Brisbane’s growth spurt will outpace the rest of world

As Australia’s resources boom puts Brisbane on the map and sees demand for Queensland based labour intensify, it’s hardly surprising that the Sunshine State’s capital is set for rapid expansion between now and 2020.

The question is; what will it mean for the local property market, which has famously had its fair share of ups and downs in recent times?

According to an article in the Brisbane Times, market analysts Jones Lang LaSalle ranked Brisbane number one for expected gross domestic product (GDP) growth over the next 8 years in their study, A New World of Cities: Redefining the Real Estate Investment Map.

Only one other Australian city got a gander on the list – made up of cities with a “mature property market” and a population over 1 million – and that was Perth at number eight.

Considering sixteen of the top 20 cities were scattered across North America, the fact that Brisbane took top honours is a pretty remarkable effort and should bode well for residential property investors into the future.

But that would come as little surprise to savvy investors who already recognise how significant the mining boom up north will be for Queensland’s overall future economic health.

JLL Brisbane-based research and consulting director Leigh Warner said the primary reason for Brisbane coming in at number one in the study was due to the strength of the state’s resources sector; with Perth making the top ten because of a similar boom occurring in the west.

“Not only is it creating investment that drives GDP, but it’s also driving population growth in both those markets, which is the ultimate driver of property demand across all property sectors,” Mr Warner said.

He says the report’s implication; that Brisbane’s housing market is set for a very healthy future in terms of demand from a growing (and cashed up) population, isn’t reflected in the current low level of local consumer confidence.

“I’m certainly not surprised, but I guess it is a surprise to some when we’re seemingly doing so poorly in the residential property market at the moment and other visible aspects, like our retail property market” Mr Warner said.

According to Mr Warner, jobs creation on the back of the resources boom is providing a strong foundation for the office sector in Brisbane right now and he adds; “Hopefully that will flow through to broader jobs growth and lift other areas of the economy like retail, which is suffering at the moment.”

While Mr Warner concedes that emerging cities in the likes of China and India would blitz the field if they were included in the JLL study, he says they were purposefully left off of the list because of the inherent risk associated with investing in their fledgling real estate markets.

“For property investors, a lot of them don’t want the direct exposure to an emerging market because there’s fundamental risks associated with investing in countries where there’s not even the basic security of property rights and you’re at the whim of an unpredictable central government with a lot of power,” Mr Warner said.

“So looking at where to invest – and this is something that a lot of investors coming through our office are doing – they’re looking for the markets that have the exposure to those (emerging) markets, like Perth and Brisbane.”

Mr Warner says the biggest question mark, in terms of how well Brisbane’s local economy and housing markets will fare as a result of this rapid growth, is around things like infrastructure and accommodation delivery for a large and growing population.

“If we don’t keep up in terms of infrastructure delivery and accommodating a large population, then there is a real risk that the cost of living would go up quite significantly,” he said.

“But in the end, it all comes down to how well we manage it. There’s also magnificent opportunities in how we capitalise in terms of state revenue from this mining boom, so if we use that wisely and spend it wisely then we can all benefit from it.”

It will be interesting to see how well this predicted economic and population growth is managed by Brisbane’s state government, but if the city plays its cards right the local housing market could well be set to boom between now and 2020 in a big way!

 

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Brisbane’s growth spurt will outpace the rest of world' have 1 comment

  1. Avatar for Property Update

    May 12, 2012 Claude Fullinfaw

    I agree with Michael that Brisbane is posed for massive growth and the people who are open to taking calculated risk are the ones who will profit the most. Just look at the infra structure that is going up all around Brisbane. This throws weight to Micheal’s advice that Brisbane is the next big thing in property. With millions or billions of dollars put into the road works right now by the State and Central Govt, its just common sense to know that Queensland is on the tipping point of massive growth. I remember migrating to Brisbane in 1984 when properties around the inner city suburb of Paddington were just 35,000 AUD back then. Today just 28 years on in 2012 the same property is worth well over 800K. Look out Australia, Brisbane will be the best city to live in soon. In fact its is right now.

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