Infrastructure spend presents lucrative opportunities for investors

Monday, 26th Jun 2017
Categories: Market News, Newsletter

Perth is on the cusp of a substantial private infrastructure surge with billions of dollars of investment in hotels, apartments and shopping centres about to kick off, according to a new report from Momentum Wealth’s Research Division.

The research report outlines Perth’s large pipeline of projects either under construction or committed to including 15 major hotels featuring 2,631 rooms; more than 40 large-scale apartment projects; and $4 billion worth of upgrades to metropolitan shopping centres.

The report, Perth Private Infrastructure Report: Opportunities for residential property investors, explains that the private infrastructure investment presents some lucrative opportunities for property investors.

While these developments will create tens of thousands of jobs and buoy the Perth economy in the coming years, many of these projects will also enhance amenity in local communities, which will help to drive demand and prices for nearby housing.

Although some of these apartment, hotel and shopping centre projects have started, the research report shows that the large majority of works are still ahead of us and will be completed over the next 2-4 years.

The report explains that investors who can act early and take advantage of this private infrastructure spending spree are likely to benefit most.

Property investors need to target projects with tangible benefits

While the report details the unprecedented building boom ahead, investors need to be vigilant when making their investment decisions.

For example, hotel developments are typically limited to the Perth CBD, and while they will help stimulate the local economy by creating jobs these projects won’t have a direct impact on property markets.

Instead, the research report explains that investors should focus on metropolitan apartment and shopping centre developments that deliver more tangible benefits to local communities by way of new cafés, shops, restaurants and cinemas.

The research report highlights that many shopping centre expansions include main-street dining and leisure precincts to ensure the areas remain activated after 5pm while some suburban apartment projects include café and retail offerings at the ground floor that are open to the local community.

New amenities that come with these projects will help buoy values of nearby housing as more people want to live in these areas. It is these types of projects that investors need to consider when buying their next investment property.

Investment pipeline evidence of high confidence

The large investment pipeline shows the high confidence that local, national and international hoteliers, developers and shopping centre operators have in the long-term outlook for Perth.

The surge in apartment, hotel and shopping centre investment is a result of changes in WA government policy, including lifting caps on the maximum sizes of shopping centres and a greater focus on tourism to diversify the state economy, as well as a greater acceptance of higher-density living.

While private infrastructure projects can help drive future residential property prices, investors also need to consider other factors such as demand and supply, demographic shifts and changing structure plans, for example.

To download a copy of the report, simply follow this link.