Today’s awarding of the 2018 Commonwealth Games to the Gold Coast warrants celebration for more than the event itself. The economic benefits which will flow from the preparation required to host an event of this magnitude is just the shot in the arm that the Gold Coast, and Australia for that matter, needed. I personally hope that it becomes the fillip which all levels of government appear to need in order to capitalise on this Nation’s healthy economic position, low debt level, and abundance of opportunities; something positive!
A warm-hearted congratulations goes to all of those associated with putting the bid together and to the broader Gold Coast community. The Gold Coast is the first regional Australian city to ever host such an event. It will now be exposed to billions of people around the world as preparations unfold in the lead up to April 2018. Property markets will reap rewards, too.
What Will The Games Bring?
According to the State Government, “the Games could generate up to $2 billion in economic benefit with up to 30,000 full time-equivalent jobs created between 2015 and 2020. Research confirms that mega-sporting events like a Commonwealth Games have wide reaching ramifications for the host city. Many impacts are not precisely quantifiable but are significant in their positive impact on the community”.
$500M on sport and transport infrastructure
higher level of awareness of the Gold Coast and SE Qld
increased demand for business services from visitor spending and increased demand for housing
Metricon Stadium (home of The Suns) will receive increased seating from 25,000 to 40,000 and become the main venue for the event. Numerous other facilities (in Gold Coast, Brisbane, Cairns and Townsville) will also receive upgrades
A start-of-the-art Sports & Leisure Centre will be built at Coomera
Accommodation for 6,500 athletes will be built near Griffith Uni and become homes for local residents post-Games
A new Health & Knowledge precinct will be built adjacent to the new $1.76B Gold Coast University Hospital.
The $1B Rapid Transit passenger rail network will be fully operational
The improved facilities and infrastructure has the potential to transform the Gold Coast in to Australia’s premier sports and leisure location. It will most certainly enhance the City’s chances of bidding for a World Cup Soccer event.
The Games will not just benefit Gold Coast. Big international events create hype, positive sentiment and improved productivity which the entire host nation tends to benefit from at some level. I believe that Brisbane, only an hour away via the M1 or less via the new train line and where most of the flights will come in and out of, will benefit substantially from the Commonwealth Games. There will also be opportunities for the rest of SE Qld as tourists look to make the most of their trip in Oz. In a perfect world, you’d like to see the AUD$ much lower by then to entice more tourists and longer stays.
Impact Of Past Events On Property Markets
We cannot under-estimate the considerable boost to consumer confidence which comes from being awarded an event such as this. The scramble to build better roads, tunnels, stadiums, and athlete villages provides substantial opportunities for those in construction-related occupations. The extra revenue generated also spins off on to other sectors. As this graph shows, unemployment rates generally reduce. Demand for housing also increases. As images of development progress gets distributed through the media, the city gains increased exposure, attracts more tourists and revenues for retail and hospitality well before the event starts.
The 2012 London Olympics reportedly created 10,000 long-term jobs just on the construction of its new Olympic Park in Stratford plus a nearby athlete’s village.
Australia has an impeccable record with hosting international sporting events. The Sydney Olympic Games (2000) and Melbourne Commonwealth Games (2006) are both rated the most successful ever. The Brisbane Commonwealth Games (1982) and World Expo (1988) were also a success.
The direct impact which these events had on their respective property markets is more difficult to quantify though. Brisbane median property values grew 31% in 1981, the year before its Games, and 35% in 1988 (World Expo). Sydney had a few years of high value growth before and after its Games, with a peak of 24% in 2002 before it then had a sustained flat period. The lead up to the Melbourne Games produced poor property results but had growth of around 11% and 8% for the two years following their games.
There are numerous other factors which affect property markets. That said, there is no question that Australian cities which have hosted such events in the past have been beneficiaries of significant increases to their property values.
Change in Median Property Value
No Automatic Ticket To Prosperity
Not every major international sporting event produces the economic windfall that the host had hoped for. It’s not that long ago (2004, in fact) that Athens hosted the Olympics; Greece’s economy is today the worst of all the developed nations!
The biggest challenge which Gold Coast’s event organisers will face will be competition for skilled labour. The resources sector is ramping up and already doesn’t have the workforce it needs. Australia’s defence force, with its plans to construct / assemble a massive $150 billion upgrade of its fleet, will compete for the same workforce.
Other risks associated with this event include not leaving the desired legacy post-event. If costs blow out and / or revenues generated from and after the event come in under budget the State risks being left with a big debt (passed on to tax-payers). Getting the infrastructure planning right is crucial; Sydney’s Olympics left behind a poorly designed road network while Brisbane’s QEII Stadium is just one example of an under-utilised, expensive, white elephant.
Oh yes, property spruikers – they’ll love this. There will already be too many DIY property investors whom will make emotional investment decisions as it is but the spruikers will cash in on this event, for sure!
Long-Range Outlook For Gold Coast Property Markets
I’m very happy for the people of Gold Coast, particularly those in the construction industry who’ve been doing it tough for a while. As an avid sports fan, I’ll be like a lot of people tuned in for the drama and inspiration from the efforts of all those world-class athletes. I’ll probably even venture down the M1 to experience a few live events with my family. As for the impact which I expect the Games to have on Gold Coast’s property markets, it most definitely should be positive in the lead up to 2018 but the legacy which it will leave beyond 2018 will lie in the detail of the planning – only time will tell.
weather, proximity to water, lifestyle, and general desirability of the Coast is undeniable. These things do have some impact on property values. Quality infrastructure and social services, proximity to the State’s capital, and affordable housing are also on the positive side of the ledger for the Coast. All of these things are major contributors for historically strong population growth. On the other hand, the Coast has had an over-supply of property for the last few years. Efficient public transport, traffic congestion, and quality town planning are also things which the Coast needs to improve. Unemployment on the Gold Coast is currently amongst the highest in the country but the Games will definitely help address this over time.
The big concern that I’ve always held for investing on the Coast is its unhealthy reliance on tourism. An event such as the Commonwealth Games, and the international exposure which it brings, is wonderful for tourism but it’s a one-off. Unless the Coast’s economy ever develops some diversity its property market will always be highly vulnerable to things such as any broader economic downturn (domestically and / or internationally), a high $AUD, and any turmoil affecting airlines.
Overall, yes, I do think the Games will be good for the property market on the Coast. But, I would not recommend rushing out to invest there; there are many better property markets to invest your hard earned dollar in!