Whether it is apartments, infrastructure or major urban renewal, opportunities for builders and developers to benefit from significant developments within Victoria abound.
At the moment, activity throughout the state is running hot.
In the June quarter, the dollar value of building and engineering construction work done throughout the state came in at $10.562 billion – higher than any other level on record and up a whopping 17.8 per cent on the same quarter two years earlier. This comes on the back of massive levels of activity in new apartments – approvals with regard to which have risen by 46 per cent over the past two years to come in at 68,290 for the two years to September against the 46,742 multi-residential dwelling units approved for construction in the two years earlier.
Going forward, the Australian Construction Industry Forum (ACIF) expects the overall dollar value of work done to remain at elevated levels for at least the next two years, though activity may ease slightly thereon after as the apartment sector drops back. Furthermore, beyond this macro picture, opportunities are arising in a number of focused areas. These include apartments, urban renewal precincts, infrastructure and regional development.
Start with apartments. Whilst the residential property boom will almost certainly one day end (indeed, the pace at which new work is coming in has eased over recent months), the sheer number and size of projects means that there will be plenty of work around over the next year or two.
Take for example, the recent phenomenon of massive apartment towers reaching greater than 250 metres in height in and around the CBD. No fewer than seven such buildings are either planned or in construction. These include the 100-storey Australia 108 building at Southbank, the 90-storey Crown Queensbridge Tower building (also at Southbank), the 82-storey building at 555 Collins Street, a 73-storey complex at 38 Freshwater Place in Southbank, the Westside Place Tower 1 on Spencer Street, the 88-storey Aurora Melbourne Central building and the 85-storey Eliza Tinsley Tower in Bourke Street.
Beyond this, other projects include the Crown Hotel & Apartment Tower in Southbank, the Virginia Park mixed use development in East Bentleigh and Queens Place in Melbourne. Added to all this are substantial opportunities associated with a number of urban renewal projects.
The uplift in property values in and around areas where rail crossing removals are taking place will also more than likely unlock further opportunities for multi-residential units in and around train stations and transport hubs.
One day, the party may end. For now, there is plenty of work in the pipeline.
Beyond apartments, there will be significant opportunities associated with major urban renewal projects going forward. The largest is Fisherman’s Bend – claimed by the City of Port Phillip to be the largest urban renewal project in Australia and set to ultimately house 80,000 people and host 60,000 jobs by 2051. Five precincts across two municipalities include an employment precinct with world class IT infrastructure, a mixed-use precinct at Montague, a green ‘spine’ precinct connection at Lorimer, a vibrant arts and public places precinct at Sandridge and a family friendly ‘neighbourhood’ precinct at Wirraway.
Other urban renewal projects include E-Gate and Arden Macaulay.
Sitting on top of former industrial land two kilometres west of the CBD on Footscray Road, the 20-hectare E-Gate site will house up to 10,000 residents and will include up to 200,000 square metres of office and retail space.
Arden Macaulay, meanwhile, will involve the transformation of government owned land into a new precinct which will be home to 15,000 residents as well as 30,000 jobs and will feature a new train station along the Metropolitan Rail Link.
Finally, six employment and innovation clusters are planned for the established hubs of Parkville, Monash, Dandenong South as well as emerging hubs at Sunshine, La Trobe and East Werribee.
Underpinning all this is investment in transport and roads. The most significant project in this area is the Melbourne Metro Tunnel, which will link Footscray in the west and South Yarra in the South East via twin tunnels and which will include five new stations at Domain, CBD South (linking with Flinders Street), CBD North (linking with Melbourne Central), Parkville and Arden (at the new precinct). This will enable the new precinct at Arden to be within two minutes’ travel time of the science and medical hub in Parkville and will enable significant congestion to be cleared up on the inner core of Melbourne’s train network, the government says.
Beyond that, the Western Distributor Project will provide a second Yarra River crossing in Melbourne’s west and will see the widening of the West Gate Freeway from eight to 12 lanes, a tunnel under Yarraville, an elevated motorway connecting the West Gate Freeway with the Port of Melbourne, CityLink and the western edge of the CBD, and an upgrade of the Monash Freeway with 30 kilometres of additional lanes.
Other projects include a new freight terminal at Truganina in Melbourne’s west am, upgrades to the Cranbourne and Pakenham rail lines in Melbourne’s east and of course the government’s flagship program as in the removal of 50 dangerous level crossings.
These projects are enabling some of the housing and urban renewal opportunities. The new precinct at Arden Macaulay, for example, will be supported by the Metropolitan Rail Tunnel, whilst the rail crossing removal program may create opportunities for residential and commercial development in and around transport hubs.
Infrastructure is also an interesting area at the moment with the current process of making a 30-year infrastructure strategy for the state. A draft strategy released in October recommended a new rail line to Melbourne Airport, a tram line to Fisherman’s Bend and an overhaul of the bus network. There will also be new motorways including the North East Link connecting the Metropolitan Ring Road in the north with the Eastern Freeway and the Outer Metropolitan Ring Road linking Werribee in the south-west to Thomastown in the north-east through Melton, Tullamarine, Craigieburn, Mickleham, Epping, and Thomastown.
Finally, there are regional areas, where the government is planning to invest 10 per cent of proceeds from the Port of Melbourne sale on regional infrastructure projects, including through a new agricultural infrastructure jobs fund. In an effort to refocus growth within the regions, the state’s Metropolitan Planning Authority has become the Victorian Planning Authority. As the population in Melbourne grows, the government is looking to regional cities such as Geelong, Bendigo and Ballarat to take a greater proportion of employment and population growth.
Over recent years, construction activity in Victoria has been very strong because of strong housing and apartment sector construction.
Going forward, the apartment story still has some legs and beyond that, there are opportunities in a number of areas.