage treasury building into a retail centre and a new pedestrian bridge that links to South Bank.
Cross River Rail
Cross River Rail is QLD’s largest infrastructure project to date, reported to be around $6.8 billion. The project was created to fix a severe rail network capacity issue. With only one inner-city rail river crossing, the network is expected to be at capacity shortly without the new line built. Cross River Rail is a 10.2km rail line from DuttonPark to Bowen Hills, which includes 5.9 km of twin tunnels under the Brisbane River and Brisbane CBD. The project includes the construction of four new underground stations at Boggo Road, Woolloongabba, Albert Street, and Roma Street. It will also deliver upgrades to eight above-ground stations including: Salisbury, Rocklea, Moorooka, Yeerongpilly, Yeronga, Fairfield, Dutton Park, and Exhibition. The project is now fully under construction with TunnelBoring Machines expected in the ground commencing tunneling towards the end of this year.
Woolloongabba Station Precinct
The Woolloongabba Station Precinct is a large precinct masterplan thanks to the broader Cross River Rail project which involves the refurbishment of the Gabba stadium, new linkages and walkways to a mixed-use precinct which surrounds the new station.
The Brisbane Metro was initially proposed by the Brisbane City Council as a subway line which would supersede the Northern and Southern Busways. Although retaining its original name, the project has since been updated to a turn-up-and-go high-frequency busway project which includes 60 new electric bi-articulated buses, upgraded Busway infrastructure and a new underground station
at the Cultural Centre. Reported to be around $944 million, a new busway tunnel will also be dug underneath Adelaide Street connecting to the Central Busway near King George Square underground station. The project was recently approved by the State Government to proceed with preliminary site works now occurring.
Victoria Park Vision
The Victoria Park Vision is a large parkland redevelopment project of the Victoria Park Golf Course. Planned by the Brisbane City Council, the project would be double the size of the City Botanical Gardens and feature suspended canopy walks, kayak and swimming lagoons, wetlands, a giant walk-through butterfly house, a food forest and produce garden, dog water parks, fountains, waterfalls and even an ‘adult playground’.
River Reach Masterplan
The River Reach Masterplan is a 1.2-kilometre waterfront promenade upgrade project along the CBD’s eastern waterfront. Proposed by the Brisbane City Council, the draft plan promotes more green space and trees, public art, decorative lighting, highlighting heritage features and increasing the width of the promenade. The plan also details space for a proposed public riverside lap pool, relocation of the current city cat terminal and integration with the proposed Kangaroo Point green bridge.
In a similar location to the River Reach Masterplan, Dexus has unveiled plans for a $2.1 billion redevelopment of the 31-year-old Eagle Street Pier known as Brisbane Waterfront. The project is reported to provide around 7,900 square metres of open space, with around 3,900 square metres being around the Eagle Street Pier area.
To the south of Brisbane Waterfront, the Brisbane City Council is proposing one of four new cross-river green bridges for Brisbane. The new CBD bridge would link Alice Street to Kangaroo Point and is currently in a business case phase.
Brisbane Cruise Ship Terminal
New Brisbane Airport Runway
The new 3km $1.1 billion Brisbane Airport runway opened in July this year after 8 years of construction. The project created 7,800 jobs and is expected to provide Brisbane with the best runway system in Australia.
Brisbane International Cruise Terminal
The QLD Government-backed Port of Brisbane Cruise Ship Terminal project is complete and is designed to meet high demand for larger ‘mega-ships’. Currently, some of the larger ships owned by Royal Caribbean and Cunarcannot fit into Brisbane’s existing cruise ship terminal aPortside Wharf. The $158 million project was this yearThe Brisbane International Cruise Terminal will have the capacity to cater to the world’s largest cruise ships. The terminal provides access to first-class marine engineering facilities and is capable of welcoming ships up to 270 metres in length.
Developed by Shayher Group, the three-tower project which takes up a CBD grid includes the newly completed W Hotel and 300 George commercial office tower The remaining tower ‘The One Residences’ is nearing completion. Currently, at level 64, the tower has 18 levels remaining until it tops out.
Howard Smith Wharves
443 Queen Street
Developed by Cbus Property, 443 Queen Street which is currently under construction is a significant 51 storey subtropical designed residential tower. Designed by Singapore’s WOHA Architects and Brisbane architecture firm Architectus, the project is set to become an Australian first for ‘breathable architecture’, designed specifically for the Brisbane climate.
Developed by Sekisui House, West Village is a large mixed-use urban renewal redevelopment located in Brisbane’s West End. With the first few residential stages now completed, along with an urban common, the significant retail portion of the development is now under construction.
New Performing Arts Venue (NPAV)
The QLD Government-funded NPAV is a new $150 million world-class 1,500 seat theatre facility which is being built as part of the Queensland Performing Arts Centre (QPAC). Once completed, QPAC will become the largest performing arts centre in Australia and is expected to deliver capacity for an extra 260 performances annually. The new theatre has started construction and is expected to be completed by 2022
And an Olympics Bid
In addition to these projects, QLD Premier Annastacia Palaszczuk announced late in 2019 that Qld would bid to host the Olympic Games with the State becoming the first location to announce it would bid for the Games,
under new rules that allow a region — rather than a city — to host the event with SEQ – in Brisbane, the Gol Coast and Sunshine Coast as well as other regional areas.
The QLD Government has indicated it would generate 130,000 jobs in the preparation stage and delivery of the international sporting event. Ms Palaszczuk suggested it could deliver $7.4 billion in economic benefits for the state, with 3.2 billion people forecast to tune in.
The bid had been given the official backing of the Australian Olympic Commission (AOC) in January and is now in the phase of “continuous dialogue” with the International Olympic Committee’s (IOC) Future Host Commission.
Prior to the pandemic, planning for venues, mostly already existing or temporary, and planning for athletes’ villages were progressing well and the necessary buy-in of local, state, and national government was largely in place. It is expected that as COVID 19 restrictions ease, that planning will resume.
In addition to the delivery of the projects outlined above, an Olympics could provide an economic catalyst to assist in lifting QLD and Australia out of the post-coronavirus downturn. It is highly conceivable though, that regardless of the outcome of the Olympics bid, that this historic level of investment in major sport, transport, residential, commercial, entertainment and leisure projects and assets will set the foundations for a strong and sustained resurgence in investor activity in a modernised 21st century Brisbane and SEQ over the next decade.