Infrastructure Development

One of the fundamental factors we look for at Hotspotting when assessing locations is infrastructure.

 

We want to know that a location has good basic infrastructure – schools, shops, government services, public transport and recreation amenities.

 

If there is also a major factor in the market like a university campus or a hospital, this can be significant as a big generator of demand for real estate.

 

In addition is good existing infrastructure, one of the big game-changers we look for is major new infrastructure under construction or in planning.

 

A $500 million or $1 billion infrastructure project is a big generator of economic activity and employment in an area while under construction – and, with certain types of infrastructure, when completed and operational. And this means strong demand for dwellings, both to buy and to rent.

 

This is one of key factors that has kept many property markets across Australia busy and vibrant during times of high inflation, high interest rates and economic uncertainty.

 

And here’s the key factor: the level of infrastructure investment currently occurring in the nation is unprecedented, in my experience, which is more than 40 years researching and writing about real estate issues.

 

Projects under way or completed in 2024 across Australia totalled well over $500 billion, with another $370 billion worth in advanced stages of planning.

 

These projects include hospitals, universities, airports, motorways, rail links, ship-building enterprises and major energy projects like wind and solar farms. 

 

Partly at least, the level of construction of big infrastructure developments was inspired by the economic damage caused by the Covid lockdown periods and a desire by governments to bring on big ticket projects to generate economic activity and jobs to avoid recession.

 

These developments can have huge impacts on property markets, because they create demand for workers and for businesses that provide products and services. 

 

And the impacts can be long-lasting. 

 

If a new $1 billion hospital is proposed, it may create 3,000 or 4,000 jobs in construction – but have even bigger impact after it is completed, because there are often as many as 6,000 jobs in the operation of this major facility.

 

I recently conducted an analysis of infrastructure investment in the capital cities and regional areas of Australia on a per capita basis – in other words, the level of spending relative to the population of the city or regional jurisdiction.

 

And the places with the biggest impacts from current and planned infrastructure were Darwin, Brisbane, Adelaide and Melbourne among the capital cities, and the regional areas of Queensland and South Australia.

Some of the big ticket infrastructure projects currently happening, with direct and indirect impacts on real estate markets are …

 

the $31 billion Inland Rail Link, which is connecting Melbourne to Brisbane via regional NSW;

 

the new Western Sydney airport, which includes new road and rail links, as well as education, medical and commercial precincts, totalling many tens of billions of dollars in investment; and

 

major new hospital developments in regional cities like Toowoomba, the Gold Coast and Bundaberg in Queensland; Wollongong and the Tweed region in NSW: Albury-Wodonga at the NSW border with Victoria; and several of our capital cities. Many of these hospital projects will each cost over $1 billion and will be massive generators of economic activity and employment, and from that demand for real estate.

 

It's a key factor to look for when considering good places to buy for future capital growth. A location with a big program of infrastructure developments will always have rising prices.