BY REIQ CEO ANTONIA MERCORELLA
Brisbane made history last month when the city and wider region were announced as host of the 2032 Olympic and Paralympic Games. The announcement has set tongues wagging about what hosting the world’s premier sporting spectacular might mean for Queensland.
The Journal of Economic Perspectives claims there’s three major benefits of hosting the Olympic Games: “Olympic legacy”, which might include improvements in infrastructure and increased trade, foreign investment and tourism post-Games; and intangible benefits like civic pride.
Property prices are a different matter. In the past, lesser-developed Olympic host cities like Barcelona saw a major rise in property prices – with the city recording a mammoth increase of 130 per cent prior to the 1992 Olympics. This is likely due to the fact the city underwent major rejuvenation, such as the implementation of a high-speed train which connected to the capital city of Madrid, and a regeneration of the city’s waterfront.
For highly developed cities, it’s harder to attribute property price growth to one singular event, according to Propertyology’s Head of Research Simon Pressley.
London, which hosted the 2012 Olympics, experienced only a 38 per cent increase in median house prices over the five years ending 2013 which, according to Pressley, is “hardly a boom” considering the $16 billion outlay to prepare the city for hosting the Games.
“Sydney hosted the 2000 Olympic Games and its median house price increased by 88 percent over the five years ending 2001,” says Pressley.
“But the reality is that the start of this century is etched in history as one of Australia’s most prosperous eras. Property markets right across Australia benefitted from long-term political stability, major tax reform (GST implementation), the biggest ever government grants and incentives for property buyers, free-flowing credit, large scale privatisation, a global technology boom and unprecedented economic development.”
When looking at other major sporting events held in Australia, such as the Melbourne and Gold Coast Commonwealth Games, it’s interesting to note other cities across the nation produced stronger property markets than the host cities themselves.
The lead-up to the Brisbane event will be vastly different to previous Games. For starters, the Olympics won’t be entirely hosted in the state’s capital city. Sporting venues on the Gold Coast and Sunshine Coast will be utilised – plus venues in Redland, Moreton Bay, Scenic Rim, Ipswich, Toowoomba and North Queensland.
The Games are set to cost less to run ($4.5 billion) and much infrastructure has already been built. But new infrastructure is on the way, including a re-built Gabba, new Brisbane Live Arena plus new indoor sporting venues and a whitewater centre to be built across the region.
Additionally, the athletes’ village won’t just be in Brisbane, with other villages set to be based on the Gold and Sunshine Coasts. This spells good news for Queenslanders, as tourism, increased infrastructure and other benefits will be shared outside Brisbane.
Whether property prices in Brisbane or Queensland will increase after the Olympics is yet to be determined. What’s more likely to happen is infrastructure upgrades to transport, services and amenities may have a positive flow-on effect to house prices. This will depend somewhat on what the broader economic conditions are like at that time.
“Generally speaking, the direct benefit to property markets from hosting such a big international event comes from the bringing forward of investment in big-ticket infrastructure,” says Pressley. “The global exposure and local enthusiasm created can linger for up to a year after the event. So, the property market benefits tend to span a total of five years.”
However, Pressley advises homeowners and investors alike to not count on the Olympics for driving enormous house price growth, and to focus on the Olympics for what they are: a fantastic display of talent, sportsmanship and national pride.