« Back to Blog

How new transport developments affect property



Have you heard about Melbourne’s Metro Tunnel initiative? Of course you have: it’s a project that is so big, so bold and so ambitious that it’s going to transform the way people in Melbourne get around.

That said, you’re going to be at least a decade older than you are right now before you’re given the opportunity to step foot inside it.

That’s right – the $11bn Metro Tunnel, which will enable more trains to run in and out of the city to cater for Melbourne’s exponential expected population growth, isn’t going to be fully operational until 2026. Even then, the start date is subject to planning and environment approvals, and the 10-year project timeline accounts for few delays or budget blowouts.

Now, let’s assume this project runs on time and on budget, and it does indeed begin ferrying commuters between their home and their workplace in 10 years time.

The question we want answered is this: what impact will this massive public transport development have on property?

Infrastructure the key to property price growth

There’s a simple formula that property investors use to help them understand whether an area is likely to continue to appeal to tenants for a long period of time, and it’s this: They simply follow the money.

  • Where are developers spending their money, to create new housing?
  • Where are businesses spending their money, to create more amenities and services?
  • Where are governments spending their money, to create new roads and public transport networks and other key infrastructure?

All of the above stakeholders invest a lot of time, money and resources into finding the right locations, so savvy investors know that if these types of big decision makers are banking on an area growing and thriving, then it might make sense to follow their lead.

And when it comes to transport infrastructure, it doesn’t get much bigger than the Metro Tunnel.

Biggest transport project since City Loop

Metro Tunnel is Melbourne’s biggest public transport project since the City Loop, which connected 15 suburban train lines to the CBD more than four decades ago. Constructed between 1971 and 1981, the City Loop transformed the way people were able to move around their own city.

Then, as now, construction of the much-needed new transport infrastructure translated to one painful reality: years upon years of disruption for the city.

After the Metro Tunnel project kicks off in 2017, trams will be re-routed along Swanston Street in Carlton, which just happens to be the busiest tram corridor in the world.

From Swanston Street, you’re a short stroll to Melbourne’s famed Lygon Street restaurant precinct and to the University of Melbourne. Disruptions to this tram service may therefore have a big impact on both local residents and tourists during construction.

If you adopt a long-term view, however, you can see that the benefits outweigh the short-term disruption. In 10 years time, it’s going to be a whole lot easier for everyone to get around Melbourne, which is on track to overtake Sydney as Australia’s most populated city – meaning these transport improvements are nothing but good news for Melbourne property owners.