Investor opportunities abound in Western Sydney Aerotropolis: Westpac

Private investment opportunities will abound as Sydney’s new aerotropolis development takes off, but those who want a slice of the action would be wise to start investigating options now.

The Western City & Aerotropolis Authority aims to create 200,000 new jobs across the Western Parkland City, with a particular focus on advanced manufacturing and agribusiness, as well as in education, housing, healthcare and pharmaceuticals.

Central to the development is the creation of a modern, digitised supply chain, which in itself won’t create many jobs, but will provide a vital support network to leverage the opportunities of an airport that operates 24/7.

Early mover investors

The authority is aiming to have the agribusiness and manufacturing precincts up and running by the time the airport opens in December 2026.

Several businesses in those sectors have committed to build facilities in the area, including advanced 3D-printing company GE Additive, Australian vitamin and pharmaceutical maker Vitex, along with the Australian Space Agency and 18 SMEs in aerospace.

Additionally, aerospace company Northrop Grumman has committed to an AUD 50 million investment in an advanced defence electronics maintenance and sustainment centre. Japanese multinationals Mitsubishi Heavy Industries and the Sumitomo Mitsui Financial Group have also agreed to invest in the aerotropolis. The state’s largest wholesale produce market, Sydney Markets, has signed an agreement to expand into the aerotropolis.

And to help supply the skilled workforce needed for many of these businesses and others in the region, the University of Newcastle, University of NSW, University of Wollongong, and Western Sydney University plan to join forces to create a world-class, higher education institution at the aerotropolis.

State and federal governments have committed AUD 20 billion to build Western Sydney’s new airport and all the associated transport infrastructure, yet the NSW government estimates that to build out all of the development required in Western Sydney – the airport and aerotropolis, the transport infrastructure, housing, schools, hospitals and so on – will cost more than AUD 100 billion.

Where opportunities await

The remaining AUD 80 billion will come from the private sector and this presents a huge opportunity for investors, in property, in business, in infrastructure – and even as potential owners of the airport should the government eventually privatise it, says Roddy Adams, Head of Energy, Infrastructure & Resources NSW at Westpac.

Accommodating population growth

A huge amount of investment will be required to house the population of the rapidly growing Western Parkland City, as the government has tagged the region.

In a Westpac-commissioned report titled Western Sydney Infrastructure Projects and Investment Opportunities, The Root Partnership has identified what will need to be built in the two decades to 2036 to accommodate the rapid growth:

Roddy Adams, Head of Energy, Infrastructure & Resources NSW at Westpac, notes that the airport has been structured as a stand-alone corporation, Western Sydney Airport. While nothing has been confirmed, Adams believes the government may put the airport up for sale once it is operating, providing another opportunity for investors in the region.

“It would make sense for them to recycle their money once the airport's up and running because that's how it was with every other airport in Australia,” he says.

Additionally, while the federal government has committed AUD 5.3 billion to the airport, Adams says most observers believe that to bring it up to the standards of an international class airport total investment will be more like AUD 10 billion, suggesting the government will have to raise additional cash, or sell off the airport in stages to fund its continued development.

He expects the airport to attract interest from the superannuation sector, which is drawn to the stable, long-term cashflow that comes with many major infrastructure investments.

It won’t just be multibillion-dollar, headline-grabbing projects which create opportunities for investors. Adams says the knock-on effects for the whole region will be quite profound.

There are also investment opportunities in the aerotropolis itself, which will host industry and manufacturing, and logistics centres designed to take advantage of the new airport – and it will be home to new communities, parklands, cultural and sporting centres, shopping centres, schools, childcare centres, universities, aged care facilities, healthcare and hospitals.

Investors have the capacity to put money into the aerotropolis both by establishing businesses in the precinct and by funding its development, plus they will have the chance to either buy land or acquire long-term leases as well.

Obvious candidates to set up in the aerotropolis include logistics and supply chain businesses and those involved in agribusiness. “You don't have to think too hard down that line to come up with a whole range of people, both from an industrial or other institutional equity perspective, who’ll be keen to look into this,” says Adams.

Westpac will be involved in facilitating the region’s growth both as a member of the community which has had branches in the region since the early 1900s and as a facilitator of opportunities for corporate and institutional clients.

Adams says, "we want to help the aerotropolis drive as much value into the business supply chains locally as we can as well."

“This is one of the biggest growth opportunities that the bank currently has on its radar,” he concluded