_Strong economic growth, the top reason to invest in Tasmania
1) Strong economic growth
The Tasmanian economy has undergone significant structural changes over the past two decades, transitioning from a once manufacturing, mining and logging, towards industries such as health care, professional services and tourism. Tasmania was one of the strongest states for economic growth (GSP) in Australia with 3.3% in 2017-18, trending above the national average of 3.1%. Over the past five years, the state averaged 1.7% annual growth, compared to the Australian average of 2.6%.
2) Government investment
The Tasmanian Government is investing $1.8 billion over the next four years to deliver infrastructure projects to drive economic growth and create employment opportunities. Major projects include upgrading the TasRail freight network, Hobart Airport upgrade ($30 million), major traffic decongestion and road infrastructure upgrades, Tasmanian Health Plan to upgrade hospitals ($92 million), in addition to, the extensive upgrade of Royal Hobart Hospital ($689 million).
3) Business confidence grows
Business confidence is growing with the employment index significantly above average and highest in Tasmania (+14pts). The pattern of business conditions and confidence across all Australian states appears to have shifted somewhat with the gap between the east and west narrowing a little over recent months. Conditions remain most favourable in Tasmania according to the NAB Monthly Business Survey in April 2019.
4) Rise in domestic and international visitors
Tourism Australia calculated growth in international visitors to Tasmania of 10.8% over the year ending December 2018, with 309,000 visitors. To support investment in tourism infrastructure, a Tourist Accommodation Refurbishment Loan Scheme has been established. This has encouraged the developments in Southern Tasmania such as MONA (Museum of Old and New Art), Motown Hotel and the Mount Wellington Cable Car. As well, developments in Northern Tasmania such as Peppers Silo, The Gorge Hotel and The Table Cape Resort.
5) Growth in international students
The proposed new University of Tasmania campus in Hobart (estimated cost of $600 million) and Launceston (est. $300 million) will encourage more activity in the Central Business Districts—with several Registered Training Organisations (RTO) for international students already establishing a presence. These two new campuses will form a catalyst within these CBDs for services such as immigration services, travel agents and other professional services, targeting international students.
6) Liveability
Hobart is placed well for liveability when compared to other cities around the world—offering rewarding career opportunities, true sense of work/life balance, affordable housing, established schools, short commutes and close to the cleanest air in the world. Over the next four years, the Tasmanian government has invested to build and promote Tasmania’s liveability, to foster a culture which is vibrant, inclusive, respectful and supportive.
7) Rising population growth
Tasmania’s population has grown year-on-year for 19 consecutive years. Over the year ending June 2018, an increase in the estimated resident population was recorded at 1.1% to total 528,200 persons. According to the Australian Bureau of Statistics (ABS), Greater Hobart grew 1.5% over the same time to count 232,600 persons. According to the Department of State Growth, the Tasmania population is projected to grow to 650,000 persons by 2050.
8) Capital value growth
The strongest annual capital growth across all Australian capital cities was recorded for Hobart apartments, at 8.6% in March 2019, to stand at a median of $363,400. This pace outperformed the annual national average which fell by 2.7%, according to APM. Hobart also had the best performance for houses across the country over the same time, with an annual growth of 7.1% to reach a median of $478,200.
9) Lowered vacancy
A shortage of housing stock in Hobart has contributed to rising rents and a decline in residential vacancy. Over the course of three years, vacancy fell from 3.1% (considered to be a balanced market) to 1.5% in December 2019 according to REIA. Hobart house rents increased 7.1% in the quarter ending March 2019 according to APM. This also saw rents rise from $420/per week in March 2018, to be $450/per week, one year later—making a house more expensive to rent in Hobart than in Melbourne. Rents also jumped to $380/per week for a Hobart apartment in March 2019, from $350/per week a year earlier. In March 2019, gross rental yields were 5.10% for Hobart houses and 5.20% for Hobart apartments.
10) Global hotspot for produce and wine
The Tasmanian brand is well known both domestically, and internationally, for multiple hatted restaurants, fresh produce, wine and whisky with renowned emphasis on paddock to plate. There are the weekly markets such as Salamanca and Farm Gate, together with, annual festivals such as Taste of Tasmania, Dark Mofo (Winter Feast) and Bicheno Food & Wine Festival. Hobart’s growing reputation as one of the world’s best restaurant and produce scenes has been further enhanced with a number of new restaurants and bars opening over the past years.
For more information contact our residential team in Hobart:
Mathew Chugg, Head of Residential, Tasmania
mathew.chugg@au.knightfrank.com
+61 362 206 999