Confidence in NT property market growing as economy ‘to go from stagnant to starring’: Terry Ryder

The most confident property market in Australia is found in the Northern Territory. That was the finding of the Property Industry Confidence Survey published recently by the Property Council of Australia. 

It found that, nationwide, a strong engineering construction sector is generating greater confidence in the various property sectors. The overall outlook for the June quarter 2012 was six points higher than for the March quarter. 

Property Council chief executive Peter Verwer says more than half the quantifiable lift in sentiment was attributed to three regions: Western Australia, the Northern Territory and Queensland. The Northern Territory was the location to record the highest confidence level. 

At the same time, Deloitte Access Economics says the Northern Territory economy is “set to go from stagnant to starring”, with the second fastest growth rate in the nation over the next five years. 

NT has reason to be bullish. The $34 billion Ichthys gas project by Inpex of Japan and Total of France, plus the establishment of the Marine Supply Base to service major oil and gas companies such as Shell, ConocoPhillips and Inpex, will establish Darwin as a gas hub of global significance. 

The upcoming projects will build on the base created by ConocoPhillips, which completed a major LNG plant at Wickham Point in Darwin six years ago. 

Although the final investment decision has not been made officially, the Ichthys project is effectively under way. Ichthys contracts worth $700 million have gone to three big companies – Laing O'Rourke, Macmahon-John Holland and Leighton. The contracts cover the building of the workers' village at Howard Springs and the civil works for the LNG plant at Blaydin Point. 

GE has won a $1 billion supply deal of rotating equipment for Ichthys. GE will also supply subsea production systems for the offshore portion of the project, as well as subsea connectors from the gas field, in the Browse Basin off WA, to the LNG plant at Darwin. Inpex expects to start producing LNG at Ichthys by the end of 2016. 

By that time, the supply industry in Darwin will be “a huge business”, according to chief minister Paul Henderson, who says: "The offshore gas industry is expected to be the biggest driver of NT's economy over the next 40 years."

The territory government is seeking companies to build and operate the marine supply base next to Darwin’s East Arm Wharf.

The supply industry is already worth $150 million a year to territory business and is expected to grow strongly. The giant Bayu-Undan gas field is largely serviced from Darwin and the Sunrise floating platform will use the city for food, maintenance and transport. When the Ichthys project proceeds, the supply industry will be a multi-billion-dollar business.

There are other reasons to believe the territory economy is heading towards a sustained upturn. The military plays a major part in the economic life of the region and the decision announced in November by US President Barack Obama to significantly increase American military personnel in Darwin over the next five years will boost business and real estate. 

The first US Marines have already arrived. About 250 personnel arrived in Darwin in early April as part of a six-month training deployment. The US Marine presence will rise to 1,000 in 2014, reaching a full capacity of 2,500 troops by 2016. 

A number of mining ventures are emerging across the territory, with direct impact on Tennant Creek, Alice Spring and Katherine, as well as indirect benefits to Darwin. 

The territory's biggest mine is to double production. The $270 million plan for McArthur River will create 295 jobs, increase production by 2.5 million tonnes of ore per year to 5.5 million tonnes, and extend the life of the lead and zinc mine by nine years to 2036. 

It’s estimated the territory will need an extra 6,000 workers in the next five years to meet demand from mining and gas companies.

 

Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter.