On July 21, 2021, Brisbane, Australia, successfully won the right to host the 2032 Olympic Games, becoming the third Australian city to host the Olympic Games after Melbourne (1956) and Sydney (2000). The news sparked a frenzy in Brisbane's real estate market, with many people starting to look at property investment opportunities in the city.
Following the news, Brisbane house prices surged 33 per cent in a year. You know, the previous median house price in Brisbane was just over 500,000 Australian dollars. However, at the peak of rapid house price growth, the median house price in some areas of Brisbane even exceeded A$1 million.
So, what impact will the Olympic economy have on Brisbane's real estate market? If you invest in Brisbane real estate now, can you still enjoy this wave of dividends?
1. What is the potential of Brisbane real estate investment?
After Brisbane won the right to host the Olympic Games, Australian real estate investment experts generally believe that by the time the Olympic Games is held in 2032, Brisbane's housing prices may double, attracting a large number of buyers eager to take a chance! Brisbane's median house price is expected to climb from A$516,000 to A$1.24 million in the future.
While no one is entirely sure whether the Olympics will actually have such a huge impact, what is certain is that the next decade will be a golden period for the Brisbane property market.
The Olympic Games usually have a certain impact on housing prices in a city, mainly in the following aspects:
The Olympics typically attract large numbers of tourists and media to watch and cover the games, which can drive up housing prices at certain times and locations, especially during peak tourist seasons and near popular attractions.
In preparation for the Olympic Games, host cities usually invest heavily in infrastructure construction and urban renovation, including transportation systems, sports venues, and public service facilities. These investments may enhance the city's attractiveness and quality of living, thus pushing up housing prices. Brisbane has launched a series of infrastructure projects, attracting more and more buyers.
During the Olympics, a large number of tourists and competitors will need to find accommodation, and hotel rooms are likely to be in short supply, which may lead to increased demand in the short-term rental market, which in turn will push up rents. The supply of housing in Brisbane is currently tight. The number of new housing starts has been far lower than expected due to the impact of the epidemic, and competition among buyers is fierce.
The hosting of the Olympic Games may inspire market participants' confidence in the future development of the host city, prompting them to make long-term investments in the city, further pushing up housing prices.
At present, we can already see some positive signals, the most obvious being the growth of population and employment opportunities. The Australian government estimates that hosting the Olympics in Brisbane will create 130,000 jobs and bring economic benefits of A$7.4 billion.
Overall, international sporting events alone are not the primary cause of long-term growth in the real estate market. What really promotes the rise in housing prices is the large-scale infrastructure investment and transportation improvement plans brought about by the Olympic Games.
2. Where is the focus of Brisbane’s Olympic infrastructure?
Since infrastructure is so important, which areas in Brisbane will undergo large-scale infrastructure investment due to the Olympic Games in the future?
When analyzing the property market, we can discuss it from two aspects: site infrastructure and environmental infrastructure.
Site infrastructure
Brisbane will use 85% of existing sports facilities as Olympic venues, which means that investment in venue infrastructure is relatively limited. In contrast, improvements to transportation systems deserve more attention.
In terms of site infrastructure, the most noteworthy one is the Gabba near Brisbane city centre. The Queensland government has announced that it will spend more than AU$1 billion to renovate the Gabba Cricket Ground and transform it into a 50,000-seat Olympic main venue for the opening and closing ceremonies. In addition, a new world-class Arena swimming venue will be built on Roma Street, a large aquatic center with a capacity of 15,000 seats.
Environmental infrastructure
The Brisbane Government has selected the Olympic Village to be located in the Hamilton area and plans to build new high-end accommodation with river views here for athletes from all over the world. Other smaller player accommodation will also be built on the Gold Coast, Sunshine Coast and Kooralbyn.
Whether it is Brisbane, the Gold Coast or the Sunshine Coast, hundreds of millions of dollars will be invested in improving environmental infrastructure. The government plans to spend A$5.4 billion to build a railway connecting Cross River Rail, which is expected to be completed in 2024. In addition, Brisbane Airport will also be expanded. The government plans to invest 1.35 billion Australian dollars to add a new runway. It is expected to be able to accommodate 49 million passengers per year and bring an economic contribution of 5 billion Australian dollars.
3. Compare with other cities that have hosted the Olympic Games
Looking back at the 2000 Sydney Olympics, Sydney house prices rose by 88% during the five-year period. However, this increase is not just the impact of the Olympics. At that time, Australia was in the context of tax reform, and the government vigorously promoted the first home buyer grant, which further contributed to the rise in house prices. At the same time, the property market in Melbourne, which did not host the Olympics, also rose by 95%.
In other countries, the Olympic Games also brought significant economic effects. For example, the 2012 London Olympics cost 16 billion Australian dollars, which not only recovered the cost, but also drove long-term growth in the real estate market. Eleven years later, house prices near the London Olympic venues have risen by 78%, far exceeding the 61% growth rate in other areas of London.
These cases show that areas close to the Olympic venues usually perform better, and investing in properties in these areas is expected to yield huge returns in the long run.
4. Which areas should you choose to buy property in Brisbane?
So, how should you choose an area when buying a property in Brisbane? I have three suggestions for your reference:
Olympic venue areas such as the Gabba area, which has been renovated with A$1 billion.
This is also a good option near player villages, such as Hamilton in Brisbane and Robina on the Gold Coast.
My personal favorite for improving the transportation system is Roma Street. The area will be developed into a central transportation hub, and attention should be paid to benefiting areas along the subway station and the Cross River railway line. In addition, the Gold Coast's Phase 4 light rail will be extended to the Gold Coast Airport. At that time, areas along the light rail such as Burleigh Heads and Palm Beach are worth paying attention to.
The Sunshine Coast will also build a Mass Transit system in the near future. Driven by the Olympics, these infrastructure plans may be implemented faster. I believe this will drive the development of the housing market in areas such as Maroochydore and Slippy Downs.
5. Other advantages of buying property in Brisbane
Low supply of new homes Brisbane's housing supply has remained low, and although rents are rising, the supply of housing is very tight. Currently, newly built houses only account for 2.8% of the total number of houses, and the number of residential approvals continues to decline. This means that overall housing supply in Queensland and Brisbane will continue to be tight in the short term.
Investment Advantages Compared with Sydney and Melbourne, Brisbane's median house price is still at a low level. In addition, record numbers of immigrants from other states will continue to drive growth in Brisbane house prices.
Fortunately, during 2022, as Australia's overall housing prices entered a correction period due to interest rate increases, Brisbane's housing prices also returned to a relatively rational level. If you want to capitalize on the benefits of Brisbane hosting the Olympics, now is the time to do so.
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