SYDNEY S SECOND AIRPORT

Transcription

1 COLLIERS RADAR SYDNEY S SECOND AIRPORT The Catalytic Effect of Transport Infrastructure By Sass J-Baleh Manager Research sass.jbaleh@colliers.com Summary Industrial land values across the Sydney markets have recorded positive annual growth over the past few years, and have entered double digit growth since March More recently land values have soared, with annual growth rates in the high 20 per cent since the end of Record growth rates are expected to continue across all of Sydney s sub markets. However, there are different fundamental drivers for this growth between the Inner sub markets and the Outer sub markets: For the Inner sub markets Growth in land values for these sub markets have been driven by a lack of stock as fuelled by increasing urban regeneration projects (rezonings). The lack of developable land in these markets mean that the issue of industrial stock scarcity will not be rectified Main driver of industrial land values for Inner Sydney sub markets: Residential Infrastructure (e.g. train stations and the light rail) Potential/reasoning for more residential mixed use rezonings - creating greater urban renewal corridors/ opportunities (i.e. industrial-to-residential conversions) Industrial stock/land greater land parcels and custom built facilities, as well as demand from larger industrial users pushed out of the Inner sub markets due to high costs and/or lack of stock available for suitable accommodation (as outlined above). Main driver of industrial land values for Outer Sydney sub markets: Industrial Infrastructure (e.g. freight/motorway road networks, intermodal terminals, and Airports) Access to the rest of the Sydney metropolitan area/markets Provision of services on unserviced industrial land parcels Industrial land values Land values Historically, industrial land values have recorded higher growth rates during periods of new industrial infrastructure (e.g. motorways). In particular, it is during the stages when the project has been committed that precincts within close proximity experience the greatest value uplift. Commitment stages include when investment has been allocated and funding committed, as well as during the construction phase of development. Therefore the commitment of Western Sydney s Airport at Badgerys Creek, as stated in the 2017/18 Federal Budget, is expected to translate into strong land value growth for industrial precincts around the area (i.e. the Outer West and South West sub markets, spilling over the North West sub market) over the short run and during the construction phase of development until completion (i.e. mid 2020s). Industrial land values For the Outer sub market Growth in land values for sub markets located in Sydney s Outer region have been driven by increased investments and commitments in industrial infrastructure, accessibility to We will establish the Western Sydney Airport Corporation to build and operate the new Western Sydney Airport. -Treasurer, Scott Morrison, 2017/18 Federal Budget Speech

2 Current trend Over the past 12 months land values in the Outer West and South West sub markets have soared by 24 per cent and 21 per cent, respectively. Annual growth rates over the next 12 months are projected to remain in double digits for these sub markets largely driven by: The developments under the Western Sydney Infrastructure Plan The completion of stage one s Moorebank Intermodal and commencement of stage two The increasing take-up (demand) of land due to the shift in preference for industrial users to locate in the West. Particularly those users that do not only service a local sub market, in order to increase supply chain efficiencies reaping the benefits of: Relatively cheaper land values and rents Availability of larges sites and custom built facilities Stronger infrastructure links and facilities new developed or expected to come online. Double digit growth rates projected to continue Sub Market Current Land Value (as at Q1 2017) QoQ Growth QoQ Growth Outer West $450/sqm 5.9% 24.1% South West $425/sqm 17.2% 21.4% Major drivers of land value growth over the next 12 months: Moorebank Intermodal Terminal ($1.5 billion) Freight terminal facilities linked to Port Botany by rail, increasing Sydney s freight capacity and reducing road freight First stage of operations to begin mid 2017 Stage two completion is expected in 2019 Northern Road Upgrade ($1.6 billion) Upgrading around 35 km of the Northern Road, between the Old Northern Road, Narellan and Jamison Road, South Penrith from a generally two to four lane undivided road to a six to eight lane divided road Delivering new and upgraded roads to support integrated transport in the region and capitalise on the economic benefits from developing the Western Sydney Airport Providing one of the main arterial transport corridors for the South West Priority Growth Area and the Western Sydney Priority Growth Area Improving safety, increasing road capacity and reducing congestion and travel times. Drivers beyond 2018: The Northern Road Upgrade Stage km between Peter Brock Drive, Oran Park, Mersey Road, and Bringelly Completion expected in mid-2020 M12 Motorway public display ($1.3 billion) Major construction commencing in 2020 Completion expected before the opening of the Western Sydney Airport Will provide direct access to the Western Sydney Airport and connect to Sydney s Motorway Network (M7 Motorway and M4 Motorway via The Northern Road) Badgerys Creek Airport ($5.3 billion) Eart moving works will commence on the 1,800 ha site in the second half of 2018 Expected to be delivered in 2026

3 Project details and state planning context Badgerys Creek will have a positive spill over effect on the industrial property sector, as well as further stimulate the industrial user demand trending further out West as inner industrial precincts become even more costly and difficult to attain. Sydney s Major Transport Gateways, as identified by the NSW State planning framework, include the following: Sydney Airport Port Botany precinct Bankstown Airport Badgerys Creek Airport Precinct Sydney s Second Airport at Badgerys Creek Key Project Details: Early discussions for rail connections between Badgerys Creek Airport and Parramatta. $5.3 billion A second commercial airport in Sydney to be located at Badgerys Creek According to the Western Sydney Airport Plan 2016 the Airport is intended to achieve the following objectives: The Airport site is located approximately 50 km west of Sydney s CBD, encompassing an area of around 1.78 hectares Improving access to aviation services for Western Sydney; Resolving the long-term aviation capacity constraints in the Sydney basin; Operations planned to begin in 2026 The Western Sydney Corporation will be established to build and operate the project Maximising the economic benefit for Australia by maximising the value of the Airport as a national asset; Optimising the benefit of the Airport for employment Expected to generate 20,000 new jobs by the early 2030s and 60,000 in the longer term and investment in Western Sydney; and Delivering sound financial, environmental and social outcomes for the Australian community.

4 NSW State Planning Framework: A Plan for Growing Sydney BADGERYS CREEK AIRPORT PRECINCT WESTERN SYDNEY PRIORITY GROWTH AREA Source: NSW Department of Planning and Environment

5 Supporting infrastructure There is a strong provision of planned industrial infrastructure, as supported by the Western Sydney Infrastructure Plan (2016) the investment of $3.6 billion over ten years - connecting the Outer West Sydney sub markets to Inner and Middle ring areas. This, in turn, supports the increased take-up of industrial land in Western Sydney precincts, as well as the future Broader Western Sydney Employment Area. Western Sydney Infrastructure Plan Source: NSW Government Roads and Maritime Services

6 Access to a growing workforce population Planned new town centres in Western Sydney According to the NSW Department of Planning and Environment there will be around 44 per cent of the Sydney metropolitan population living in Western Sydney by This is an additional 912,500 residents - as supported by future Outer West residential areas, which will support the working population and increase the access to a growing workforce for industrial businesses located in this area. New Town Centres Currently Identified within the State Planning Framework: The North West Growth Centre The South West Growth Centre A large area identified for future urban development, including residential, employment, retail, health, education and recreational uses. Greenfield housing development will be primarily focused in these areas (in addition to the South West Growth Centre). New communities are, for example, currently being planned around the following areas: Alex Avenue 6,300 residential dwellings Riverstone 9,000 residential dwellings Marsden Park 10,300 residential dwellings Marsden Park North West Schofields Vineyard Oran Park 7,540 residential dwellings Turner Road 4,020 residential dwellings East Leppington 4,450 residential dwellings Austral and Leppington North 17,350 residential dwellings Edmondson Park -6,000 residential dwellings Catherine Fields 3,200 residential dwellings. Source: Colliers Research Number of residential dwellings expected to be delivered 3,000-5,000 5,001-7,000 7,001-10,000 10,000 Deliver tens of thousands of new homes needed in Western Sydney.... -Treasurer, Scott Morrison, 2017/18 Federal Budget Speech Badgerys Creek Airport will be a game changer for the region, creating greater strategically significant industrial land parcels in Sydney s Western areas. Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. Colliers International Accelerating success.