[+] Content the Reel Deal for Alternative Asset Owners

A wave of government-led investment and new revenue streams for the film industry has property players eyeing coming opportunities in related facilities.vbv

But property developers looking to ride the growth in demand for Australian screen production facilities need to understand the nuances of the industry to take advantage, observers say.

Screen Producers Australia chief executive Matthew Deaner says that “there’s an expansion of the sector happening”. 

“And the reality is we need more facilities to be able to service lots of different layers.”

Covid prompts mega-facilities

Hollywood productions decamped en masse to Australia in 2021, attracted by a relatively Covid-free environment. 

In response, new film facility projects have popped up, including a $440-million Coffs Harbour play led by Russell Crowe, and a $100-million WA project. 

The proponent of the WA project is developer Hesperia, who intends to operate the facility through a subsidiary, Home Fire.

A spokesperson from WA’s Department of Planning, Lands and Heritage told The Urban Developer that the project is under assessment by the WA Planning Commission and, if approved, will break ground before the end of the year.

▲ A render of the $100-million studio slated for Western Australia.

While there’s no guarantee that pandemic-induced demand for Australian facilities will continue, screen industry players are optimistic that incoming push-pull regulation will provide a new baseline for industry revenues.

New regulation to stabilise revenue

As of July 1, an amendment to the Location Offset will increase filmmakers’ tax rebate to 30 per cent. 

Meanwhile, the Albanese government announced in January its intention to regulate streaming services’ investment into Australian content. 

That move is widely expected to take the form of a mandated 20 per cent of domestic revenues pushed back into the local industry, to take effect from July 1 next year.

Acting Screen Queensland chief executive Dr Belinda Burns says “the global demand for screen content, particularly for streaming platforms such as Netflix, Stan and Disney+, is exploding, and so is the need for suitable production spaces for production and post-production”.

Deaner agrees, saying that “[streaming services] have big pockets and, collectively, a global spend of about $30 billion or so on content production”.

“Australia’s looking to capture its part of that as part of a regulatory exercise. That goes hand in hand with stable tax incentives which have been announced to ensure we also are an attractive place to shoot.

“I would say those pieces will result in more private sector money being injected into the industry now and consistently into the future.

“For the industry and surrounding industries it means things are more stable and secure and sustainable.” 

▲ A render of the Cairns studio under construction on the former site of a Bunnings.

Public purse leads infrastructure push

Previous plays into the Australian film industry by property stakeholders and big funds have not always gone smoothly.

Melbourne’s Docklands studios were initially developed by the Victorian government with a private consortium of investors and property developers, who pulled out in 2008 after underwhelming returns. 

A Macquarie Bank foray into film production in the 2000s, Macquarie Film Corporation, was rolled up after just seven years. Its string of comedies had tanked so badly with audiences that observers were concerned it may have killed off the industry.

Asset managers are active in the acquisition and operation of filming facilities overseas but their counterparts in Australia are tight-lipped about big funds’ interest in—or wariness of—similar local projects.

That leaves governments and established film industry players to lead and capitalise on the demand for more filming facilities in Australia.

“I think that governments have realised that they’ve got to have infrastructure in place to bring all sorts of productions to fruition,” Deaner says.

“And it’s not always the case that private capital feels [screen production infrastructure] is the safest investment—it can depend often on the relationships the private capital has with the sector.”

▲ A still from The Clearing, coming to Disney+, a psychological thriller television series shot in Victoria.

Location is key

Screen Queensland is constructing a new government-owned facility in Cairns, stumping up $12.6 million alongside a further $7.95 million from the Palaszczuk government for operational costs.

It will fit into Screen Queensland’s existing portfolio, including a large soundstage complex in Brisbane, and a coming $5-million facility on the Gold Coast.

Burns told The Urban Developer that the Cairns site was carefully chosen.

“We investigated a number of commercial sites available at the time, taking into deep consideration how existing infrastructure could be converted into a sound stage and support facilities like production offices, construction workshops, hair and makeup departments and more. 

“Ample space, height, carparks, electricity, data bandwidth and a competitive lease were huge factors, as was the proximity to the international airport, accommodation and dining.”

Deaner says that property developers need to consider bedding down ongoing costs and revenue streams.

“To de-risk it for a developer, you would want to be close to a whole range of infrastructure [airports, logistics, crew housing]. It’s a game of risk mitigation.

“Sometimes private studios might have an arrangement with government; they might have been given certain dispensations to be able to help manage costs, or try to mitigate risk.

“[Large Hollywood films] may not necessarily be the most practical and sensible option for property developers. It really depends on a range of factors. 

“They may be better off thinking about this through the prism of returnable television series, that need a particular piece of infrastructure year after year. In some ways that is lower-risk.”

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