Transport infrastructure spend 'leaving NSW behind'


Victoria and Queensland look set to forge ahead economically while NSW wallows, according to a report by real estate services firm CBRE on the impact of transport infrastructure spending. <br /><br /> The report, Big Wheels Keep on Turning, is based on 20 years of transport infrastructure monitoring and research, the firm says, and highlights the economic gains that come from infrastructure investment and the flow-ons from it. The report highlights investment in transport infrastructure leads not only to a return on investment in direct dollar terms, but can have a much broader impact in providing for business growth, stimulating employment opportunities and providing the basis for a more efficient, effective and growing economy, CBRE says.

By Rob McKay | November 2, 2011

Victoria and Queensland look set to forge ahead economically while NSW wallows, according to a report by real estate services firm CBRE on the impact of transport infrastructure spending.

The report, Big Wheels Keep on Turning, is based on 20 years of transport infrastructure monitoring and research, the firm says, and highlights the economic gains that come from infrastructure investment and the flow-ons from it.

The report highlights investment in transport infrastructure leads not only to a return on investment in direct dollar terms, but can have a much broader impact in providing for business growth, stimulating employment opportunities and providing the basis for a more efficient, effective and growing economy, CBRE says.

Some of the key findings from the report are:

  • Investment in transport infrastructure has a significant influence on the development of the industrial property sector
  • $41 billion of transport related infrastructure projects are proposed for Australian cities between 2011 and 2020 - up 55 percent
    on the previous decade.
  • Queensland and Victoria lead in regard to this proposed transport infrastructure investment
  • Environmental concerns are changing the type of infrastructure being developed in Australia, with a proposed rise in metropolitan rail investment, especially to separate freight movements from passenger services
  • Investment in transport infrastructure in non-metropolitan areas is set to increase and will lead to a long term rise in demand for industrial property in regional areas.

Forty projects were identified for the period from 2011 to 2020, which CBRE believes will directly influence the industrial property sector and include the development of road, rail, port and airport infrastructure.

"This investment will be necessary to provide for a national economy expected to grow 33 percent through this forecast period; a corresponding rise in freight volumes and a population expected to add 2.6 million people through the same period," CBRE Executive Director, Global Research and Consulting, Kevin Stanley says.

"Beyond the obvious benefits of increased physical access, improved transport infrastructure leads to strong business growth in new facilities, providing a competitive edge for business growth in one city or location, over another. South-East Queensland and Melbourne were key examples of areas which have benefitted significantly from investment in transport infrastructure in the past."

Of the $18.4 billion of investment in transport infrastructure across Australia between 2000 and 2010, 61 percent was in Queensland and Victoria.

This is set to rise to 75 percent between 2011 and 2020.

The economic and urban development response from investment in transport infrastructure will help lift growth in these two States above national averages in the next 10 years, as it has been in the last 10, CBRE says.

Despite accounting for 31 percent of Australia’s economy, NSW had only an 18 percent share of investment in transport infrastructure projects, especially those influential to industrial property between 2000 and 2010.

That share is set to drop to 12 percent from 2011 to 2020, despite a 28 percent increase in total proposed spending in absolute terms.

CBRE Regional Director, Industrial & Logistics Services, Joshua Charles said this was a key issue for industrial users who were quick to vote with their feet in regard to location decisions.

"When transport infrastructure does not keep pace with the increase in user demand we’ve seen in Australia, industrial users will - and have – relocated to those states that can offer better accessibility," Charles says.

CBRE’s study also details how the type of transport infrastructure being developed in Australia is changing.

The major change is in rail transport, which accounted for 11 percent of all major transport infrastructure development in Australia between 2000 and 2010; a share set to increase to 33 percent between 2011and 2020.

The share of investment going into rail-related projects was a common theme in proposals coming forward in all Australian capital cities at present. This was at the expense of major road projects, investment in which was proposed to fall from 80 percent to 56 percent of all major transport infrastructure likely to influence industrial property between the same time periods.

"The single greatest issue affecting industrial property users is the ability to move product from port to warehouse to consumer," Charles says.

"The rise in rail related investment appears to be in response to environmental concerns as well as the need to better link different modes of transport and relieve congestion at seaports.

"The more that containers can be put on rail and moved to less built-up areas away from the sea ports will be of benefit to both freight carriers and motorists in general.

"Sydney is a case in point given the current difficulties associated with the M5 which provides just two western lanes between the air and seaport and Moorebank.

"The afternoon bottlenecks in the M5 tunnel have created considerable issues for transporters paying to move containers by the hour."

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