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The future of Sydney
Sydney is riding a wave of Government infrastructure spending. The State and Federal Governments have committed over $70 billion to transport infrastructure projects in a bid to mitigate congestion issues and future-proof Australia’s most populous city. The recent strategic release shows the Government’s growth plans are not slowing, and the implications for the future of Sydney are vast.
The vision for Sydney has evolved. From a focus on economic security, with the extended harbour-side CBD as the key beneficiary of investment, the NSW Government’s independent planning body, the Greater Sydney Commission, has released a bold new vision for Sydney as a metropolis of three cities.
A Metropolis of Three Cities – Greater Sydney Region Plan (GSRP) is a 40-year strategic plan, underpinned by five 20-year district plans. The plan’s metropolis of three cities – Eastern Harbour City, Central River City and Western Parkland City sees most residents live within 30 minutes of their jobs, education and health facilities and services.
The GSRP redefines the focus of planning in Sydney to centre on addressing population growth, demographic change and improving liveability. Sydney’s population is forecast to rise from 4.8 million to 6.2 million over the next 20 years, and almost double to 8 million by 2056, so the government’s new vision has significant implications for the city and its residents.
Eastern Harbour City
The vision for the Eastern Harbour City sees it remain as the global gateway to Sydney and economic engine for the state, currently contributing approximately two-thirds of the state’s economic growth. Eastern Harbour City is expected to remain the most populous of the three cities and experience the greatest growth in dwellings and employment.
Much of the $70 billion invested in transport infrastructure has been spent on significant rail projects servicing the Eastern Harbour City. The Sydney Metro projects currently under construction will service between Rouse Hill in the northwest and Sydenham in the South (and extend links to the Central River City with the Metro West component), and the CBD and South East Light Rail will service between the city and the inner eastern suburbs.
Land conversions for residential, population growth and improvements in infrastructure will drive rental growth across both office and industrial sectors, whilst non-discretionary retail offerings will need to service an ever growing population.
Central River City
The Central River City is located close to the geographic centre of Greater Sydney, with Greater Parramatta at its core. The vision for the city sees growth in a broader array of industries, building on existing office-based industries operating in Parramatta CBD and on the numerous industrial services in surrounding suburbs.
Facilitating this vision, there is a greater focus on improving freight movement and accessibility to enable the greatest density of industrial services in Greater Sydney. Currently there are several significant projects underway to improve the Greater Parramatta and Olympic Peninsula’s economy. The $45 billion WestConnex proposes to provide greater road capacity and access for freight from Port Botany and Sydney airport, whilst the Moorebank Intermodal project aims to reduce the number of trucks travelling between the Central River City and the port.
These improvements and the increasing demands of a rapidly growing city will ensure that the Central River City will retain much of its industrial land whilst building on industrial and retail property reserves. Strategically positioned industrial land is well suited to servicing the demand of eCommerce and online retail as the population continues to swell in the area.
Western Parkland City
With the Western Sydney Airport and newly announced Badgerys Creek Aerotropolis at its heart, the Western Parkland City is set to undertake the most dramatic transformation of the three cities over the coming 20 years. The airport is expected to add about 200,000 new jobs, with the Government committing to invest $20 billion into infrastructure to support the Aerotropolis.
The Western Parkland City presents as a unique blank canvas growth opportunity for developers. Much of the land is set to be released to the market, and in turn it is yet to be seen where and how best this land will be utilised. It is likely that the land around the airport will prove to be prime logistics land, acting as a connection between Sydney, other Australian cities, and the rest of the world via Port Botany.
What it means for Charter Hall investors
Charter Hall owns and manages a large portfolio of assets positioned to capitalise on the Government’s vision and metropolis of three cities. With office assets across Sydney and Parramatta, (including Western Sydney University’s flagship campus), manufacturing and logistics centres in the northern, western, outer western and south-Western precincts, and retail assets in prime locations across Greater Sydney, Charter Hall is well situated to service the needs of a growing population. For investors, having exposure to property assets which are underpinned by strong fundamentals is beneficial to income returns and property values over the long term.