Melbourne is on track to be Australia’s biggest city – It’s population is projected to grow annually by a minimum of 1.9%, to 7.6 million persons by 2041. Here’s why this residential hotspot should be your next investment destination.
1. 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 15th on the index of global financial centres in 2019. Melbourne scored 729, up by 30 points on the previous year, and gaining pace on Sydney in position 11 with 736 points.
2. Robust economic outlook
Victoria has resulted in the strongest rate of economic growth (GSP) in Australia over the past five years, averaging 3.3% annual growth, with 3.5% recorded the year ending June 2018. This trended above the national annual average of 3.1%. The unemployment rate for Greater Melbourne averaged 5.9% over the past five years, to record 5.0% in March 2019.
3. 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.
4. 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 Melbourne has grown on average 9.5%.
5. Growth in international students
The number of international students enrolled to study in Victorian education facilities rose 10.8% in the year ending December 2018, according to the Department of Education and Training. Higher education facilities saw growth of 15.9%, while school-aged international students grew 7.7%. The SSVF has made the process of applying for a student visa in Australia easier to navigate for both students and guardians.
6. 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 17th position, from 231 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.
7. 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 2018, an increase in the estimated resident population was recorded at 2.5%, to total of 4.96 million persons. According to the ABS, this is well above the overall Australian population growth of 1.6%. Overseas migration, recently fuelled by interstate relocation, has resulted in exceptional population growth in the city. Melbourne population is projected to grow annually by a minimum of 1.9%, to 7.6 million persons by 2041. By this time, with the current rate of growth, Melbourne is likely to overtake the population of Sydney.
8. Construction starts slowed
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 2.2% in March 2019 (REIV), trending below market equilibrium of 3%.
9. Wealth flows
The number of high-net-worth individuals (HNWIs) in Melbourne continues to rise. According to GlobalData WealthInsight, the number of HNWIs – those with a net worth of more than US$1 million, excluding their primary residence – is expected to grow by 21% from 2018 to 2023, to reach a total of 68,900 in Melbourne. Over the past five years three millionaires were created every day in Melbourne, this is expected to rise to seven millionaires per day over the next five years. In 2018, the number of ultra-high-net-worth individuals (UHNWIs) grew by 4%, to 519, and projected to rise another 21% over the next five years.
10. Relative value to other global cities
As wealth creation continues, Melbourne prime property prices grew 1.8% in the year ending March 2019. 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, at the end of 2018, US$1m could buy 97 sqm of prime property, compared to 52 sqm in Sydney, while in Monaco, only 16 sqm could be purchased. At the same time, 22 sqm in Hong Kong and 31 sqm in both London and New York.
Knight Frank is the exclusive marketing agent for MUSE, 409 St Kilda Road, Melbourne. For more information about international residential services, please connect with Dominic Heaton-Watson, Associate Director, International Residential, Knight Frank Malaysia via [email protected] or +6010 438 9169.