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1
Property Strategies 2015 and Beyond
Distilling New Opportunities
Presented by Brian Haratsis
July 2015
7
Cyclicality Cyclical Drivers: Annual Growth Rate in Number of Owner-Occupier Housing Loans, 1980–2012
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1980 1984 1988 1992 1996 2000 2004 2008 2012
Annual growth rate in number of owner-occupier housing loans
Source: ABS, MacroPlan Dimasi
-2%
0%
2%
4%
6%
8%
-40%-30%-20%-10%
0%10%20%30%40%50%
Dwellings Investment (LHS) Household Consumption Expenditure (RHS)
An
nu
al G
row
th R
ate
An
nu
al G
row
th R
ate
(Rea
l GD
P)
Cyclical Drivers: Annual GDP Growth Rate, 1960-2012
9
Globalisation
The flow of technology, knowledge, people, values, ideas, capital goods and services across national borders affects each region in a different way due to the region’s geography, physical attributes, resources, individual history, traditions, culture and priorities.
(Based on Knight, J. Internationalisation Remodelled, 2004)
10
Globalisation
Australia’s global opportunity will be driven by Asian population and economic growth.
By 2031, South East Asia will accommodate a 1.7 billion person middle class, an increase of 1.2 billion persons.
12
Globalisation: Aviation
As of November 2012, China had 182
commercial airports.
Under the 2011-2015 national plan,
82 new commercial airports and 55
new civil airports are to be
constructed bringing China’s total
number of civil airports to 230.
Additionally 101 airports will be
renovated or expanded.
The whole airport industry
infrastructure investment scale will
reach 425 billion RMB.
0
100
200
300
400
500
600
700
800
900
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Air China QANTAS Airways China Eastern Airlines China Southern Airlines
Sea
ts (
00
0's
)
Growth in Airline Seats from China to Australia – 2000 to 2011
15
Information & Communication Technology Changing Space Hierarchy: Not as Expected
New Opportunities E.G. National Economic clusters
Central Place Theory Network Cities Theory Spatial Risk Theory
16
Digital Trade
Digital trade i.e. domestic commerce and international trade conducted on the internet has already had far reaching effects on global economies and city shapes in Australia. It has fundamentally transformed many aspects of the way businesses operate and interact with each other. This includes:
Lowering barriers to market entry for small and medium size enterprises (SME’s)
Increasing production efficiency. For example in the services sector the way ideas are recorded, developed and replicated
17
Digital Trade Impacts on Retail Floorspace & Distribution
Freight and Logistics
Distribution of services and Online technologies. This includes services such as ‘home hospital’
Distribution of services via ‘on demand’ technologies (e.g. movies via NetFlix or Hulu)
Access to business inputs such as finance, accounting and legal services all of which can be accessed on line
Access to global markets via Online share and bond trading
Creation of new markets e.g. sophisticated finance products which can be traded Online
Creation of major new services e.g. Online gaming, which is now a bigger industry than the film industry
19
Population: Fast Growth Australian Population forecasts –up to 2061
Source: ABS Cat 3222.0 (2013)
2011-12 2021-22 2031-32 2041-42 2051-52 2061-62
Population as at June 30 (millions)
0 - 14 4,299,878 5,093,268 5,576,695 5,979,853 6,562,393 7,048,986
15 - 64 15,204,062 17,318,254 19,494,945 21,726,174 23,633,140 25,374,891
65 - 84 2,797,747 3,896,092 4,956,198 5,688,891 6,514,459 7,541,706
85+ 420,308 558,595 864,154 1,269,477 1,607,110 1,894,639
Total 22,721,995 26,866,209 30,891,992 34,664,395 38,317,102 41,860,222
% of Population
0 - 14 18.9% 19.0% 18.1% 17.3% 17.1% 16.8%
15 - 64 66.9% 64.5% 63.1% 62.7% 61.7% 60.6%
65 - 84 12.3% 14.5% 16.0% 16.4% 17.0% 18.0%
85+ 1.8% 2.1% 2.8% 3.7% 4.2% 4.5%
21
Future Demand for retirement living dwellings
0% 5% 10% 15% 20% 25%
5-9 years
15-19 years
25-29 years
35-39 years
45-49 years
55-59 years
65-69 years
75-79 years
85-89 years
95-99 years
Increase in Residential mobility 2006-2011
?
Medical Improvements
1 2 3
4
New Pre-Retirement Market
Major increase in house purchase (underway) but underestimated
Future Pre-retirement
Traditional Pre-retirement
22
Freight and Logistics - Growth
From 2012-2017, the freight and logistics industry is expected to grow by 73,000 jobs to 870,000
The sector will also produce 151,000 job openings for new employees due to an aging workforce
The gross value added hourly rate for freight and logistics is $69; 6.1% more productive than the average hourly rate of the Australian economy at $65
23
Education
Australia’s international educational industry contributed $15.6 billion to our economy in 2013, making it one of the world’s largest
Students from China and India comprised one third of total enrolments
In 2013, educational services made up 57% of $6.9 billion in services exported to China and 53% of $1.9 billion worth of services exported to India
Australia’s fourth-largest export behind Natural gas, coal and iron ore
•Tourism is fifth
24
Tourism
Tourism is a key economic driver generating more than 900,000 jobs and injecting over $100 billion into the Australian economy.
27
Sydney & Melbourne | 40% of Australia’s Population
Queensland, New South Wales & Victoria | 65% of Australia’s Population
Capital Cities
28
Population & Employment Growth
By Greater Metropolitan Region (2001-2011)
City Population Population Growth (%) Jobs Jobs Growth (%)
Melbourne 601,512 17.6% 173,081 20.3%
Sydney 431,713 10.8% 106,209 10.7%
Brisbane 391,911 23.2% 116,747 22.1%
Perth 329,161 24.0% 112,445 33.2%
29
Sydney 2060
In 2060, Sydney will accommodate at least 8.5m permanent residents and 2m non-permanent residents, or… growth will be diverted
This is approx. double the population in 2014
30
Melbourne’s Metropolitan Planning Strategy
Key facts and figures
Melbourne’s population is expected to be between 7.6 and 8.5 million people by 2050. At this point it will be more populous than Sydney.
Recent bureau figures imply that Melbourne today is home to 4.35 million people, and 27% bigger than the city it was at the start of 2000.
Melbourne is forecast to grow by 90,000 persons and 27,800 dwellings per annum to 2030.
The proportion of people aged 65+ is expected to increase from 14% to 22% by 2050.
32
Housing Demand
According to the latest VIF forecasts (2014) Melbourne requires approximately 40,000 new dwellings per year to 2051. this is substantially higher than construction rates seen in the past of approximately 28,000 dwellings per year.
High and medium density dwellings are expected to make up about 60% of future dwelling demand to 2031 (approx. 24,000 dwellings p.a.).
33
Housing Demand - Summary
Greenfield
Growth Areas
Established
Areas Total
Historical Growth (2004-11) 12,000 15,600 27,600
Projected Demand p.a. (2011-31) 16,100 22,900 39,000
Total Demand (2011-2031) 322,000 458,000 780,000
Houses 230,000 40,000 270,000
Townhouses, units and
apartments 92,000 418,000 510,000
34
Infrastructure: Property ‘Game Changers’
Intensification of the Eastern seaboard
Sydney’s 2nd airport
High Speed Rail
Inland Rail
Don’t forget…
Brisbane Airport second runway
Melbourne Airport third runway
Major freight and logistics projects in Melbourne, Sydney & Brisbane
35
Conclusion: Eastern Seaboard Megalopolis
New Global Regions ( Pilbara/ Kimberley/ Gascoyne/ N.T. Surat and Bowen Basins)
Job Mobility
Contractors
Density of Opportunity
Capital Risk Minimisation
Importance of the 1.5 hours regional Community Shadow
Low and Negative Growth in some regions 2015-2021