_Focus On | 10 reasons to invest in Melbourne

Tech Capital of Australia

Melbourne is fast-growing as the technology capital of Australia. The City of Melbourne has designed a Startup Action Plan to create more jobs, innovation and productivity for start-ups and entrepreneurs to ‘start, grow and go global’ by removing any barriers to launch. According to the Global Financial Centres Index compiled by think-tank Z/Yen, Melbourne ranked 12th on the index of global financial centres in 2018. Melbourne scored 720, up by 24 points, and gaining pace on Sydney in position 9 with 724 points. 

Robust Economic Outlook

Victoria has resulted with the fastest rate of economic growth (GSP) in Australia over the past three years, averaging 3.3% in 2016-17. This was well above the national average of 2%. Over 117,000 new jobs were created in this time; the highest of any state and equivalent to more than 70% of new jobs created in Australia according to the Victorian State Budget. The GSP is expected to grow at a steady rate of 2.8% annually for the next three years.

Government Investment

The Victorian Government has committed to investing $10.1b per year over the next four years on infrastructure projects. Major transport projects to receive funding include, North East Link—the missing link in Melbourne’s freeway network, stage two of the Monash Freeway upgrade, Mordialloc Bypass, Sunbury to Cranbourne-Pakenham Rail Corridor and suburban roads upgrade.  

Rise in International Visitors

International departure capacity at Melbourne Airport expanded by 45.1% between 2012 and 2017 as reported by OAG Schedules Analyser. The increase has been driven by the airport adding more than 2 million international departure seats over this time. The top two Melbourne to China two-way routes by capacity, in 2017, was with Guangzhou and Shanghai. Each year since 2012, Tourism Australia has calculated international visitors to Sydney has grown on average 9.5%. 

Growth of International Students

The number of international students enrolled to study in Victorian education facilities rose 11.7%, in the year ending June 2018, according to the Department of Education and Training. Higher education facilities saw growth of 15.1%, while international school-aged students grew 11.9%. The SSVF has made the process of applying for a student visa in Australia easier to navigate for both students and guardians.  

High Ranking Liveability

Melbourne has been best placed for liveability when measured against other cities in Australia for the past decade. In 2018, the Economist’s Intelligence Unit ranked Melbourne in 2nd position from 140 global cities based on stability, infrastructure, education, health care and environment. Mercer placed Melbourne in equal 16th position, with Toronto, from 233 cities in their Quality of Life index. At the last Census, the ABS ranked Melbourne’s Boroondara, Bayside, Stonnington and Port Phillip in the top 25 Australian advantaged local government areas according to relative socio-economic conditions of people and households. 

Significant Population Growth 

The population in Melbourne has been significantly rising and is the strongest of all Australian capital cities. Over the year ending June 2017, an increase in the estimated resident population was recorded at 2.7%, to total 4.9 million persons. According to the ABS, this is well-above the overall Australian population growth of 1.6%. Overseas migration, recently fueled by interstate relocation, has resulted in exceptional population growth in the city. Melbourne population is projected to grow annually by a minimum of 1.7%, to 6.4 million persons by 2036. By this time, with the current rate of growth, Melbourne is likely to overtake the population of Sydney.

Construction Slowed as Vacancy Falls

In Melbourne, construction starts have slowed with much of the recently added new rental stock being absorbed as developers seek finance and pre-sales before construction can pick up once again. This lull in construction can only be short-lived in order to meet Melbourne’s significant population growth, as total vacancy was a low 1.9% in July 2018 (REIV), trending well-below market equilibrium of 3%. 

Wealth Flows

Melbourne is earmarked as one of the fastest growing cities, in total wealth, of it’s HNW population. New World Wealth reports that Melbourne well-exceeded 1,000 net inflow of HNWIs in 2017; taking up a large portion of the annual new 10,000 Australian HNWIs. This is someone with net worth of US$1 million, excluding their primary residence. Australia remains the top country ranked by HNWI net inflow for the third consecutive year. 

Relative Value to Other Global Cities

As the number of HNWIs rise, Melbourne prime property prices continue to show strength growing 5.4% in the year ending June 2018. Knight Frank considers prime property to be the most desirable and most expensive property in a given location, generally defined as the top 5% of each market by value. The other factor to consider is the global value proposition. In Melbourne, US$1m can buy 94 sqm of prime property in June 2018 (in Sydney this is 50 sqm), while by global comparison, in Monaco 16 sqm can be purchased, 22 sqm in Hong Kong, 29 sqm in London and 30 sqm in New York.