Making sense of the mining boom

Making sense of the mining boom
Chris LangJune 6, 2011

As a proportion of Australia's economy, manufacturing and mining contribute more or less the same output.

However, mining's investment spend is currently more than three times that being spent by the manufacturing sector.

All the media attention has mainly been focused upon this disparity. But that doesn't really tell you the complete story — as you can see from this graph.

The combined service sector (which includes transport, retail, finance, utilities, communications and the like) creates 60% of Australia's employment opportunities, and almost half of the investment dollars.

Although mining has drawn labour and other resources away from both the manufacturing and service sectors, it is manufacturing that has suffered the most.

And because the service sector has only marginal exposure to overseas trade and currency movements, it actually enjoys a net benefit from any mining boom.

This would help to explain the relative economic stability of Victoria and NSW when compared with what has occurred with the more recent gyrations for WA and Queensland.

Furthermore, this is also being reflected in the level of office vacancies for each capital city — with Victoria having the greatest level of "definite" commitments for investment expenditure.

Bottom Line: While Australia may have been experiencing a two-speed economy between different sectors, you are also seeing a two-speed market geographically with commercial property:

  • The action-packed (but unpredictable) rides you'll experience in Brisbane and Perth; and ...
  • The less-exciting (but more sustainable) growth you will be able to extract from the Melbourne and Sydney markets.

Chris Lang

Chris Lang is an advisor to commercial property investors, sell-out author and regular speaker on how to invest in commercial property.

Editor's Picks

City Beat January 2025: Sydney property market cooldown slows as new apartment pipeline ramps up
26 Vista Street, Surfers Paradise apartment development, hits 70 per cent sold
Latent Defects Insurance 101: What is the Technical Inspection Service (TIS) Program
City Beat January 2025: Gold Coast property values continue to grow as off the plan enquiries hit near 12-month high
Live parkside in Melbourne for under $500,000