The boom is not over yet: 10 regions positioned for further growth
While housing values in Sydney and Melbourne are declining, an expert has highlighted that there are markets across the ...
A new research enumerated the top reasons Western Australia should be on any property investor’s radar.
The research industry latest industry report from property consultancy firm Colliers puts a spotlight on Western Australia and its potential as an investment destination.
It highlighted Western Australia’s resilient performance throughout the pandemic and how the state rose to become an economic powerhouse in recent years.
“Over the last two years, the WA economy has shifted gears and has outpaced the rest of Australia in its economic recovery over the course of the pandemic,” the report stated.
The report also emphasised that the state’s solid economic performance is underpinned by a range of robust industries, making the state an attractive location for investors, residents, workers and visitors.
“WA is becoming a significant investment destination for global capital, known for its diverse natural landscapes, climate and unique lifestyle,” according to Colliers.
The report from the property consultancy firm also comes on the heels of REIWA’ urging investors to look to Western Australia for future investments, as the state grapples with a deepening rental crisis.
Here are 10 reasons why property investors should look toward Western Australia for their next investment:
1. Strong and diversifying economy
According to Colliers, Western Australia is undergoing a resurgence following significant economic growth and infrastructure investment.
“WA is a particularly active state, with a gross state product of $320.7 billion in 2020-21 (16 per cent of Australia’s GDP). This grew by 2.6 per cent between 2020-21 and further growth is anticipated over the forthcoming year, which will have a positive flow-on effect to the rest of WA’s economy, industries and our property market,” the report stated.
As a result, Colliers explained that significant employment opportunities are anticipated to emerge, driving an increase in interstate and overseas migration. This, in turn, is also seen to boost demand for housing in the state.
2. Solid employment growth due to strong commodity market
With Western Australia’s status as a major commodity producer in the country, Colliers believes that strong employment growth is in the cards for the state.
“The state is one of the most diverse production regions, generating over 50 different commodities from over 125 operating sites (CMEWA), which is more than any other state in Australia. Key commodities include iron ore, liquefied natural gas (LNG), gold, crude oil, base metals, diamond, garnet and lithium to name a few,” the report stated.
The report also highlighted that the state’s mining sector is “globally renowned”. “There is a considerable amount of investment being allocated towards it, creating thousands of new job opportunities within WA,” it added.
The jobs generated from the sector generally are seen to drive up housing demand in the state.
3. Demand for office space is on the rise
With more workers returning to their office locations, Colliers reported that activity within ’s office market has picked up significantly in the last six months.
“With the return of workers to the office, a number of occupiers are now looking to expand their office space requirements. This is particularly evident in the resource sector as the pipeline of new projects [continues] to increase,” the report stated.
Colliers also revealed that technology-based mining services and tenants affiliated with the renewable energy sector are also “particularly active” after a widespread shift towards automation within the sector.
“All these trends are signs of an improving and competitive market that should increase demand for office accommodation. The Perth office market is expected to enter a more robust rental growth cycle off the back of tightening vacancies,” Colliers stated.
4. CBD retail market showing signs of recovery
With office workers coming back into the city, the report highlighted that the retail sector is also starting to show green shoots of recovery.
Colliers cited data from the Australian Bureau of Statistics (ABS) that showed that retail sales in Perth have increased by 10 per cent over the 12-month period to April 2022, with headline clothing (21.5 per cent), pharmaceuticals (19.5 per cent) and electronics (18.7 per cent) ranking as the top three retail categories.
The report also noted that larger national retailers are seeking new opportunities in Perth’s central business district as a result of multiple major developments that have been recently announced, including the ECU City Campus and the redevelopments of Carillon City and the eastern core of Barrack Street.
5. Unprecedented growth in the industrial and logistics sectors to bolster demand
After the revival of the Western Australian economy, Perth’s industrial market strengthened in 2021 and momentum has continued into the first half of 2022, according to Colliers.
“Investment volumes for industrial and logistics assets in Perth were at their highest level on record during 2021 with approximately $1.9 billion trading up from $170 million in 2020. The outlook for demand in the second half of 2022 is favourable with the continued expansion of key industries including transport and logistics, retail trade and manufacturing,” the report said.
The report further explained that in addition to the resource sector, demand for properties is underpinned by population-driven industries such as construction, tourism, health and mechanical industries.
“With limited options available, there is upward pressure on rents across all precincts and grades,” Colliers surmised.
6. Competitive residential house and unit prices in Perth
Despite the strong growth recorded over the last year in the residential property market, Colliers pointed out that Western Australia remains the most affordable state in the country for housing.
Citing CoreLogic’s data, the report stated: “Perth has offered more competitive residential price points in comparison to other capital cities around Australia, with the median house price sitting at $579,000 and median unit price of $410,000 as at April 2022.”
The report also noted the rental market has also experienced significant growth over the past 12 months, leading to high asking rents and higher rental yields.
At the end of April 2022, data from CoreLogic showed that gross rental yields for both the unit and house sectors in the city stood at 4.2 per cent and 5.5 per cent, respectively.
But despite the strong showing of both sectors in terms of rental yields, Colliers acknowledged that there are potential headwinds that the market faces.
“The residential property industry is cautiously optimistic as there is an identified demand and need for more housing, however there are many existing challenges associated with cost pressures, skilled labour shortages and the prospect of higher interest rates,” the report said.
7. Growing agribusiness sector to provide employment opportunities
Colliers also cited Perth’s burgeoning agribusiness sector as another driver of demand for the city’s property sector.
The report noted the city’s Mediterranean climate, which supports the production of a range of high-quality crops.
“A total gross value of $8.8 billion for agricultural produce was recorded across 2019-2020. Agribusiness is a growing sector, providing opportunities for institutional investors as well as having other positive flow on effects on the economy such as employment prospects,” the report stated.
8. Rising investment in international education seen to drive growth
“Higher education is a cornerstone of Perth’s international appeal and continues to drive growth in the city,” Colliers stated.
The report noted the West Australian state budget had allocated $41.2 million to boost international education and attract international students to also help address skills shortages in the state.
As part of the Perth City Deal, which is worth over $1.7 billion in investment, the report highlighted major educational institutions, including Edith Cowan University and Curtin University, will now have an inner-city presence with their new CBD campuses.
“These new campuses are anticipated to attract more than 25,000 students and staff. This brings about an opportunity for [the] development of student accommodation facilities, as well as providing further support for the retail, hospitality and residential sectors within the CBD,” the report said.
9. Perth is the 6th most liveable city in the world
Perth is placed well for liveability when measured against other cities around the world, making it an attractive location for tenants and home buyers.
In 2021, Perth ranked as the sixth most liveable city in the world, with the city achieving top scores in healthcare, education and infrastructure.
“With its relaxed lifestyle, numerous beaches, unique landscapes and employment opportunities, Perth is an ideal location for people to live, work and play,” Colliers stated.
It added: “With borders now open, there is a growing need for skilled workers combined with lifestyle benefits offered by WA, net interstate and international migration is expected to increase.”
10. WA’s time zone and geographical location offer strategic business advantage
According to Colliers, another advantage that Perth offers is that it shares the same time zone with many major Asian countries, including China, Hong Kong and Singapore.
“Businesses based in the state have the ability to leverage from this geographical positioning in establishing strong trading partnerships and to gain a strategic advantage in comparison to the eastern states. More companies are anticipated to establish a presence in WA given the growing prominence of the region,” the report stated.