On 21 July 2021, the International Olympic Committee formally awarded hosting rights to Brisbane and South-East Queensland for the 2032 games. There was little surprise to this announcement, with Brisbane and SEQ running unopposed for the 2032 games for quite some time. Nevertheless, the announcement was followed by celebrations across the Sunshine State and across Australia. Australians love our sport, and the Olympics are the pinnacle of international sporting events. Many Aussies who experienced the Sydney Olympics still regard it as one of the highlights of their life.
Becoming the host of the 2032 Olympic Games is a watershed moment for Brisbane and SEQ, affirming years of progress and development for the city. When I first visited Brisbane as a Navy sailor in 2010, it felt like little more than your average country town. In the space of a decade, GAWC has upgraded Brisbane from Beta – to Beta + world city status, billions of dollars of infrastructure have been scheduled and completed, the population has grown by 25 percent, and the economy has become far less dependent on natural resources.
…but what does Brisbane 2032 mean for the real estate market?
As you’d imagine, a lot of pundits have weighed in with their perspectives already. In this article, we’ll assess the merits of some of their claims.
What is the role of infrastructure for the Olympics and the property market?
According to CoreLogic, ‘the flow on effects [of Brisbane 2032] are likely to be gradual and centred around significant infrastructure upgrades…’
The cost of hosting the games has been estimated at $5 billion, which will be covered by ticket sales, corporate sponsorships, worldwide broadcast rights, and support from the IOC. On top of that will be secondary investment effects, such as private development aimed at drawing further benefits from the international spectacle.
Unlike the Olympic and Paralympic events (which last just a couple of weeks each), most of the supporting infrastructure is enduring. This means the population of South-East Queensland can continue reaping the benefits of these investments well before and long after 2032. Brisbane already has a reputation for proactive infrastructure investment, so it looks like the coming decade will be no different.
Should property investors buy in areas proximate to Olympic venues?
A number of property commentators have offered their thoughts on where to buy in order to make the most of Olympic mania. The list includes Woolloongabba (the site of the main stadium and properties of many Blue Wealth investors), Hamilton (athletes’ village and also properties of many Blue Wealth investors), as well as regional areas surrounding the city. The Property Investment Professionals of Australia (PIPA) claim proximity to host facilities can boost price growth by 2-5 percent.
As is always the case in property investment, investors should assess both supply and demand factors in a market. There’s little doubt proximity to major Olympic events serves as a once-in-a-lifetime driver of demand, but supply will be important to watch over the coming years. This is because the Olympics serve as a powerful marketing tool that will certainly be used by project marketers and agents over the coming decade. This could lead to residential construction accelerating at a faster rate than local demand (in other words, periods where supply could exceed demand).
Olympic mania doesn’t rule out these Brisbane suburbs. It just means you have to make sure you aren’t being swept up in it. Proximity to a venue is great, but we need to ensure there’s more to the property than that, and that our clients aren’t paying an excessive premium for the privilege. That will certainly be a consideration of our research as we adapt to the changing sentiment that the Olympics will deliver.
Does the cost of hosting the Olympics outweigh the benefits?
Economists and program management professionals have mixed perspectives of the viability of the Olympics on their host cities. In fact, some have even called for candidate cities to scrap the Olympics altogether. The reasoning behind this is cost and sustainability. It has been argued that the multibillion-dollar investment often leads to derelict venues just years after the event, and that hosting the Olympics has been the precursor to financial ruin with Athens 2004 being a salient example. On the flip side, Sydney Olympic Park is today a thriving hub for business, entertainment, and of course, sport. Blue Wealth’s head office has been located in Sydney Olympic Park since 2010, and the team has made the most of the amenity it delivers. Brisbane will gain significant benefits from the success of the Sydney Olympics and is well placed to take long-term advantage of Olympics 2032.
Since a lot of Brisbane’s infrastructure is already in place (including the 2018 Gold Coast Commonwealth Games venues), its $3.7 billion USD investment to host the games is dwarfed by Tokyo’s $20 billion USD. With such a small investment in mostly existing infrastructure, Brisbane 2032 will also be less prone to the kind of major cost blowouts seen during the lead-up to other Olympiads. It could very well be the case that Brisbane 2032 serves as the blueprint for future cost-effective, profitable and sustainable events moving forward.
Will Brisbane 2032 lead to a real estate boom?
Between the 1993 announcement of Sydney 2000 and the event itself, Sydney’s median house price grew from $188,000 to $287,000 (an increase of 52.7 percent). Over the same time, Melbourne’s grew by 51.6 percent; Brisbane’s by 24.5 percent and Perth’s by 38.6 percent. Although Sydney outperformed the other major capitals, we can’t say exactly how much of that can be attributed to the 2000 Olympics.
On the other hand, the 2018 Gold Coast Commonwealth Games provides a wealth of additional data for us to inspect. Gold Coast 2018 was announced in 2011. According to SQM Research data, asking prices in the ‘Gold Coast Main’ area experienced a strong upswing between 2013 and 2018, which then stabilised for two years before experiencing a renewed upswing in 2020. The pre-games upswing was predicted by research firm Prodap as part of the property cycle ‘with the added boost of preparations for the 2018 Commonwealth Games boosting employment’. In 2018, the highly seasonal rental vacancy rate in the Gold Coast reached a decade-low 1 percent, leading to increases in rents and subsequently property prices.
During the 2018 Commonwealth Games, 6,600 athletes, team officials and media were housed in Southport. The village was a purpose-built 29-hectare development of 1,252 new dwellings (mostly units). Between 2013 and 2015, Southport’s median unit price skyrocketed from $305,000 to $404,000, but then stabilised. 2020 saw the beginning of another upswing that will yield further benefits for local property owners now and in the coming years.
Following the 2018 Commonwealth Games (which also happened to be late autumn), Southport’s rental vacancy rate increased from 1.6 percent to 2.5 percent, but then followed the same seasonal pattern until the coronavirus pandemic. In recent years, the most supply in the resale market occurred a year after the games in May 2019, when 448 homes had been listed for more than 180 days. By mid-2021, that number had fallen to 182. This data suggests that the transition of athletes’ villages into long-term housing can have a temporary effect on a neighbourhood that you should be prepared for. More recent performance, however, emphasises that this doesn’t detract from a longer-term investment strategy.
So, what’s the verdict?
There’s little doubt that a well-managed Olympics is highly beneficial for the host city, and Australia has a fantastic track record in that respect. 2032 serves as another major event showcasing the growing South-East Queensland region, which will offer an economic boost for years to come. The key issue to be mindful of is the timing of your purchase in certain Olympic-oriented areas, as well as the price you are paying. For those of us who already own a property in SEQ, the positive sentiment around the Olympics serves as a boost as the world’s focus turns to Brisbane. The one key driver of property prices that is hardest to measure is sentiment. We know positive sentiment has a positive effect on prices. How positive? Only time will tell.