Infrastructure to lead Gold Coast recovery
April 24, 2012
| Development Sites
Infrastructure spending on the Gold Coast is at record levels and will be the impetus for the region’s recovery, according to new research from Colliers International.
The latest Colliers International Gold Coast Development Map – released every two years - shows there are more than $13.7 billion in major infrastructure projects either planned or underway for the Gold Coast, a figure that has risen by close to a huge $4 billion – or 40 per cent - over the past two years. It is the highest level of infrastructure spending on the Gold Coast Colliers International has recorded since it started compiling the biennial Gold Coast Development Map more than a decade ago.
In 2001 infrastructure spending was less than $1 billion and in 2003 it fell by $200 million before rising to $3.5 billion in 2005 and increasing from there. In 2009 Colliers International recorded infrastructure spending on the Gold Coast at around $9.9 billion.
Stewart Gilchrist, Colliers International Gold Coast director, said the record level of infrastructure spending on the Gold Coast was an impressive feat for the region.
“All things considered, the Gold Coast has fared well over the past couple of years,” he said. “There has been plenty of negativity surrounding the region but our research figures prove it hasn’t suffered as much as what has been reported.”
Mr Gilchrist said the amount of infrastructure spending on the Gold Coast is reflective of what’s needed, with the population in the region having grown by an average of around three per cent per year between 2006 and 2011.
“In the past two years the Gold Coast was announced as the winner of the 2018 Commonwealth Games bid and part of the rise in infrastructure spending over that time relates to projects for that event, but the majority is related to basic infrastructure requirements for the growing region, such as transport upgrades,” he said.
“We had a massive population boom but there was not enough infrastructure built to accommodate the needs of a greater population,” he said. “Now there is a catch up taking place, as well as new infrastructure being built to prepare for future growth and the requirements of the Commonwealth Games.”
The biggest infrastructure project in the pipeline on the Gold Coast is the Pacific Motorway upgrade, involving a widening of the M1 from Nerang to Coolangatta, which is under construction and will cost nearly $3.8 billion.
Other big ticket transport infrastructure projects include the Gold Coast Rapid Transit system, which is also under construction and will cost $1.8 billion; a planned extension of the rail link from Varsity Lakes to Coolangatta, costing $1.2 billion; and upgrades to roads such as the Pacific Highway at Banora Point, at a cost of $359 million, and Olsen Avenue at Southport, at a cost of $178 million.
Meanwhile, a large chunk of money is being spent on infrastructure relating to health services, with many projects underway around Griffith University at Southport. The largest of those is the under-construction Gold Coast University Hospital, which will cost $1.76 billion. The health precinct in that area will also include the planned Gold Coast University private hospital next door, at a cost of $210 million, and the under construction Griffith University Health Centre, which is costing $150 million.
Also planned in the Griffith University precinct is the $700 million Parklands village complex, which will be used as an athletes' village during the Commonwealth Games. Given that the end use for this project is currently unclear, it has been included under the infrastructure sector in the most recent Gold Coast Development Map.
The Parklands village complex is the only new project to come onto the development pipeline for the 2018 Commonwealth Games so far, but more are expected.
Some of the major infrastructure projects on the Gold Coast were planned when Colliers last released the Gold Coast Development Map in 2009 and have now gone into the construction phase, while some of the new developments added to the pipeline include the Parklands village and the $284 million Evandale Cultural and Civic Centre. There have also been significantly increased infrastructure spends for projects such as the Pacific Highway upgrade (up from $1 billion to $3.79 billion) and the Southern Cross University development at Coolangatta (up from $70 million to $500 million).
Of the 73 major infrastructure projects in the pipeline, 38 are under construction, with a total value of just under $10 billion, and 35 are planned, with a total value of just short of $4 billion.
The latest Colliers International Gold Coast Development Map found that overall, development spending on the Gold Coast – taking into account projects across all sectors including residential, commercial, tourist and renovation - has fallen over the past two years, from $68 billion to $58 billion, but Stewart Gilchrist, Colliers International Gold Coast director, said this only represented a 15 per cent drop, and considering recent economic conditions the fall was really quite respectable
“While the amount of development spending has dropped, there are still 358 projects in the pipeline, which is very similar to the amount of projects underway or planned two years ago of 379,” he said. The difference now is that the new projects coming into the pipeline are smaller.”
While new infrastructure has been desperately needed on the Gold Coast for some time, Mr Gilchrist said the amount of spending underway showed the confidence both the private and public sector had in the future of the region.
“All levels of government are pumping funds into the Gold Coast, as well as plenty of private investors, who are investing in not only new developments, but existing properties too,” he said.
“The amount of infrastructure in the pipeline is huge for a region like the Gold Coast. It is going to revitalise the city by improving facilities, but it will also create a great deal of employment, which will also stimulate a recovery.
“The Gold Coast has a strong future and infrastructure will shore up that future, leading the way forward for the region.
“In addition to the infrastructure already in the pipeline, more projects are likely to be announced in the next few years to prepare for the 2018 Commonwealth Games, so there is only going to be more good news for the Gold Coast.”
Lynda Campbell, Colliers International Gold Coast research manager and compiler of the Gold Coast Development Map, said apart from an increase in infrastructure developments on the Gold Coast, the other development sector to record a rise over the past two years was the major refurbishment/renovation/expansion sector, which increased by nearly 20 per cent.
“This was understandable given the current economic climate – rather than buying, owners are looking to improve assets they already own,” she said.
The Gold Coast apartment market has been widely publicised as having suffered during the economic downturn over the past few years, and the Colliers International Gold Coast Development Map has recorded a 30 per cent drop in development in this sector.
Tony Holland, Colliers International Director of Residential Project Marketing, said the drop in apartment development was not unexpected, and was due to a combination of lower demand and difficulties in obtaining finance. He said it had resulted in an impending shortage of supply in the apartment market, especially for affordable stock under $600,000, that had the potential to push up prices when buyer momentum picks back up.
“There are a number of astute developers that have land banked key sites on the Gold Coast and are in the process of obtaining approvals for apartment developments,” he said.
“When confidence returns, and consequently demand from buyers returns to normal levels – there will be a rush to release new projects to the market and these astute developers will be in the best position to capitalise.”
Mr Holland said one positive sign in the Gold Coast apartment market over the past three months was that two of the three super tower projects – Oracle and Hilton – had adjusted apartment pricing to meet the market.
“This action has generated immediate strong sales activity and will address much of the negative sentiment that has existed over the past 18 months,” he said. “This should give further confidence to developers that there is an increasing underlying demand for appropriately priced apartment developments on the Gold Coast.”
Ms Campbell said that while there was plenty of development activity around Griffith University, overall development activity on the Gold Coast was concentrated in the northern corridor, particularly around Pimpama, Ormeau and Coomera.
“In total there is $13.577 billion in development in the pipeline in the northern corridor, across 127 projects,” she said.
“The development sector dominating that area is residential, with as many as 37 projects in the pipeline worth a total of $7.224 billion. Commercial development projects come second, with $2.712 billion in the pipeline across 22 projects.
“Population growth in the northern corridor has been huge in the past – between 2006 and 2011 the Pimpama-Coomera area saw average growth of 14.1 per cent per year, Kingsholme-Upper Coomera had an average growth rate of 10.6 per cent per year over the same period and Ormeau-Yatala recorded growth of 8.8 per cent.
“That area is set to continue growing in the future and the development either planned or underway is reflective of that.”
Ms Campbell pointed out that the Gold Coast Development Map identifies projects that are either planned or under construction on the Gold Coast valued at more than $10 million and there were plenty of smaller development projects underway that were not captured in the map.
“The amount of development underway on the Gold Coast is higher than the $58.5 billion recorded in this development map, as it focuses on major developments in the region, but because it takes into account more than 350 major developments, it is still very reflective of the current development pipeline.”
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