Welcome to Australia in 2013. The Country is on the eve of what promises to be one of the most radical periods of structural change in its history and the property sector is ground zero, yet despite the looming shadows of an ageing population, falling productivity, slow growth and the end of the resources supercycle, relatively few people are discussing solutions and gearing up to ride the waves of innovation beginning to swell offshore. 'Beyond the Fringe' looks to explore this reality by describing the major factors that are causing and will cause structural change in the next 15 - 20 years and their impacts on the property industry. It identifies a slew of major issues both occurring and developing in Australia, discusses and suggests possible solutions to them, with the intention of opening the dialogue and enlightening the reader with an understanding of planning and profiting in Australia's property markets in 2020.
This book offers new ways to understand, plan for and profit from property in Australia. While interest rate and inflation affected property cycles have historically driven the highest property returns, this book argues that structural change (economic and social) will create the opportunity for lower risk and higher return projects, and drive new urban and regional planning frameworks.
In the interest of cutting tape, the key sections are indicated in blue.
Structural changes from 2015 to 2030 will be driven by ageing and health, information technology, globalisation, and exports (AIGE factors), and be facilitated by ICT. Structural changes will generate business sector demand for new property products, new locations and highly mobile labour forces. The household sector will become both a producer and consumer, initiating a dispersed, dynamic microbusiness sector, and new, highly mobile labour markets. As a result, new city shapes and property development opportunities will emerge.
Ageing and Health
Information and Communications Technology
Information and Communication technology is changing urban geography in obvious ways (e.g. car sales.com and realestate.com.au) and in more subtle ways (e.g. by creating a major new micro business contractor sector). This is the beginning of major changes in supply chains and consumer behaviour.
Ageing will drive the health sector as Australia’s number one employment and number one public expenditure sector. Today the sector is not seriously considered as an investment target and is rarely the subject of planning policies.
Globalisation will restructure metropolitan and regional Australia not only in some obvious ways (e.g. freight and logistics/intermodal facilities), but also in more subtle ways through international tourism and international students, by shaping vibrant new tourist precincts and inner city areas. The likely outcome is a new grid of regional cities and towns, and major restructuring of urban areas. Currently, understanding and planning for areas like globalised freight and logistics is in its infancy, and is almost non-existent for tourism and international students. According to Australia in the Asian Century (2012), Asia alone has the potential to add at least 5–10% to Australian economic growth if demands generated for visitation, education and commodities can be accommodated.
Exports are an exciting growth engine for the Australian property sector. Around resource extraction points (e.g. Karratha, Port Hedland, Gladstone, Surat Basin), major new projects have been delivered. As exports in energy (LNG and CSG) grow even faster than minerals, major new regional developments (e.g. key marine facilities with significant economic multipliers) are emerging throughout northern Australia. New projects are creating extensive local and national economic impacts via fly-in fly-out (FIFO) labour forces. However, the Australian corporate property investment (e.g. Australian Real Estate Investment Trust – AREIT) sector is not yet active in the resources sector, and most markets are in undersupply in terms of residential, commercial and industrial floor space.
The AIGE factors will complement and shape growth on urban fringes. This will underpin a rapid change from ‘nappy valley’ planning and project development, to planning for and extracting value from building ‘brownfields’ communities, and integrating housing, employment and business development opportunities.
Structural changes in Australia will continue to respond to emerging global trends. The global shift from ‘peak oil’ to energy abundance is perhaps the most amazing recent trend. Turbo charged growth in the wealth of the Asian middle classes will also drive growth in demand, not only for tourism, education and agriculture, but also for residential and commercial investment properties. The reinvention of the USA based on cheap and abundant shale oil and shale gas will complement the Asian growth in ways yet unimagined. The push for public transport, electric vehicles, carbon taxation, and the growing demand for food (especially protein) and commodities add to the certainty that the future of planning and property in Australia will alter and how the Abbot Coalition Government will handle these issues remains to be seen.
Property cycles will continue and will drive profit from property, but extracting value will require thinking Beyond the Fringe.
Over the next few months, Brian Haratsis will share excerpts from his book, Beyond the Fringe on the MacroPlan website. If you have any questions regarding the excerpts or you would like to order a copy of the book, please contact Dorothy Patrick, Executive Assistant to the Chairman on 03 9600 0500 or via email email@example.com.
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