infrastructure development

Why property investors should care about the Metro Tunnel

It may not be ready to use for another ten years, but Melbourne’s Metro Tunnel project is big, bold and ambitious and is due to transform the way people in Melbourne get around.

Intended to cater for Melbourne’s exponential expected population growth by allowing more trains to run in and out of the city, the $11bn tunnel is expected to be fully operational by 2026 – subject to planning and environment approvals, and provided there are no big delays or budget blowouts.

So, assuming this huge project runs on time and on budget, and it’s up and running in 10 years to make it easier for commuters to get to work, what is the impact on property development, particularly for investors?

Infrastructure driving property price growth

When it comes to property investing, it’s often a simple case of following the money that others are ploughing in to certain areas. If a location is receiving heavy investment, it is likely to continue to appeal to tenants for a long period of time. So, consider where money is being spent on the following:

  • By developers, on new housing
  • By businesses, to create more amenities and services
  • By governments, on infrastructure project such as new roads and public transport networks

These three stakeholders invest a lot of time, money and resources into identifying the best locations, so investors can save themselves a lot of hard work by just following the lead of these types of big decision maker.

And the Metro Tunnel is well and truly a sign of government investing in an area through infrastructure.

Large-scale infrastructure

The last Melbourne public transport project of this size was the City Loop, which was constructed between 1971 and 1981 to connect 15 suburban train lines to the CBD. This undoubtedly transformed the lives of residents by making it easier for them to get around their city.

But the reality of a ten-year infrastructure project is years of painful disruption for an already busy city. The Metro Tunnel project, due to kick off next year, will see trams re-routed along Carlton’s Swanston Street which, even before the diversion, is the busiest tram corridor in the world.

Near to Swanston Street are Melbourne’s popular Lygon Street restaurant precinct and the University of Melbourne, so residents and tourists, students and workers alike will be hit by the disruption.

But looking past all of this to a decade from now, the long-term benefits are clear. Melbourne is well on the way to overtaking Sydney as Australia’s most populated city, so there need to be easier ways for people to get around.

Property investors will certainly find new markets of potential opening up as the tunnel nears completion.

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