ASTUTE commercial property investors should keep an eye on the state’s LNG industry, with a Jones Lang LaSalle research paper showing positive flow-on effects for office demand from engineering, construction, legal and accounting services.
Research director Leigh Warner says the indirect effects of the $20 billion invested into LNG over the past 18 months will affect the commercial sector more than demand from the sector itself.
“We saw this first hand in Brisbane over the past five years with the coal boom – the actual coal companies’ space requirements paled into insignificance relative to the demand generated from other sectors as a flow-on from the investment and employment created by the coal industry,” says Warner.
“From a longer-term perspective the sector represents a strong opportunity for Queensland to replace the impetus to the Queensland economy that coal provided over the past decade.”
Even if only a quarter of proposed projects go ahead, report co-author Geoff McIntyre says LNG will generate more investment than what the coal industry has in the past five years.
“The strongest indication of the potential of this sector and that at least some of these enormous proposals will proceed, is the enormous investment that several global energy giants have made over the past 18 months in spite of the GFC and a fall in global energy prices,” says McIntyre.
“The coal boom showed how quickly and how strongly investment in resource projects can flow through to property markets. Consequently, astute property investors should keep a watching brief on the CSG (coal seam gas) to LNG sector, where the potential flow-through impact to the real estate sector may be even greater.”
But despite the flow on effects Brisbane’s CBD and fringe office markets have already had almost 25,000sqm of office space commitment from LNG’s key players including Santos, Origin Energy, Arrow Energy and BG International.
The paper concludes that regardless of what happens in the CSG industry, continued strong levels of population growth and public infrastructure investment will underpin a solid longer-term outlook for the state’s economy and property markets.
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