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News release

Sydney

The renewed focus on infrastructure spending is positive for the NSW commercial property sector: JLL

Fiscal consolidation in the budget is likely to see interest rates remain lower for longer, supporting real estate asset pricing


​SYDNEY, 14 MAY 2014 – The continued spending commitment to infrastructure announced in the Australian Federal Budget this week is positive for the NSW property sector, according to JLL agents, with funding for roads and highways and a second Sydney airport at Badgerys Creek under the Western Sydney Infrastructure Plan promised to be delivered.

The plan builds on other confirmed initiatives fostering growth in Western Sydney including WestConnex, the development of the Moorebank Intermodal Terminal and the construction of the North West and South West Rail Links.

JLL’s NSW Managing Director and National Head of Industrial Michael Fenton said, “We are pleased to see an ongoing commitment to spending on infrastructure, providing a boost to the economies of Western Sydney and wider New South Wales.

“Streamlining travel time and creating greater transport efficiencies will have a positive impact on the New South Wales economy, enabling it to keep pace with population growth and the resulting increased demand for both goods and services. This will have a trickle-on effect into the property sector.” 

Mr Fenton said, “Fiscal consolidation in the budget, designed to reverse years of deficits, is likely to see interest rates remain lower for longer, supporting real estate asset pricing.”

The Asset Recycling Initiative, which encourages State and Territory Governments to sell existing assets to create funds for new projects, can be seen as a favourable result for the private sector, according to Mr Fenton.

“With increased private sector participation in freight infrastructure important in this budget, we are likely to see a flow-on to the real estate sector – particularly around Moorebank and Badgerys Creek. The privatisation program is likely to be positive for investment banks, lawyers and engineering companies who occupy a lot of office space in Sydney, with many white-collar workers employed in the design, delivery and finance stages of the construction industry.”

According to Mr Fenton, “The fuel excise will be a cost to businesses but for the property sector will largely be offset by spending on new motorways. There is likely to be an increased focus by businesses looking to reduce transport costs by locating further towards motorways and in close proximity to customers.” 

JLL’s Director in Charge – Parramatta John Macree said, “With additional Federal Government contribution to the existing pipelines of Western Sydney, infrastructure projects will provide more certainty regarding financing and delivery of these projects. This is likely to stimulate demand by astute developers and investors to start acquiring and developing key assets that will benefit from the infrastructure projects. 

“The 10,000 new jobs created as a result of the budget will have flow-on benefit to the local economy in Western Sydney. In addition to the construction sector, the infrastructure projects will also benefit a range of industries and services – particularly those industries involved in supplying raw materials, such as concrete, bitumen, steel and earth-moving equipment as well as support and engineering services.”