South-east Queensland an impressive economic story for prudent investors

By Robert Stanley-Turner

Happy New Year! January is the perfect time to sit back, start afresh and re-evaluate your investment goals. 

Over the last few years, we’ve all been challenged by a lack of attractive investment options as returns have followed interest rates down. (OK, perhaps we’ve been a little bit spoiled by the glory days of high interest rates.) Now, though, the game has changed. The US is well and truly into its second decade of quantitative easing. Here at home, the ASX is edging into vulnerable territory—and you only need to look at bank shares to realise that the definition of blue chip is changing. Term deposit cash rates are laughable. And the return from residential real estate, even with all its attendant hassles, is around 2 or 3%. So what options are available for investors seeking to secure their income?

For those of us who prefer investments of the non-digital, non-fake, bricks-and-mortar variety—commercial real estate is still the answer. In Melbourne and Sydney, though, returns have fallen to around 5 or 6%. 

For a brighter investment outlook, it might be time to head north.

The Queensland economy: beautiful one day…

The Queensland government is expected to shortly announce an economic growth rate of 3%—this compares with our national economy ticking along at an uninspiring 1.4%. The part of this I find really exciting is the export figures: Queensland exports rose at a stunning 9% per annum up until October 2019. Its biggest customer by far is China, so it seems likely that these kinds of figures will be continuing for quite a while.

There’s also strong internal demand: overall, the Queensland population growth was consistent with the national average at 1.7% but the state’s south-east grew at 3.5% pa, virtually double the national average. People are flocking to suburbs like Pimpana, halfway between the Gold Coast and Brisbane, which recorded one of the largest increases in population in Australia, with close to 30% increase. This south-eastern corner has around 3.5 million people, which is about 15% of our national population—this isn’t that far below Sydney or Melbourne, which each come in at around 20%.

In other words Queensland, and in particular, the south-east of the state, is humming along nicely.

If you build it, they will come

In response to all this growth, the state government is making some pretty big decisions. There’s a raft of large private and public construction projects well underway.

Here is a summary of the major projects:

  1. Cross River Rail is a new 10.2-kilometre rail line running underground between Brisbane’s southern to northern suburbs, designed to relieve rail & road congestion in and out of the CBD. This congestion-busting measure will improve travel times up and down the line from the Gold Coast up through Brisbane and up to the sunshine coast. Not only this, there will be three new gold coast railway stations to promote further decentralised urban growth up and down the line. For more information, see: Click here
  2. New runway at Brisbane airport to upgrade capacity and facilitate income from tourism and freight will open this year, after 8 years under construction. Brisbane airport currently processes around 23 million passengers a year and it’s been estimated that that figure will double over the coming decade. International visits are already up 3.6% from last year and should be boosted further with new flights from San Francisco, Chicago and Tokyo set to take off later in 2020. For more information, Click here and here
  3. The new Maroochydore CBD is well underway to create a model city of the future. Maroochydore is the heart of the Sunshine Coast, only 90 minutes north of Brisbane is the new Maroochydore CBD. The new CBD will feature an extensive use of technology to create a cleaner, greener, more liveable, dynamic city centre, including Australia’s first underground automated waste collection system and Australia’s fastest telecommunications and data connection to Asia with a Submarine Broadband Cable, which promises to be very attractive to the financial industry for high-speed trading. For more information, Click here
  4. Queen’s Wharf Brisbane, a massive development that will cover over 27 hectares, or 20% of Brisbane’s CBD, is already well underway and is slated to be completed in stages between 2022 and 2024. The development will offer a shopping centre, public space, 5 new hotel brands including a Ritz Carlton, cinemas, residential towers, and a mega pedestrian bridge into Southbank across the river. It’s being built on one of the city’s most prominent CBD sites, is integrating some of Brisbane’s heritage buildings and is being developed by an impressive consortium of Asian developers and local ASX listed company Star Entertainment group. The corporate video is really something else.  Click here

If you’d like to read further about Queensland’s economic outlook, here are some interesting links:

Queensland Treasure August 2019 statement:

https://www.treasury.qld.gov.au/queenslands-economy/about-the-queensland-economy/

Queensland Government Statistician’s Office statement on exports, October 2019:

https://www.qgso.qld.gov.au/statistics/theme/economy/international-trade/exports#current-release-exports-qld-goods-overseas

Queensland Government Statistician’s Office statement on population, March 2019:

https://www.qgso.qld.gov.au/issues/3071/population-growth-highlights-trends-qld-2019-edn.pdf