Infrastructure creates jobs and capital growth: Terry Ryder
The fossils of real estate are creatures known as Mythosaurus. They’re the relics who cling to ancient folklore such as “the inner-city suburbs provide the best growth” and “Sydney’s good suburbs are the strongest in the nation”.
Here’s another mist-shrouded legend much loved by species Mythosaurus: “water is the greatest wealth creator in real estate”.
The factor that all myths have in common is that they are unsupported by research evidence. But Mythosaurus does not concern him or herself with inconveniences like statistics.
As a side issue, we are fast approaching a condition whereby waterfront property is at risk of not only losing its status of valuable real estate but being rendered near worthless by rising sea levels, extreme weather events and erosion. But that’s a topic for another day.
The more I chart the events in real estate around Australia the more I am convinced that the greatest creator of capital growth is infrastructure.
Infrastructure covers a host of things, including roads, rail links, bridges, hospitals, universities, wind farms, desalination plants, factories, export ports and mines.
Nothing creates jobs like a major infrastructure project, both during construction and after completion. Infrastructure also improves the amenity of locations after completion by providing new services and economic activity.
Transport infrastructure makes remote locations more accessible; medical infrastructure generates modern health services and long-term employment; and resources infrastructure can spread economic benefits and jobs over vast distances.
So last week’s announcement of a $6 billion infrastructure package by two major entities in Queensland is significant for local economies and property markets 500km apart.
Indian group GVK and rail services company Aurizon (formerly QR National) are uniting to build a rail link and export port infrastructure that will facilitate the rapid evolution of the new boom mining province, the Galilee Basin.
GVK is developing coal resources in the Galilee Basin in central western Queensland and will have rail links to the Abbot Point export port, where new facilities will be developed.
GVK is one of several big mining companies with plans for the Galilee Basin and has grabbed an advantage over competitors, because the state government has made it clear it wants only one rail corridor from the basin to Abbot Point.
There will be widespread impacts from this announcement. The little town of Alpha is going to get much bigger. Emerald, the key regional centre in this part of Queensland, will feel more pressure on its airport and on its real estate market. And Bowen, 500km away, will receive a welcome boost to its market, because it sits beside Abbot Point.
Bowen needs the boost because an alignment of negative events have sent vacancies rising from near zero to around 17-18% - temporarily, I’m sure, because there’s plenty coming up for Bowen that’s positive.
Once the plans announced by GVK and Aurizon get under way with construction, jobs will come into Bowen and those empty houses and apartments will fill.
Terry Ryder is the founder of hotspotting.com.au