Developers, investors welcome fiscal fillip

INVESTORS and developers in tourism and urban construction have welcomed the proposed cash injections included in the NSW budget.

By InvestSMART · 13 Jun 2012

By InvestSMART ·
13 Jun 2012

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INVESTORS and developers in tourism and urban construction have welcomed the proposed cash injections included in the NSW budget.

It was also positive news for Australian real estate investment trusts exposed to residential property, in particular Australand, Stockland and Mirvac.

Analysts at Bank of America Merrill Lynch said the impact of first-home owner and new-home grants, plus the extension of the stamp-duty concession beyond this month, will benefit stocks in the 2013 financial year.

"It may also reduce Stockland's nervousness over the potential for another downgrade," they said.

The upgrade of transport routes and the acceleration of development approvals were seen as providing a much-needed boost to industrial and commercial property plans, particularly in the expanding western Sydney and Hills districts.

The NSW Treasurer, Mike Baird, allocated $112 million to the Department of Planning and Infrastructure to speed up the assessment of major projects, a move which had the potential to inject $55 billion into the state's economy.

The Minister for Planning and Infrastructure, Brad Hazzard, said $13 million was committed to accelerating the assessment of significant state developments, including the remaining development applications lodged under the now-repealed Part 3A of the Environmental Planning and Assessment Act.

A senior research analyst with CBRE, Monica Khamis, said the allocation of extra resources to the Department of Planning and Infrastructure should stimulate growth in the housing sector.

"The fast-tracking development applications will also allow new supply to reach the market faster, which should help address the housing shortfall in the city and assist with affordability," she said.

For hotel operators, the Minister for Tourism and Major Events, George Souris, said Destination NSW would receive $125 million each year for the next four years.

He said the funding would be used to help rebuild the state's economy by supporting tourism, business and major events.

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Frequently Asked Questions about this Article…

How does the NSW budget affect residential property stocks like Australand, Stockland and Mirvac?

The article says the NSW budget was welcomed by investors and developers and is positive for real estate investment trusts exposed to residential property, specifically naming Australand, Stockland and Mirvac. Bank of America Merrill Lynch analysts expect first‑home and new‑home grants plus an extended stamp‑duty concession to benefit these stocks in the 2013 financial year, and they noted the measures could ease concerns about further downgrades for companies such as Stockland.

What first‑home buyer and new‑home grant measures are in the NSW budget and how might they help the market?

The budget includes first‑home owner and new‑home grants and extends a stamp‑duty concession beyond the current month. Analysts quoted in the article say those incentives should boost demand for housing, which can support residential property prices and benefit related property stocks in the near term.

What did the NSW government allocate to speed up planning approvals and why does that matter for investors?

The NSW Treasurer allocated $112 million to the Department of Planning and Infrastructure to speed the assessment of major projects, and a further $13 million was committed to accelerating significant state development assessments (including remaining Part 3A applications). The article notes faster approvals can inject economic activity (potentially up to $55 billion), help deliver new supply sooner and therefore support activity in housing, industrial and commercial property markets — all points investors watch closely.

How will transport upgrades and faster approvals affect industrial and commercial property in western Sydney and the Hills district?

The article reports that upgrades to transport routes combined with accelerated development approvals are seen as a much‑needed boost for industrial and commercial property plans, particularly in expanding areas such as western Sydney and the Hills district. That combination should make those precincts more attractive for development and investment.

What funding was announced for tourism and how could that impact hotel operators and tourism businesses?

Destination NSW will receive $125 million each year for the next four years, according to the article. The Minister for Tourism and Major Events said the funding is aimed at rebuilding the state’s economy by supporting tourism, business and major events — a move that hotel operators and tourism businesses are likely to view positively.

Will the planning and budget measures help housing supply and affordability?

Yes. A senior CBRE research analyst in the article said that extra planning resources and fast‑tracking development applications should allow new supply to reach the market faster, which can help address the housing shortfall in the city and assist with affordability.

What is the economic significance of the $112 million planning allocation mentioned in the NSW budget?

The article highlights that the $112 million allocation is intended to speed assessment of major projects and notes it has the potential to inject as much as $55 billion into the state’s economy, by enabling projects to proceed more quickly and stimulating construction and related activity.

When might investors expect to see the budget’s positive effects on property stocks?

According to Bank of America Merrill Lynch analysts cited in the article, the first‑home and new‑home grants and the stamp‑duty concession extension are expected to benefit property stocks during the 2013 financial year.