WA’s Time to Shine Placing the spotlight on opportunities across Australia’s Western gateway Over the past two years, the Western Australian economy has shifted gears and outpaced the rest of Australia in its economic recovery over the course of the pandemic. The state has become a significant investment destination for global capital, known for its diverse natural landscapes, climate and unique lifestyle. Anchored by a robust resource sector that is currently fuelling a global recovery, the economy is underpinned by a range of flourishing industries. These are just some of the major drawcards for investors, residents, workers and visitors. Here are our top ten reasons to invest in WA: 1 2 Strong and diversifying economy International hub for resource production & mining WA is undergoing a resurgence on the back of significant economic growth and infrastructure investment. The economy has continued to show resilience throughout the COVID-19 pandemic and was the strongest economy in the country during this time. WA is a particularly active state, with a Gross State Product of $320.7 billion in 2020-21 (16% of Australia’s GDP). This grew by 2.6% 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. As a result, significant employment opportunities are anticipated to emerge, igniting an increase in interstate and overseas migration. WA is a leading resource sector production and investment destination. 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. Top Five Industries to Contribute to WA’s GSP (%) June 2020-21 (gross value added: current prices) Major resource projects include: Western Australia’s mining sector is globally renowned and there is a considerable amount of investment being allocated towards it, creating thousands of new job opportunities within WA. Mining • South Flank (BHP) iron ore project 5.0% Construction 4.7% Health Care & Social Assistance • Iron Bridge and Eliwana Railway (Fortescue Metals Group) 4.2% Professional, Scientific & Technical Services 46.9% 4.2% Manufacturing Source: ABS • Koodaideri Mine Rail (Rio Tinto) • Kemerton Refinery (Albemarle) A total of: $37.4B $37.4 Billion or 69% committed to mining, oil and gas and infrastructure projects in WA. $54.3B $54.3 Billion $240.5B $240.5 Billion total value of committed projects across Australia. in feasible and publicly announced stages in WA. Source: Office of the Chief Economist / Colliers Research 3 Growing demand for office accommodation with tightening vacancy rates Over the past 6 months the Perth office market has improved significantly with workers returning into the city. On the future supply front, there are several key new projects under construction including Capital Square 3, Westralia Square 2 and One The Esplanade. 4 With office workers coming back into the city, the retail market in the CBD is showing signs of recovery Retail sales have increased by 10% YoY in April 2022, with Headline Clothing (21.5%), Pharmaceuticals (19.5%) and Electronics (18.7%) ranking as the top three retail categories (ABS). Over 72,000 sqm of office space is projected to come into the market by 2024 across Premium and A Grade buildings of which 90% is already leased; Premium and A Grade office buildings are in demand from tenants. As a result, rents have also recently increased and the vacancy rate continues to tighten at 15%; 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 continue to increase. Technology based mining services and tenants affiliated with the renewable energy sector are also particularly active following the movement towards automation within the sector and high global demand for rare earth minerals. 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. Larger National retailers are seeking new opportunities in the CBD as a result of multiple major developments that have been recently announced. This includes the ECU City Campus and the redevelopments of Carillon City and the eastern core of Barrack Street; all of which are anticipated to significantly revitalise and reshape the CBD. Neighbourhood centres have proven to be resilient throughout the pandemic due to being anchored by supermarkets and a defensive tenancy mix. These centres are providing value to investors relative to similar product located within east coast markets. 5 6 2021 witnessed unprecedented growth in the industrial and logistics sector Following the recovery of the Western Australia economy, Perth’s industrial market strengthened in 2021 and momentum has continued into the first half of 2022. In addition to the resource sector, demand is underpinned by population-driven industries including construction, tourism, health and mechanical industries. With limited options available, there is upward pressure on rents across all precincts and grades. 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. Competitive residential house and unit prices in Perth 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 (CoreLogic). Similarly, the rental market has also experienced significant growth over the past 12 months resulting in increasing asking rents and higher rental yields. 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. CoreLogic Home Value Index, Weekly Rents and Yields for House and Units by Capital Cities (as at April 2022) Median Price Industrial & Logistics Market $1.9B 200k 110k $1.9B Investment volumes 200,000 sqm Leased in 2021 1.7% 5.5% 1.7% Vacancy rate in Q1 2022 5.5% Vacancy rate in Q1 2021 Source: Colliers Research Yields House Unit House Unit House Unit $579,000 $410,000 $504 $437 4.2% 5.5% Sydney $1,417,000 $831,000 $687 $546 2.2% 3.1% Melbourne $1,001,000 $631,000 $498 $439 2.5% 3.6% $880,000 $488,000 $558 $443 3.3% 4.7% Perth Brisbane 110,000 sqm Leased in 2020 Weekly Rents Source: CoreLogic 7 8 Emerging focus on agriculture The Mediterranean climate in Perth offers 265 sunny days every year (Bureau of Meteorology) as well as a diverse climate across the rest of the state, which supports the production of a range of high-quality crops including livestock, dairy, wool, horticulture and grains. A total gross value of $8.8 billion for agricultural produce was recorded across 2019-2020. Agribusiness is a growing sector, providing opportunities for institutional investors as well as having other positive flow on effects on the economy such as employment prospects. Top Five Agricultural Commodities Produces ($ Gross Value) 2019-2020 Rising investment in international education Higher education is a cornerstone of Perth’s international appeal and continues to drive growth in the city. The WA State Budget has put forward $41.2 million to boost international education and attract international students to also help address skills shortages. As part of the Perth City Deal which is worth over $1.7 billion in investment, 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 development of student accommodation facilities, as well as providing further support for the retail, hospitality and residential sectors within the CBD. Source: ABS $3.3B $2.0B $6.8B $6.4B $3.4B Edith Cowan University Wheat & Barley Livestock Canola Wool Hay Curtin University 9 10 Perth is the 6th most liveable city in the world In 2021 Perth ranked as the 6th most liveable city in the world, 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. 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. Perth Liveability Index Scores 2021 Valuable strategic advantage with WA’s time zone and geographical location WA is the largest state geographically and 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. Source: The Economist Intelligence Unit Limited 95 100 Stability Healthcare China 78.2 100 100 Culture & Environment Education Infrastructure Singapore Hong Kong Author Yashwini Halai WA Manager | Research +61 8 6158 8260 Experts Richard Cash State Chief Executive Western Australia Dean Johnston National Director Valuation & Advisory Services Jemma Hutchinson National Director Office Leasing Malcolm Reed National Director, WA Real Estate Management Services 0412 006 949 0488 280 998 0422 870 473 0412 830 305 Hadley Missell Director Retail Leasing Hayden Dick Senior Executive Industrial Shane Isaacs Manager Investment Services 0437 054 532 0438 941 660 0408 883 987 Accelerating Success.
