The vital and desirable infrastructure checklist before you invest any suburb

In my view, overall investment desirability in an area is heavily dependent on infrastructure.

So how would I rank the various infrastructure basics in order of importance?

I would argue there is not one checklist of infrastructure vitals you need to investigate when considering an investment property purchase, but two.

The first list I came up with are what I call ‘Area Vitals’ and this includes the core vitals pertaining to the basics of human life: safety, security, and employment.

But the second list, ‘Area Desirables’ are just that, the ‘nice-to-have’ factors that can – and do – persuade prospective tenants to choose one suburb over a similar suburb to live in. I would recommend considering each of these lists when you are deciding where to invest:

Infrastructure Checklist – Area Vitals:

-          Emergency services (local police, fire, ambulance)

-          Employment prospects (look for job creation in a variety, not just a handful, of industries or trades)

-          Proximity to transport nodes (rail, bus, tram; as well as domestic and international airports)

-          Shopping & retail facilities (basic/core groceries)

-          Proximity to education facilities (pre-school through to tertiary)

-          Digital services (fast access internet, subscription television)

-          Provision of basic leisure facilities (parks, local sports grounds, town centres, restaurants/bars)

-          Well-maintained roads and intersecting/connecting motorways

Infrastructure Checklist – Area Desirables:

-          Prestigious education facilities (beyond basic, so esteemed schools/universities with a good reputation)

-          Nearby national parks & hiking trails

-          Hospital facilities that provide sophisticated surgeries & procedures

-          Bustling local entertainment venues (abundance of restaurant choices/cultures, popular nightspots)

-          Proximity to premium entertainment & sports venues (for big concerts, major sporting calendar events)

-          Provision of adequate parking nearby to transport nodes

In an ideal suburb, you would hope to check off as many items on these lists as possible, but of equal importance is to consider areas where projects related to any of the above have commenced construction.

For example, if values in your chosen area have not shown much capital growth in the last five years or so, yet a new motorway that will make this area more connected to major employment centres has already begun construction, you ought to take these factors in to account.

Recently, I returned from a trip to Singapore and Malaysia.

My time in Singapore was mostly for business, but my time in Malaysia was for a short break, not on the mainland but instead on a remote island. Apart from the climate, the two places I visited could not be more different.

Singapore is a tiny, bustling, and high-density city-state, brimming with business people from all around the world. There are over five million people crammed into an island about one third the geographical size of Sydney.

On the other hand, the small Malaysian island of Tioman on the east coast of Johor Bahru, has a population smaller than that of Darwin.

From a property perspective the two areas, though neighbours, could not be more different.

Spending a little bit of time on each island, I began to appreciate just how important the presence of good infrastructure is, in determining where you invest.

When comparing the infrastructure of these two places, again, they could not be more different.

Singapore is everything you would expect; practically anywhere one would choose to live on the island is in very close proximity to not only the fundamental/basic infrastructure of city living, but to more sophisticated infrastructure like major lifestyle venues (zoos, grand botanical gardens, major entertainment venues, sporting grounds, and so on).

The rent costs being commanded by landlords in most parts of Singapore are in line with such world-class lifestyle facilities. Yet demand for property of any kind in Singapore remains fiercely strong, and in many instances, highly competitive.

Conversely, the remote island of Tioman in Malaysia faces an entirely different problem.

Apart from a small volume to Tourism, the island has little to no infrastructure.

The only airport that services the island will cease all flights from September onwards, making all access to the mainland of Malaysia reliant on ferry services. Even these ferries are reliant on fluctuating tides and if the water tide is too shallow on any given day, the ferries simply do not run.

Infrastructure on the island is very weak indeed with no doctors, let alone a hospital, only a handful of police officers to service a population of over one hundred thousand and no sophisticated urban planning zoning or restrictions, making construction and importations of any kind challenging for the developer.

Employment prospects are poor and services to roads, communities, and technology are also very limited.

Most people would think of infrastructure as being separate to employment prospects, but the two are often related.

A good example of this is Kempsey on the mid-coast of NSW.

I visited this area in April 2013 and was initially pleasantly surprised by the affordability of residential property in this mid-size town.

Houses in most suburbs are very affordable; according to RP data the current median price for a house in Kempsey is $165,000.

The town should have solid appeal as an area to live; it is a very short drive to beautiful coastal beaches, the weather is mild most of the year and sunny, and there are almost a dozen state and national parks surrounding the city in every direction.

The recently completed upgrade of the Pacific Highway included a bypass path that re-routed traffic around the city. This has stopped noise, pollution, and traffic running through the centre of town and once would think this would restore the town centre with a sleepier, pleasant vibe, akin to that of nearby Grafton.

Yet despite all of this, the longterm growth trend for house values remains muted.

After visiting and speaking to some locals there, as well as making some calls to local estate agents, I began to realise that economic growth for the city had stunted due to lack of infrastructure.

It turns out that Kempsey is about a 45 minute drive to much larger cities Port Macquarie and Coffs Harbour.

Residents of Kempsey would often commute to either of these places to seek work, due to a lack of infrastrucutre and services in Kempsey having resulted in little to no new job creation in Kempsey.

The town does have basic services – a small hospital, police station, fire station and so on. However, the council has not promoted industrial and agricultural infrastructure growth in the town and this has resulted in limited job growth prospects.

With retail being the only developed industry, employment prospects remain muted and this in turn reduces desirability and increases vacancy rates, resulting in capital growth remaining stunted.

Education is always a strong influence when it comes to infrastructure.

In the example of Kempsey, apart from a small TAFE with very limited course offerings, there are no universities in the area, meaning that residents wanting to study for a career beyond basic trades, have to leave the town to do so.

A lack of solid infrastructure can restrict growth in industry, leading to high unemployment rates that keeps a town or city with otherwise great appeal and desirability, deflated.

Cameron McEvoy is a NSW-based property investor and maintains a blog, Property Correspondent.