[+] Road to Carbon Sobriety Paved with Opportunity

The wide brown land is increasingly turning a tinge of green as billions of dollars in renewable energy infrastructure is rolled out to meet net-zero emissions targets for what has become the fastest global energy transition ever seen. And according to new research, Australia’s road to carbon sobriety is paved with verdant opportunities for property developers. Construction of vast fields of photovoltaic solar panels and towering wind turbines as well as hydrogen hubs, large-scale battery storage, and bioenergy, geothermal and hydroelectric power plants is not only providing cleaner energy but also creating increased housing demand and property values in areas benefiting from them. It is still early days but with the acceleration of the renewable energy transition in recent years, some property markets are already reaping the rewards, PRD’s Renewable Energy and The Property Market report says. Analysis of six regions where renewable energy projects had been installed since 2017 indicated a positive multiplier effect on each of the local regions and their property markets. Over the ensuing five years, its data shows, median property values rose in the NSW regions of Glen Innes, Griffith and Broken Hill by 34.7 per cent, 36 per cent and 43.8 per cent respectively. Similarly, in the Victorian regions of Moorabool, Colac Otway Shire and Upper Lachlan, where solar and wind energy plants were installed, there was price growth of of 36.7 per cent, 44.9 per cent and 51 per cent. “Property values rise due to the increased demand created in the area,” the report says. ▲ Property values in Glen Innes, in NSW's New England region, grew by 34.7 per cent over five years. In this week’s Federal budget, treasurer Jim Chalmers warned retail electricity prices were expected to rise by 50 per cent over the next two years. To help cut soaring power bills and ease cost-of-living pressures as well as combat climate change, the government has allocated $24.9 billion to renewable energy spending. With Australia having committed to net-zero carbon emissions by 2050, the government also has started to incentivise owners to make their buildings more sustainable. “But the most important thing to come out of our research is it basically tells us that there is another benefit to investing in renewable energy projects,” PRD chief economist Diaswati Mardiasmo told The Urban Developer . “There’s a lot of focus just on climate change, net-zero emissions or the green part, if you like, of having renewable energy initiatives. But there’s another positive impact of it. Having that energy project does attract a lot of people into the area.” And therein lies the opportunity for both developers and investors. According to the PRD report “while residing within 100m of a renewable energy plant may not be ideal” the surrounding LGA strongly benefits in terms of cost of living, particularly through the drop in power prices. ▲ Living near a renewable energy plant can mean lower power costs. “The introduction of renewable energy can significantly help a region draw in new residents,” it says. “This is largely because rising inflation and economic growth have increased living expenses, making any decrease in expenses—especially power—a significant deciding factor when choosing where to buy real estate. “This has the result of raising the demand for real estate, which raises the price of real estate. The average price growth [in the areas surrounding renewable energy initiatives] over the past one, two, and five years has been 6.5 per cent, 7.8 per cent, and 41 per cent.” In its analysis of the six regions where renewable energy plants had been constructed, it notes the initiatives had led to higher rental yields, population growth, wage price growth and lower unemployment rates as a result of investment into the domestic economy. “Overall, these demographics have improved, which is a positive sign for investors, as a strong tenancy base can be created and maintained under these indicators,” it says. At last count, the renewable energy industry accounted for 32.5 per cent of Australia’s total electricity generation—having almost doubled from 16.9 per cent in 2017. With the switch currently flicked on to 117 large-scale projects that are under construction or due to start construction, delivering more than $24.9 billion in capital investment, the greening and cleaning of the country’s power grid is continuing at pace. Last year alone, 68 new projects—representing 9.3 giga-watts of additional capacity, 35,000 jobs and $18.4 billion of investment—provided a massive power surge to the energy transition as well as the commissioning of the nation’s three largest solar farms and two of its largest wind farms. In the booming hydrogen sector, there is a pipeline of more than 100 project worth $163 billion, with iron ore magnate and property player Andrew "Twiggy" Forest leading the way for the private sector. The link between renewable energy construction projects and strong property market performance also is highlighted in recent research by buyers agency InvestorKit. “As more projects and zones are created in regional Australia, communities will see the benefits through new opportunities created for their local economies,” founder and head of research Arjun Paliwal says. “Each renewable energy project creates hundreds, and even thousands of jobs, particularly in its construction phase. “This will see increased demand for housing in regional areas, a revitalisation of regional surrounding towns as new ‘locals’ bring money to hospitality and retail businesses, and an overall strengthening of its property market.” PRD's report identifies 13 local government areas across the country that are forecast to experience significant growth over the next five year based on investment in future renewable projects. ▲ Greater Bendigo in Victoria is among the LGAs tipped to experience growth thanks to renewable energy projects. They include Bundaberg, Gladstone, Southern Downs and Rockhampton in Queensland; Federation, Upper Lachlan, Upper Hunter and Lithgow in NSW; Greater Bendigo, Southern Grampians and Melton in Victoria; Murray Bridge in South Australia and Northampton in Western Australia. Mardiasmo says for developers “the opportunities are endless”. “There hasn’t been a lot of residential development activity in the past 24 months in a lot of these new places that have been identified in the report,” she says “And so, because of that, it really does open up that investment opportunity. “Assuming that all of these projects are going to go ahead, it means they will attract more workers. Whether it’s single people or families, there’s a lot of different types of stock that are going to be needed. “So, there's opportunities in different types of configurations, whether it’s townhouses, whether it’s greenfield, whether it’s a block of apartments or even whether it’s temporary accommodation. All of those opportunities are there.” But as the report points out: “This, however, also depends on the adaptability of the regional planning authorities, both at the state and local council levels, to permit the growth of new housing supply at a rate that is consistent with demand.” Nevertheless, the deluge of renewable energy projects is showing no signs of abating and—to borrow from Dorothea Mackellar’s poetic ode to the wide brown land—the “filmy veil of greenness” is thickening as we gaze. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Road to Carbon Sobriety Paved with Opportunity

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