It’s true that when a city hosts a major sporting or global political event such as the Olympic Games, G20 Summit, or the World Expo this will affect the local property market.
Both Sydney and Melbourne saw significant increases in property prices and sales volume after they hosted the Commonwealth Games and the 2000 Olympics. Hosting these major international events raised the host country’s profile and certainly attracted business investment, which benefits real estate value as a long-term gain. City and suburban transport received heavy investment benefiting local residential areas. Many new employment opportunities were created to handle all the new infrastructure developments and construction. Thousands of staff were hired to support the running of the games, with around 50,000 people employed to work on the first stage plans.
For the forthcoming 2032 Olympics, there’s likely to be similar levels of investment and employment opportunities. Based on the data from past events, it’s likely that a few hundred million dollars will be invested in the 2032 Olympics precinct. The area will ultimately become a mixed-use community, with over 10,000 jobs anticipated. Jobs will likely be available for the long-term meaning that existing and future workers will need accommodation across the region.
Two key events that previously took place in Brisbane were the World Expo in 1988 and the G20 Summit in 2014. PRD research analysis shows that prices surged during the 11 years prior to, and the year after these two events. The forecast for the 2032 Olympics is that Brisbane’s median house price will triple to $1.7m.
In April 2018, another major event that took place was the Commonwealth Games hosted on Australia’s Gold Coast. With multiple venues in Brisbane city and across Queensland, the 11-day event saw ticket holders exceed 1.2 million and brought the world’s media spotlight to the Gold Coast region. In the weeks following the event, there was a significant appreciation of property prices. According to CoreLogic’s July 2018 figures, there was an increase in property value compared to the previous year and the previous month, across all types of dwellings. The figures show that the Gold Coast’s property values have increased by more than 7% between 2017 and 2019. In fact, the Gold Coast’s property market has been consistently appreciating since late 2013, outperforming the rest of the state, so the region certainly benefited from hosting the games.
In the year following the 1999 World Expo, house prices grew by a further 29.7% in Brisbane and 19.1% in South Bank and nearby suburbs. A similar trend can be observed when the city hosted the 2014 G20 Brisbane Summit.
Historical data of house prices during the 2000 Sydney Olympics gives insight into how prices could behave in Brisbane in 2032. The median house price in Newington NSW and the Olympic Park’s surrounding suburbs, grew by an average of 13.4% in the year after the Olympics were held. Three years after the event, prices in Newington surged by 66.4%. The 2032 Olympics is still 11 years away and based on how the Brisbane market is transforming, the area has huge potential. Brisbane’s successful bid to host the 2032 Olympics will certainly have a massive impact on the local property market, according to many commentators. The current median house price sits at $674,738 and due to the forecast; it will hopefully reach $1.7m within 11 years.
Forecasts which are based on past statistics become a huge selling point to redirect sales to small products, such as units and town homes that wouldn’t otherwise have been part of the market growth, though it doesn’t always work out as predicted.
For instance, if we look at Hamilton – it’s close to the water, 4km from the CBD, easy commute by bus, car, and ferry – a dream water location. Since 2010, high rises and boutique homes have been heavily marketed. However, there has been no major increase in the unit market and in fact, all small units, even townhouses, reduced in value.
There are various sales perspectives that are used to push property sales in Brisbane, but they’re not always based on fully accurate data. For example, marketers report that Brisbane always follows Sydney’s market patterns around the 3-year mark, arguing, for example, that when Sydney’s median house price surged around 2010, Brisbane’s greater region would inevitably follow peaking in 2013-2014. Marketers used Sydney’s house price surge in 2013 (RP Data score was a 15.7% increase) to prove that Brisbane and the South East QLD would therefore peak in 3 – 4 years. They also say that the G20 held in 2014 triggered a quick appreciation of Brisbane prices. Since 2010, marketers heavily promoted the notion that the entire Southeast QLD would see growth, due to the hosting of G2 Summit in 2014 and the Commonwealth Games in 2018. However, after 2014/5 nothing spectacular had happened in the market. In fact, in Hamilton, South Bank and various other inner-city suburbs, there was no appreciation of units at all, in fact they depreciated. There are now bargain properties available at half price, even near the water or important amenities. Yet marketers still use this kind of information to argue that property market appreciation is a certainty in relation to the 2032 Olympics.
As you can see, we are always being influenced by commentators, media, marketers and of course property investment firms, especially those who sell new and off the plan projects. Many local real estate agents will simply use these arguments to add weight to their sale pitch, despite them not reflecting the full story.
So, it remains a big question – will the 2032 Olympics change property values in the region? The answer for units in general is no, but there may be some appreciation for old apartments that were bought below the market value in 2010. Townhouses and other smaller house properties might have some growth, especially after 11 plus years, but not in areas where the oversupply is extreme. Some suburbs in Brisbane and the Gold Coast have huge oversupply with around 2000 properties in the pipeline for the next 2 years, which isn’t likely to be absorbed even in the next 10 – 15 years. Areas a little further away from Brisbane or the Gold Coast, that have had very poor growth over the past 5 – 7 years, like the Southwest of the city, may not be impacted financially by the 2032 Olympics at all.
Historically, the only properties that appreciated due to the impact of the large-scale events in Brisbane and on the Gold Coast were those that were already located in a good socio-economic area with a substantial land size and appropriate configuration.
All predictions and analysis, along with knowledge about forthcoming events’ infrastructure spending plans, are useful only to understand which areas may have the potential to benefit. Yes, large events bring more stake holders and investment into the hosting city, but only insightful research with thorough risk analysis can determine which suburbs, locations, asset classes, and configurations will truly benefit, and the reality may not be what you expect. This is the key aspect to remember when looking to invest in property!
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