With a rapidly growing population in Australia and many large infrastructure projects underway will the COVID-19 pandemic have a small or large impact on the sector?
Read on as I reveal all.
Our Nation is Growing!
Population growth along the east coast of Australia has underpinned the demand for residential property for the past decade and has been a driving force of the national economy.
In 2018-2019 alone, people living in Australian capital cities increased by 303,100 people.
It’s to no surprise that the largest population increases are observed in the Eastern capital cities, due to the larger volume of employment opportunities and diversification of industry.
Over 12 months (2018-2019) Melbourne had the largest growth in population with 113,500 people, followed by Sydney with 87,100 people, and Brisbane coming in third place with 52,600 people [1].
This is on the back of diversified job opportunities being offered in each city, along with lifestyle aspects and key amenities all close to the CBD.
Population Growth & Infrastructure
As populations in our capital cities continue to swell, congestion can quickly impede access to employment nodes, causing a drag on the economy.
The challenge is with all levels of government to take a dynamic, forward-thinking approach to provide infrastructure to improve connectivity and service the needs of a burgeoning population.
COVID-19's Impact On Infrastructure
As of April 2020, the world has come to a sudden halt due to the COVID-19 pandemic with certain sectors of the economy such as; tourism, retail, and hospitality having come to an abrupt stop.
Whilst this event has created economic uncertainty, we need only take a look at China; the country where this crisis first emerged, to see that the downturn will not last forever. For the last 6 weeks, the Chinese economy has indicated that key industries in the supply chain are now re-opening and returning to business as usual.
At the same time, many countries are now demonstrating signs that they are now moving past the peak, with new infections rates declining and recovery rates increasing.
Should this trend continue, many economists expect that the global economy can start to unwind isolation measures and slowly resume normal trade.
With strong job losses worldwide, many Governments have injected significant economic stimulus to reduce unemployment and attempt to reduce a prolonged economic decline when the health crisis abates.
On the domestic front, the health response has been made in concert with a strategic economic stimulus to ensure Australia is well placed when the economic recovery begins.
Based on recent announcements by both the Federal Government and the RBA, it's likely that key infrastructure projects will be expedited and brought forward. This will create many new job opportunities and generate much-needed momentum to increase economic output.
This is something Urban Development Institute of Australia (UDIA) has been strongly advocating for.
As it stands, large infrastructure projects that are already underway in Sydney, Melbourne, and Brisbane have enforced strict social distancing rules to ensure workers can continue full steam ahead progressing projects to meet construction completion deadlines.
This will have a positive influence on the economy and help combat the effects of the economic fallout attributed to the coronavirus in the short term.
Let’s look at some of the key mega-infrastructure projects on the East Coast of Australia. These all continue all steam ahead during this challenging time and the impact on our economy.
Brisbane’s $3.6bn Queen’s Wharf
Construction on Brisbane's $3.6bn Queen's Wharf development is well underway, with five levels of basement closing nearing ground level [2].
The Queensland Government in partnership with the Destination Brisbane Consortium will deliver world-class tourism, leisure and entertainment precinct that provides economic growth for Queensland with the creation of around 8,000 new permanent jobs and 2,000 during construction.
The redevelopment area is located between the Brisbane River and George Street and between Alice and Queen Streets. The development will create 5 new hotels (three of six-star rating), three new residential towers and 50 restaurants and bars.
The Sky Deck area will feature outdoor restaurants on the 25th floor, a glass floor observation deck, and a Botanic Gardens observation deck.
Once completed, this development is expected to generate an influx of 1.39mil additional tourists each year.
Sydney's $16.8bn WestConnex
WestConnex will provide 33km of motorway to link western and south-western Sydney with the city, Kingsford Smith Airport and Port Botany precincts [3].
Mainly constructed in the M4 and M5 corridors and will comprise approximately 14km of the road above ground and approximately 19km of tunnels, including a new tunnel linking the two corridors.
Recently the NSW government announced extended hours across the construction industry to allow workers to continue over weekends and public holidays. This will help with the reduced workers on site due to the social distancing protocol taking place.
WestConnex is expected to create around 16,000 jobs during construction which is a positive impact on the Australian economy. The project is expected to be delivered in stages up to 2023.
When WestConnex is completed, it is expected to deliver major benefits to the Sydney community.
It’s expected to reduce travel times between Parramatta and Sydney’s Kingsford Smith Airport by up to 40 minutes and also halve bus travel times between the Inner West and the city.
Not only will the connectivity of Sydney improve but it is estimated that more than $20bn in economic benefits will be delivered to NSW.
Melbourne's $11bn Metro Tunnel
The new $11bn Metro Tunnel, is a twin 9km rail tunnel running through Melbourne's CBD from South Kensington to South Yarra.
The Metro Tunnel project will create nearly 7,000 jobs during construction, including hundreds for apprentices and trainees with completion expected late 2025.
The upgrades will enable more than half a million extra passengers to use Melbourne’s rail network during peak periods every week, and save people up to 50 minutes each day during their commutes.
Major construction is continuing in 2020 despite the COVID-19 outbreak. Before the pandemic, significant progress was made at each of the new station locations and tunnelling underway in the west between North Melbourne and Kensington.
Key Takeaways for Infrastructure During COVID-19
In a bid to keep the construction industry open during COVID-19, both Master Builders and the CFMEU are working together in their best efforts to help combat the overall impact on the construction industry and Australian economy.
To continue staying up-to-date on the property market make sure you join our Weekly Property Market Pulse Newsletter here.
Jarryd Gauci – Property Investment Consultant
P: (02) 9939 3249
References:
[1] ABS - Regional Population Growth, Australia, 2018-19
[4] The Metro Tunnel
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