Australia is currently experiencing an almost unprecedented infrastructure boom including the establishment of an extensive underground Metro network in Sydney. The Sydney Metro Northwest opened in June 2019, Metro Southwest is planned for 2024 and Metro West in 2026. Rebecca Ngan, Senior Analyst at Colliers says these projects will decrease worker travel times significantly.
Similar to global cities like Tokyo, Shanghai, and New York, Sydney residents will benefit from the development of a comprehensive underground Metro grid, which will assist in alleviating the gridlock on Sydney’s road infrastructure by seamlessly transporting passengers across Sydney, through integrating and co-locating within other transport networks such as the existing heavy rail network, light rail, bus and ferry.
Metro network developments support and provide various opportunities for employment, economic growth and urban development and expansion for CBD’s, metropolitan and residential and fringe suburbs. They also present significant opportunities for growth in the property sector, typically in the form of increases in densities and provision of greater amenities along the designated Metro corridors, which subsequently influence property values.
Developments along a Metro corridor will attract and increase medium to high density residential apartments. Higher density developments with ground floor retail and commercial space will be developed within the immediate vicinity to station precincts to provide convenient passenger and pedestrian access, connectivity and amenity.
Introduction of a Metro line requires re-zoning around identified Metro stations, with an increase in density and higher yielding development projects becoming feasible. Consequently, land prices will increase to reflect higher yielding developments and the establishment of new town centres.
The amount of uplift realisable varies depending on the prevailing market conditions at each milestone (such as, announcement, commencement of construction, completion and opening), the location, socio-demographics, distance to and from the Metro station, the network line itself (i.e., what areas does the line service) and prevailing planning controls. Therefore, it can be determined that the value uplift associated with Metro developments is captured in various stages and is characterised by time and spatial effects.
It should be noted that areas with no existing rail networks will experience a higher uplift with the introduction of a new Metro line, than areas with existing rail networks. This is also influenced by the localities serviced by the Metro and if an existing rail network services a similar route, an example being St Marys which is set to become home to a prominent Metro station under the Metro West line, connecting the Nancy Bird Walton Airport (set to be completed in 2026) to the Aerotropolis and the Sydney CBD. On the other hand, locations like Sydney Olympic Park with current insufficient and indirect rail links will experience a greater uplift, as the Metro West will forge a direct link to and from the area, connecting it to major CBDs like Parramatta and Sydney CBD. NSW State Government is yet to implement any viable value capture mechanism from the land value increase resulting from these significant projects.
Sydney will benefit significantly from the current infrastructure transformation through improving connection and access between outer suburban areas and employment hubs including the new Nancy Bird Walton Airport and surrounding Aerotropolis, as well as to other town centres and precincts. It is anticipated that this urban growth will continue to evolve over the next few decades where Metro and other rail transit developments will increase to accommodate growth and expansion.
For more information on infrastructure development or the impact of Metro transit on real estate, please contact one of Colliers’ Strategic Advisory experts today.