The Effect of Sustainability on Real Estate Values

September 17th, 2014

In a recent report by Hotspotting, it has been found that sustainable infrastructure developments pay off through higher property values. So investors who want to choose the next property hotspot should look for areas that have good public transport, renewable energy, and social infrastructure, said Terry Ryder, director of Hotspotting, on The Fifth Estate.

Buses vs. trains

Hotspotting’s research also found that suburbs with rail services had higher capital growth rates in real estate than suburbs where buses were used as the main form of public transport. The reason behind this is that people prefer to travel on a train/tram than on a bus that’s full during peak-hour traffic, said Ryder.

Here are some of the areas where rail services have had a positive impact on nearby property values:

  • A rail link between the isolated Redcliffe Peninsula in Queensland and the Brisbane CBD saw the property market responding with price increases.
  • A new rail link in Seaford that connects to central Adelaide has seen strong growth in house prices. Seaford is ranked as Adelaide’s number one property market because it’s next to the sea, near the wine district, and has plenty of land for building new estates.
  • There’s also a new rail project being undertaken at the City of Onkaparinga in Adelaide that has driven up house prices in the surrounding areas.

Roads vs. transit-oriented developments (TODS)

Although road projects like WestConnex in Sydney are also contributing to high house prices in Blacktown, Liverpool and Westmead, Ryder said that building bigger freeways isn’t a long-term answer. For a more sustainable urban fabric, he said that “rail and light rail are the long-term winners”. A higher population density can also be seen around rail developments, making TODS the way of the future.

Renewable energy and social infrastructure

Ryder said that Adelaide is one of the best places to invest in property because of its economically beneficial renewable energy industry, prominent social infrastructures such as health and education, and affordable house prices. People can buy two houses in Adelaide for the price of just one house in Sydney. And more houses are being sold in Adelaide, which could lead to price rises – this is good news for property investors.

Social infrastructures are also stimulating the property market in the following areas:

  • Blacktown, Liverpool, Westmead, and Parramatta in Sydney.
  • Sunshine and Casey in Melbourne.
  • Kelvin Grove in Brisbane.

In Parramatta, health and education services tend to co-locate along with public transport, making it a sustainable and liveable community. Ryder said that what makes health and education services attractive is that they offer long-term jobs compared to short-term jobs in mining and road building. There’s also plenty of demand for rental accommodation in areas with social infrastructures.

Overall, improved public transport access, renewable energy, and social infrastructure can boost the values of properties in the area, and make the place more appealing to investors and non-investors alike. They also generate business activity and jobs, which in turn create demand for real estate, said Ryder.