16 February 2015

A key neighbourhood in Brisbane’s Inner East is about to see changes that will further enhance its already outstanding investment prospects

We’ve seen some great success in connecting investors with developments in Brisbane over the past eighteen months, with the districts of Fortitude Valley and Newstead being our main focus to date.

South of the river in the Inner East district, our investment team have unearthed another strong area for investors: Cannon Hill. It’s a part of Brisbane that offers residents a fantastic quality of life, good transport links, proximity to employment hubs, and enviable retail, leisure and education facilities.

Booming Brisbane

There’s a huge amount of investment flowing into Brisbane right now, and this is powering growth in employment sectors around the city. This bodes exceptionally well for the performance of the local residential market.

One of the key investments on its way into Brisbane is the Australia Trade Coast (ATC) scheme. This AUD6 billion programme incorporates the Port of Brisbane and Brisbane Airport and the industrial areas that surround them. Its 8,000 hectares represents the fastest-growing industry and commercial precinct in Australia and is driving massive employment growth.

A further AUD2.12 billion has been committed to the Gateway Motorway upgrade scheme. This is a key part of the Brisbane road network that provides vital connectivity to the Port of Brisbane and Brisbane Airport.

The ATC currently employs some 60,000 Brisbane workers, but with much more development and investment on the way this figure is expected to reach 110,000 by 2031, representing growth of 83.3%.

Brisbane’s Inner City is also thriving, with over 100,000 new jobs expected to be created by 2031 according to Urbis, representing growth of over 50%. You can read more about the overall economic and business strength that is fuelling this growth in Brisbane in our Market Update series on the city from late last year.

Close up on Cannon Hill

Cannon Hill occupies an excellent position within Brisbane. Situated between the inner city centre area and the huge growth around the ATC scheme to the east, Cannon Hill is a suburb that’s perfectly placed for commuters to some of the city’s most vital employment hubs.

Employment growth within the local area is also strong, with a number of large schemes driving business activity and job increases.

Bringing more of both leisure and employment opportunities to the area around Cannon Hill is the AUD600 million East Village, a new master-planned urban village that will deliver some 17,000 square metres of new retail, commercial and residential space around a central park precinct.

More commercially focused is the AUD90 million Southgate Corporate Park, a new business precinct for this part of Brisbane. Now completed, the park will deliver 60,000 square metres of space ready to be filled by businesses in the city’s burgeoning high-tech sector.

These sorts of developments are behind the excellent job growth forecasts for the Cannon Hill catchment area, with an increase of almost 21.9% forecast through to 2031, according to Urbis. Neighbouring Inner East districts such as Morningside and Carina are also expected to show strong growth over this period, with forecasts of 29.1% and 27.7% respectively. This puts Cannon Hill in a pivotal position in terms of business and employment growth across the Inner East.

Rezoning to enhance Cannon Hill

A key change for the coming years that will set Cannon Hill apart from other Inner East districts is the recently approved residential zoning changes that will redefine residential construction in the area and create some interesting opportunities for investors.

You can take a closer look at what this will mean for the area with our latest infographic, which offers a visualisation of the coming changes. These changes will see a small area of new medium density residential developments surrounded by new commercial projects that will deliver key amenities to local homebuyers and renters, such as bars, restaurants and coffee shops.

Cannon Hill Real Estate

Cannon Hill has seen steady levels of population growth over the past decade, with estimates from the OESR projecting a consistent increase through to 2036. This would represent 50,000 new residents, although many commentators expect the area to outperform this conservative level of growth.

The area is increasingly home to a young demographic of buyers and renters. The median age of neighbourhood residents is just 35, which is significantly lower than the citywide average and represents a strong Gen X and Gen Y demographic foothold in the area.

Demographic shifts over the period of the last census (2001-2011) show the area’s mature demographic decreasing as representation among the younger age brackets grows. Residents aged 25 to 34 now make up 20.2% of the population, which is significantly above the citywide average.

This demographic is a key market for low-maintenance, modern apartment living, and while this group is increasingly keen on migrating to the area given the ongoing investment in local infrastructure and amenities, Cannon Hill suffers a serious shortfall of this type of housing – 88.6% of Cannon Hill residents currently live in low-density, detached suburban housing.

The new residential zoning changes will go some way to redressing this balance, although projects in the newly allocated zones for medium-density housing will remain someway short of satiating demand entirely.

This ongoing supply-demand imbalance has driven consistent price growth for Cannon Hill apartments over the past decade, with the market having recorded average growth of 5.7% per annum, with this figure rising to 7.2% across the wider Cannon Hill catchment area.

This impressive growth has been mirrored on the local rental market, with average rents for two-bedroom apartments having risen 5.9% per annum over the past ten years while one-bed apartments have seen annual growth of 7.2%.

A particular effect of the lack of new medium-density developments in the area is that new or near-new apartment rentals attract a significant market premium. The average rental rate across all two-bedroom apartments in Cannon Hill is currently AUD380 per week, while the average rate for newer apartments is 19.7% higher at AUD455 per week.

A large number of the local public and private investment works will complete alongside the new residential developments that will soon be available to investors for off-plan purchase. This timing will be very beneficial for investors, who will be presenting a very much improved Cannon Hill to potential buyers and tenants by the time their units are ready to hit the market.

The fuse has already been lit and Cannon Hill is loaded with investment potential, so now is an excellent time to be entering the Cannon Hill market from a property investment perspective.  

IP Global

Written by IP Global

IP Global’s full-service approach is built on extensive market research and analysis combined with a significant financial commitment to every investment we offer. We are able to manage the entire investment process end-to-end, from sourcing, financing, and management to those all important exit strategies, making investment in real estate as straightforward as investing in more traditional asset classes. Our expertise, experience and strong record have produced over USD2.8 billion in international real estate investments in over 30 markets worldwide.

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