The case for investing in Geelong property continues to improve, supported by ongoing infrastructure projects, business expansion and population growth.
A number of projects have begun and business deals been struck over the past 6-8 months. More than $2 billion worth of major construction and redevelopment projects are underway in Victoria’s second-largest city, with another $1.1 billion announced and awaiting commencement.
Work on the $400 million Epworth Hospital began at Waurn Ponds in April. Planned for completion in July 2016, the project is reportedly running ahead of schedule. Builder Brookfield Multiplex expects to have the building up by April, by which time up to 500 people will be working on the site and attention will turn to the fit-out, with a possible completion date in early 2016.
More than 250 jobs have been created since the beginning of the project, which is expected to generate 900 full-time equivalent construction jobs.
The hospital will be built in four stages, with the $280 million first stage to include 262 beds. The completed hospital will have the capacity to treat more than 46,000 patients annually and is expected to directly create 700 jobs.
A joint project with Deakin University, it is expected to become a major medical research hub, as well as playing a key role in training doctors, nurses and allied health care professionals.
Victorian premier Denis Napthine in August said more than $200 million of capital funding would be spent on health in the region this financial year – including expanding Geelong Hospital’s intensive care unit and providing an urgent care facility in Geelong’s north.
Work continues on the Regional Rail Link, which is scheduled for completion in 2016. As well as creating jobs during its construction, the link will support greater numbers of people commuting to and from Melbourne for work. Passenger numbers on the V/Line service grew by more than 50 per cent between 2008 and 2013, with all signs suggesting this trend will continue.
Further into the future Geelong commuters stand to gain from the East West Link project, due for completion in 2023. The link is expected to save motorists up to 20 minutes when driving to the city from Geelong.
Projects awaiting commencement include a $25 million upgrade of the Great Ocean Road and the duplication of Princes Highway between Winchelsea and Colac ($181 million).
Still in the planning stage is $500 million worth of infrastructure work at the Port of Geelong, reconstruction of the Yarra Street Pier ($33.2 million) and a rail service between Geelong and Avalon ($200 million).
Avalon’s China link
Avalon Airport struck an agreement with China’s HNA Group in April to establish commercial and freight flights between Geelong and China by the end of next year. HNA Group runs Hainan Airlines, China’s fourth-largest carrier.
China is Australia and Victoria’s strongest international tourism growth market, with the number of visitors expected to grow by 7.1 per cent a year over the next nine years. Critically for Geelong, the freight services have the potential to give local producers direct access to the Chinese market.
As well as investing in infrastructure and locating the National Disability Insurance Scheme headquarters in Geelong, the federal and state governments are behind the $29.5 million Geelong Region Innovation and Investment Fund. The fund allocates grants starting at $50,000 with the aim of creating new or additional business capacity that results in sustainable jobs.
More than $100 million has also been allocated to a raft of training and reskilling programs aimed at helping automotive employees secure new jobs and supply chain firms capable of diversifying to enter new markets.
Deakin University’s Geelong campuses reached 17,813 students in 2013 – a record number up by 25% over the past five years.
The $11.5 million Geelong Industry Trade Training Centre, aimed at addressing local skill shortages, opened in May. About 320 students are enrolled in its vocationally focused courses.
The State Government has also included $25.6 million in the budget to upgrade Geelong High School and Portarlington, Montpellier, Barwon Heads, Roslyn and Clifton Springs primary schools.
Dutch company Vitol plans to spend about $150 million on major maintenance at the former Shell refinery at Geelong over the next two years. Vitol effectively saved the refinery from closure when it agreed to buy Shell’s Australian business for $2.9 billion in February. The refinery has about 450 employees and 150 contractors.
Hi-tech wheel-maker Carbon Revolution says it will create 150 jobs by 2016 when its $23.8 million expansion project at Waurn Ponds is complete. Based at Deakin University, the manufacturer secured a $5 million Geelong Region Innovation and Investment Fund in March. Carbon Revolution, which has already hired several former Ford employees, predicts its annual wheel production will increase from 4000 to 50,000 as a result of the project.
Agricultural manufacturer Accensi has selected a site just north of Geelong for its third Australian base. The new plant is expected to be operational early next year and directly employ 45 staff. The company says the site is ideally placed to distribute its crop protection products into the southeast farming area of Australia.
Having announced the expansion of its Geelong headquarters in 2012, Cotton On has added 500 jobs over the past 18 months, increasing the number of staff to about 1300.
Little Creatures opened its Geelong brewery in April last year and its bar/restaurant last December. It directly hires about 50 staff.
City in transition
Geelong is progressively diversifying away from manufacturing, which employs about 13 per cent of Geelong’s workforce compared with 25 per cent 20 years ago. Health care, social assistance and retail have overtaken manufacturing as the main sectors for employment.
The tourism sector contributes about $1 billion a year to the greater Geelong economy and supports about 5 per cent of total employment in Geelong.
Hi-tech manufacturing is also gathering momentum. As well as having companies like Carbon Revolution, Geelong is bidding for a $10 billion Defence contract to build military combat vehicles.
The LAND 400 project would require hi-tech manufacturing, advanced composite production, software development and maintenance, vehicle system integration and logistics skills. That project is due to begin next year, and Geelong is well placed given its experience with the car industry.
Portfolio’s managing director Jock Bing said Geelong’s proximity to Melbourne, diversifying economy and projected growth made a compelling case for investors.
“Geelong has a bright future and remains a targeted property market,” he said.
“The impact of employment losses has long been factored into our economic and investment outlook. The transition to new industries is ongoing and is being managed extremely well. If anything, the concern or apprehension by some purchasers about Geelong creates a window for more informed purchasers and investors who understand the investment fundamentals of Geelong remain intact.”
Portfolio’s acquisitions team has been busy finding Geelong properties that fit its criteria for successful property investment. To discuss your property investment goals, call Portfolio on (03) 9621 1044.