A multi-billion dollar defence building boom in the Northern Territory is set to create more than 7500 jobs, rapidly spur the economy and lift rental and residential property sales prices.
The Department of Defence will join with the US Government to spend an expected $6.23 billion on 25 defence projects as the Top End comes into focus as a regional defence and security hub.
A Master Builders NT-commissioned report by ACIL Allen, titled Billion-Dollar Partnership, found the Northern Territory’s economic growth would be boosted almost 5 per cent.
“I feel that it’s a great thing for the Territory because it’s expansion, it’s population and it’s exactly what the Territory needs,” he said.
“It’s also what the Federal Government wants to see occur in the Northern Territory, in terms of strengthening the size and population push here.
“From an economic perspective, it’s a great thing.”
Mr Grantham said the impact on the real estate market would be significant.
He said there were also several oil, gas and mining projects in the Territory and the Territory Government had already identified the need to build about 11,000 new homes over the next decade to satisfy existing population forecasts.
“Outside of that, with private population coming up to work in these industries, there is going to be a hell of a lot more requirements and, by and large, the Territory has not really created many residential properties over the last six years because of the economic climate up here,” Mr Grantham said.
“So there is a gap there now for the existing population expansion and as this population expansion comes online, driven by employment, there is going to be a huge gap.”
Mr Gratham said in the past when significant projects have brought more workers into Darwin and the Territory, it had put upward pressure on rental prices and increased sales prices.
He expects the same to occur this time as well.
“It’s a two-fold situation that happens through our pricing,” Mr Grantham said.
“The first one, if you look at a huge increase in potential tenants, what that does is put massive upward pressure on rental prices.
“And what that does is create amazing investment opportunities with great returns for investors coming in from down south.
“So that fills a large part of the market from a purchase perspective and demand, and then you have the people that are coming up here that have decided to make the Territory their home, which also fills a very large part of the purchase requirement.
“The only thing that we can expect from that is a huge demand and, consequently, a huge upward movement in pricing.”
Mr Grantham said Defence Housing Australia (DHA) had already intensified efforts to secure housing for military personnel in the area and he predicted this activity alone could push property prices up between 3 per cent and 5 per cent.
“But they’re not operating insolation and that’s the critical thing,” he said.
“We have all these other projects and all these other infrastructure builds that are creating employment opportunities in the Territory and requiring an increase in population as well.
“So I would expect those percentages over the entirety of the market to be boom-type percentages where you’re looking at 10 to 20 (per cent).”
According to Mr Grantham, it seems that DHA’s preference is to partner with Darwin’s private developers rather than engage in property development itself when it comes to securing housing for its personnel.
“We have two pieces of land that the developer hasn’t even submitted development applications for and already DHA has indicated it would like to buy 20 to 30 per cent of the new properties,” Mr Grantham said.
“We just haven’t seen this level of interest from DHA in Darwin properties for at least 10 years.
“They will subsequently offer the properties for sale to private investors with the condition that these investors lease the properties back to DHA under long-term agreements.”
Mr Grantham said traditionally, local owner-occupiers have had to contend with interstate investors when vying for high-quality properties in Darwin.
“With the return of DHA to the market, we now have a third wheel that will contribute to driving up property values in Darwin, long-term.”