One of Australia’s capital cities set for high growth this year is seeing a large amount of infrastructure expenditure on all levels of government, and it means good news for property prices.
The federal government, South Australian government and the City of Adelaide council signed the Adelaide City Deal, a $551 million agreement designed to boost economic growth and tourism as well as innovation potential, according to a joint release by Prime Minister Scott Morrison, premier of South Australia Steven Marshall, the minister for immigration, citizenship and multicultural affairs David Coleman and lord mayor of Adelaide Sandy Verschoor.
As part of the deal, the Lot Fourteen area located in Adelaide’s north-eastern corner is set to be renovated into a “renovation precinct”, where it will base the headquarters of the Australian Space Agency and its mission control facility, the Australian Space Discovery Centre and other cultural attractions, businesses and education facilities.
The deal will also provide funding for Adelaide’s cultural environment through an Aboriginal art and cultures gallery as well as an international centre for tourism, hospitality and food studies at Lot Fourteen.
Tourism will also see a boost in various key projects, such as the Heysen Gallery in Hahndorf, the Mitcham Hills and Glenthorne Trails to the south of Adelaide and the construction of a visitor central at Carrick Hill House in Springfield.
There’s also plans to address congestion on Adelaide roads with an additional $194 million,
Busting congestion across Adelaide with a $194 million boost, as announced by Mr Morrison, Mr Marshall and South Australian minister for transport, infrastructure and local government and South Australian minister for planning Stephan Knoll.
The congestion plan focuses on two projects, with a dedicated $30.5 million from each government for the Cross Road-Fullarton Road intersection in Highgate and a dedicated $49 million from each government for the Portrush Road-Magill Road intersection in Maylands, which is described to be a “big win for local motorists accessing nearby schools and amenities.”
What does this mean for property prices?
According to Peter Koulizos, chairman of the Property Investment Professionals of Australia, who is based in Adelaide, the city deal means good things for the property market.
In fact, he said it was fantastic that the city deal is seeing all three levels of government cooperating with each other.
“That’s how you can get efficiencies rather than the three levels of government working in silos,” he said.
“Getting all of this together, I’m sure we’ll get more than half a billion dollars’ worth of benefit, which is what this particular project has been costed at.
“Adelaide is certainly on the radar of the major political parties, we have an election coming up in a couple of months, so they want to try and secure as many votes as possible.
“So, we’re more than happy, pour as much money into Adelaide and South Australia as you like.”
Out of everything listed, Mr Koulizos said to Smart Property Investment the biggest impacts to the property market would be as a result of the renovations to Lot Fourteen, especially for those in the space industry.
“Lot Fourteen, for most people in Adelaide probably would know, is where the old Royal Adelaide Hospital used to be,” Mr Koulizos said.
“There’s a lot of infrastructure there, which is getting underutilised at the moment, and so the state government has had its eye on that site for a while as an innovation site, and here we have local government, which is the City of Adelaide, as well as the federal government all looking to put their funds in to do something to the old Royal Hospital site, which is perfectly located right in the CBD, next door to the botanical gardens, certainly a good spot.”
Because Lot Fourteen is expected to attract people in the space industry, who are generally “high-income earners” according to Mr Koulizos, he said they have the potential to pay more than average when it comes to renting or purchasing property.
The congestion spending is another matter; while Mr Koulizos said the government is targeting the right locations, it will not mean much for property investors.
“I don’t think it’s going to do too much for property prices because it just means people don’t have to stop at the intersection for as long, it’s no big deal,” he said.
“It’s not like putting in a big tunnel or a big freeway in or a big overpass, but it’s all good.”
Sasha Karen, Smart Property Investment, 19 March 2019