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16 September 2014

Brisbane Part I: As we gear up for a new Brisbane investment opportunity, we will be taking a closer look at this exciting city in a three-part Market Update series

We start the series by delving into the economic strength of one of the world’s fastest-growing city markets, looking at its value, projections, infrastructure and future.

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Billed as “Australia’s new world city”, Brisbane is living up to the hype that comes with being forecast as the world’s fastest growing mature city through 2020, ahead of the likes of Hong Kong and Singapore. That prediction was put forward by Jones Lang LaSalle in 2012 in their A New World of Cities report, following a decade in which the Queensland capital has seen average annual GDP growth of 4.7%. 

After looking at the investment currently entering Brisbane, it should come as little surprise to hear that the forecasts for the city’s future expect improvement even on this successful track record, with the local economy firmly anticipated to grow by 5% every year through the end of the decade.

 The Brisbane economy is currently valued at AUD136 billion and is the major driver of the Queensland economy, accounting for nearly half of all economic activity in the state, and 9% of GDP across the nation. By 2031, Brisbane is expected to have seen very strong and consistent economic growth to drive its value up to some AUD217 billion, which would represent growth of 62.7%.

It is predicted that all of this growth will translate into 443,000 new jobs by 2013, including the creation of 200,000 professional and managerial roles by 2021.

Some 25% of Brisbane’s Gross Regional Product (GRP) comes out of the still booming Australian resources sector, with the industry contributing over AUD30 billion to the Greater Brisbane economy in 2011/12. The city is home to 178 mining and energy regional headquarters, and the sector is set for further expansion, with AUD164 billion in large projects currently in the proposal, planning or construction phases of development across the state. 

A particular advantage of geography will also have a strong influence on Brisbane growth over the medium-to-long term; the city is the closest Australian state capital to the country’s three largest export destinations. The combined markets of North, East and Southeast Asia see 71% of all Australian exports, and their relative position combined with a strong regional freight network that is increasingly leveraging the city’s deep-water access port saw the city achieve a 4.5% average annual increase in export volumes between 2002 and 2012 that pushed the amount of Australia’s container trade that comes out of Brisbane up to 13.6%. 

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The main focus of national and international trade in Brisbane is at Australia TradeCoast, the country’s fastest growing trade and industry region. Located just six kilometres outside of the Brisbane CBD, this is the location of the Port of Brisbane and Brisbane Airport, as well as surrounding industrial precincts that are home to 1,500 businesses and some 60,000 employees – a figure expected to grow to 110,000 by 2026. The impact of the area shouldn’t be understated; Australia TradeCoast is responsible for adding AUD9.4 billion to the Queensland economy.

Back within the city limits, Newstead is particularly notable as a growing industrial and business hub for Brisbane. Centred around the massive Newstead Riverpark regeneration masterplan, this new employment node is now home to more than 4.7 million square feet of office space and 44,000 workers. Already under construction are more than half a million more square feet of additional office space, while current proposals would add a further 3.23 million square feet – altogether enough to house 30,000 new workers.

A number of major companies such as the Bank of Queensland, Energex and Fujitsu have already moved to the area, with many more expected to follow over the next few years as the project progresses. This economic migration is already seeing the Newstead catchment area add 777 new jobs per annum, while an additional 4,409 are being added within a two kilometer radius each year.

It’s not just money flowing into Brisbane; people are heading for the city in droves. Population growth was at 2.4% per annum over the five years to 2012, and this surge in Brisbane residents is expected to continue far into the twenty-first century – the city’s population is forecast to rise by 34.2% by 2031.

A large proportion of this migration is international, with groups from the UK, South Africa and China most heavily represented, although an increasing downsizing trend among the baby-boomer generation is seeing a high number of Australians contribute to the migration figures as they look to make the move to a lower maintenance apartment lifestyle.

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Local government is ahead of this expected growth, with Australia’s biggest suite of urban road projects already having a positive effect on the city’s infrastructure. Known as TransApex, the city’s plan to both improve connectivity and divert unnecessary traffic from central areas to improve Central Brisbane liveability is already well underway.

This transport masterplan includes the already completed AUD328 million Go Between Bridge that crosses the Brisbane River in the inner-city, the enormous AUD3.2 billion Clem Jones Tunnel and the AUD4.8 billion Airport Link, a tunnel connecting Brisbane Airport to the city’s CBD. Due to open later this year is the Legacy Way, another road tunnel that is expected to route 32,400 vehicles a day, and a proposed link to the Western Freeway dubbed the East-West Link.

Beyond this, Southeast Queensland also boasts some AUD134 billion in committed infrastructure projects due to complete by 2031, including the recently announced Underground Busway and Train (UBAT) tunnel. This innovative double-decker transport system will involve the boring of the widest tunnel in Australia to house 5.7 kilometres of train lines and bus roads that will link north and south districts of the city, from Dutton Park to Spring Park, the district adjacent to Fortitude Valley and Newstead. The line will run under the Brisbane River and through the CBD, where there will be two new custom-designed stations built for the service.

While attention on the city seems to be increasing with every passing month, Brisbane for the moment remains something of an under-the-radar destination when it comes to international real estate investors. We think the city’s economic strength and potential present an excellent opportunity as an investment market.

We’ll soon be launching a new project in the city in an area we think has everything a property investor should be looking for when it comes to assessing a new proposition. Before then, don’t miss our follow up article that will take a closer look at the city’s real estate market to see which districts hold the most potential for investors.

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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