The Sydney Metro. A bonanza for Sydney residential and commercial property buyers or not?

February 19th, 2018

For a city of its size many consider it a crime that Sydney does not already have a metro system. Yet, with the New South Wales capital predicted to reach eight million people by 2050, the government is now looking to remedy that. The initial leg in Sydney’s first dedicated rapid transit line, consisting of driverless single-deck trains capable of moving up to 40,000 people an hour, is due to open as early as next year.

If done well Sydney’s new Metro – the largest urban rail project in Australia’s history – will radically overhaul the way we get around the city. In turn this, so the theory goes, will boost employment, spur development, transform suburbs and raise land values.

Sydney is the second least affordable city worldwide to buy property after Hong Kong. For many Sydney residential and commercial property buyers, investment in public transport infrastructure is therefore seen both as a significant opportunity not only to profit but also to hedge against the risk of falling property prices.

But questions remain. How efficient will the Metro be? Will commuters really give up their cars? Is it a game-changer? And if so, what does that mean for prospective property buyers and current homeowners? Buyers’ agent Curtis Associates digs deeper in this special report.

Sydney Metro: What we know so far

This is what we know:

  • Sydney Metro Northwest Under construction and due to open in 2019, this $8.3 billion line, consisting of eight new stations and five upgraded stations, will connect Rouse Hill to Chatswood.
  • Sydney Metro City and Southwest Currently in early construction, Metro City & Southwest will run between Sydenham and Bankstown and will cost up to $12.5 billion. It is expected to open in 2024 with seven new stations and eleven upgraded stations.
  • Sydney Metro West Connecting the CBD to Parramatta, this line is still in early planning stages. On current estimates it will cost up to $15 billion to build.

Combined, Sydney Metro promises to increase the capacity of train services entering the CBD by sixty percent, from 120 trains an hour today to 200 an hour from 2024.

All this sounds expensive. Why does Sydney even need a Metro?

Trams once crisscrossed Sydney. Although hard to believe now, this was a city with three times the number of trams than Melbourne has today. It was a transport labyrinth that carried 400 million passengers a year. The tram system, however, was torn up, and the final tram stopped operating in 1961.

“The motor car was being sold as the next big thing and trams were old technology,” says Benjamin Driver, senior urban designer at Sydney’s Hill Thalis Architecture + Urban Projects Pty.

In addition to buses Sydney today relies on a train system which, while top class when it was first installed, is now cracking under the pressure of a growing population and burgeoning geographic expansion. What’s more, Sydney’s trains still use a signaling system put in place in the 1930s, which significantly slows frequency.

“Coupled with a lack of investment in the same period as the population has doubled, and the system is unsurprisingly under strain” says Mr Driver.

For many commuters, then, who are unable to rely on fast and reliable public transport, the car is their preferred and in many cases only, option.

Is the Metro a game-changer?

Yes. In order to relieve those problems, the Metro is not only necessary but a potential game-changer that has been on the maps for decades.

“Hong Kong, Taipei and Shanghai have put massive investments in transport systems, which have limited the growth of the car. That is where Sydney has to go – it can’t sustain its economic activity and quality of life, especially as it expands westward, unless it changes people’s moving habits,” insists Peter Bishop, professor in urban design at University College London (UCL).

Mr Driver is as adamant: “Done well, and with a network of lines, Sydney could in-fact be the world-city of envy. We have all the ingredients to be the lifestyle capital – but the public transport and high cost of living is weighing us down.”


Will every one of the three lines spur growth?

Each Metro line will impact the way Sydney functions in different ways – although, as Mr Driver points out, “it doesn’t appear that the Metro will make any previously affordable areas more affordable,” introducing, instead, different types of housing (namely apartments) into areas now dominated by houses.

The area around Sydney Metro Northwest has the highest car ownership levels per household in New South Wales. This will be the first time a reliable public transport service will be routed there – servicing a predicted extra 200,000 people.

Laura Schmahmann, Associate at independent policy advisors SGS Economics & Planning says, “the Metro Northwest is very much about linking up areas of existing development that have not had great public transport access to the city centre and current CBD, [whereas Sydney Metro City & Southwest will create] a bit more capacity in the network around the city.”

The government is looking to increase density between Sydenham to Bankstown, with plans a lot to build 35,000 new units, housing an extra 100,000 people, along the Metro’s corridor.


Unlocking Parramatta’s potential

Metro West has the potential to make the greatest impact of all the lines.

Parramatta has been earmarked as Sydney’s second CBD for decades and now has taken off after a series of past stops and starts.

Station locations are to be decided but Parramatta, Olympic Park and the Bays Precinct are those most often discussed. According to government data, jobs in Parramatta are expected to double over the next twenty years to 100,000. By 2030 it is predicted that 23,000 residents and 34,000 jobs will be located in Olympic Park. The 95 hectare Bays Precinct, meanwhile, has been earmarked as Sydney’s new innovation hub.

While the current western rail network is heavily constrained, Metro West will have its own track – meaning it will not be affected by existing train lines.

“If residents can access those centres more easily via public transport they might be more willing to work there,” says Ms Schmahmann. “And employers might be more willing to locate there if they can attract the more skilled workers they need.”


Triggering a high-rise boom

“Metro West does have great potential – more so than any transport project in Australia at the moment,” agrees Mr Driver.

Housing supply, too, will be unlocked in the far west given this new accessibility – with the government predicting that, over the next 20 years, an extra 420,000 people will move into the corridor between Greater Parramatta and central Sydney.

Last year, a cabinet paper seen by ABC and Fairfax revealed that the Metro West would trigger a high-rise boom through sale of development rights around, and air-space above, a dozen new underground stations.


A property goldmine

When it comes to prices, those properties located within a one-kilometre radius walk of a railway or metro station typically benefit (although the positive effects cease beyond the one-kilometre mark). This is particularly true for those suburbs that have not had public transport infrastructure but which will, in future, receive them. That has been the case for many properties, as buyers’ agents Curtis Associates observed in April 2011. In our experience it remains the case today.

“There is a correlation between land values within half a kilometre of the station,” confirms Professor Bishop. “As the Metro gets built you get little pockets of increased values around where the stations are. The people who build the railways quite often go bust,” he adds. “It’s the landowners around [the new stations] who make money by doing nothing.”

For speculative residential and commercial property buyers, Metro West offers the best bet. Much of Sydney Metro Northwest involves the conversion of existing heavy rail lines in five north west suburbs (Epping to Chatswood); likewise, much of the proposed Sydney City & Southwest (Sydenham to Bankstown) already has public transport infrastructure in the form of rail.

Thus, the likely hot spots for capital growth are those with no existing rail: Cudgegong Road, Rouse Hill, Kellyville, Bella Vista, Norwest, Showground Road, Castle Hill, Cherrybrook, Crows Nest to Barangaroo.

As Professor Levinson, professor of transport at the University of Sydney points out: the “game is the same. Just more territory is brought into the game.”

“Since the lines and stations for the Metro North West and City/South-West are already set, the landowners have already realised their price appreciation,” he says. “There is still a small fortune to be made on the Metro West line, since where the stations land is still not set.”

Rob Roggema, professor of sustainable urban environments at UTS, notes it is wise to buy close to a Metro station; and with 35 percent of Sydney siders now choosing to live in apartments, higher density is no bad thing.

“What you see happening in Europe and also South East Asia is that those places are the most valuable,” he says. “There is less and less interest in the single detached house as big as possible on a quarter acre block– people are understanding it will cost them a lot of money to cool in summer, a lot in petrol to get them there and to their work. The property value of the areas around the Metro stations – if they are designed in a good way (and design is crucial to the areas around those stations) – are really the best bet if you want to develop your property value.”


Density done well

Not everyone is happy about a high-rise boom, however, with many current residents along the Metro corridor concerned about overcrowding.

Yet there is one way to combat this: density done well. That means lots of public green space, sustainable housing design, and plenty of nearby amenities. Streetscapes, too, need to be amenable to walking and cycling: critical is providing safe spaces to store bikes in or outside Metro stations, as in cities like Copenhagen and Amsterdam.

To provide this, Mr Driver recommends looking to the tried and tested examples of European cities: “They employ a more evenly spread density of four to six storeys, rather than islands of towers and swathes of suburban sprawl.”

There “are still too many bulky, unhealthy apartments popping up all over Sydney,” he says, pointing out that above five stories you are no longer close enough to engage with the street.


Where’s the circle line?

That’s all makes sense – in theory. Yet, Sydney Metro offers its own set of problems that may deter users and thus push down the value of property in the areas it services.

One problem with the Metro system is that there is no circle or cross-city lines proposed.

“I don’t see a circle line like in London – a line that is actually connecting, say, Bankstown with Parramatta and the North West line. If you want to go to Parramatta from, let’s say, Rouse Hill do you really need to travel to Central station?” asks Professor Roggema.

“No one will do that. There are hardly any connections between those locations – that is a weak point. That will need to be improved to create a whole network in public transportation – because in a car you can drive from north to south directly.”


It’s all about the interchanges

Critical in any transport network is ease when interchanging – and the ability to change lines and transport modes in the same station, without having to tap on or tap off.

“If you go out of one system and you need to go on the street and walk to another station, to go from the Metro onto the heavy rail, then it becomes awkward,” says Professor Roggema. “By that time people have already chosen the car.”

For Sydney Metro to truly be transformative it needs to work as a whole: “A single line here or there won’t make a network – and it is at this point that public transport finds its real potential. It must interchange frequently,” says Mr Driver.

Mr Driver notes specific problems with the proposed lines as they stand. “Waterloo station is way too close to Redfern. Out of Waterloo there should be at least two if not three new stations, one interchanging with Green Square town centre,” he says. “The Pitt Street station, which is designed to relieve Town Hall, isn’t even being connected to Town Hall Station. Again, this is unthinkable.”

Meanwhile, stations will need to have adequate signage to attract commuters.

Julian Maynard, managing director of transport consultancy Maynard Design, points out that this is not only about providing signage at the entrance/exits and to platforms.

“Stations are at a different scale now… and therefore very complex environments. We need to create intuitive environments, providing the right information, at the right time, at the right place” he says.


Distance matters

Another issue that may affect the Metro’s success is distance.

Metros, in comparison to the double-decked trains used in Sydney’s current rail system, have fewer seats with just one deck and more doors. True, they have greater capacity, as they are able to run more frequently with faster boarding and automated modern signal controls, but in peak hour less seats means more standing.

“Metros are good for 15km or so, and their benefits drop after this as passengers become fatigued from standing,” says Mr Driver. “The new Metro is longer than recommended by international best practice – more than double. More people standing for much longer distances is not optimal, and risks the public rejecting it – and then turning back to their cars.”

Professor Levinson adds: “One reason, I am told, that the government chose the Metro over trains for the new lines is that because it is a different technology, it will be easier to manage separately from Sydney trains (and will be privately operated under contract). It was a technology choice to achieve a policy aim of breaking the existing bureaucracy and labour unions.”

“To help ensure the political separation, the tunnels for the Metro line are just a bit too short, and the tracks too steep, for double-decker trains to use. This could have been remedied at little or no cost, providing future technological flexibility, but the government want to reduce the flexibility of future governments,” he continues.

“Flexibility would have been a potential benefit from providing compatibility. On the other hand, separation has some value from a reliability perspective, problems on the train lines should not cause problems on the Metro (except for crowding where people have a choice between the two), and vice versa.”


It’s also all about the money 

To combat the distance issue, the Metro needs to have a competitive pricing structure. The system has to be cheap and efficient enough that commuters reject a more expensive journey in the car. This is an incentive used in London: a journey into the city might cost a few pounds on the Tube; in the car, by comparison, it costs £11.50 to enter the congestion zone plus £10 an hour for parking. “There’s nothing to stop my right to use my car but frankly I’d be mad to use it,” says Professor Bishop.


The car remains king – so beware of tunnel ventilation stacks 

In Sydney, by comparison, roughly eighty percent of journeys are still taken by the car (see buyers agent Curtis Associates’ special report on the future of our roads with the advent of electric vehicles and driverless cars).

Like in the US, the car has been ‘King’ in Australia but with congestion reaching a peak on the roads people now realise that an alternative approach is called for,” says Mr Maynard.

Yet investment in the WestConnex motorway brings into question whether the government is really committed to getting car owners into public transport. Now notorious, an internal Transport for NSW memo referred to, in the words of the Sydney Morning Herald, a “cabinet directive not to consider public transport alternatives to road projects”. Similarly, a proposed Metro from Wollongong or Hurstville to the City appears to have been shelved.

“It is though out-dated and inappropriate city building,” says Mr Driver. “Many cities, including in the US, are removing motorways, and no other city in the world is proposing a motorway project of this magnitude.”

“The $50 billion plus the NSW government is spending on WestConnex and its numerous armatures is completely antithetical to a city structured and oriented by public transport,” he adds. “It may be high time for a change of talent in the Treasury — one that is not wed to the post-war mantra that the car is king.”

However and as Curtis Associates, buyers’ agent warns, those looking to profit from the Metro might find any profit negated by tunnel stacks. While Crows Nest will be train enabled for the first time, it is right in the line of future stacks and their well-established health risks.

As the current epicentre of Metro West, the Bays Precinct around Rozelle and extending to Glebe, Annandale and Lilyfield are even worse affected with four such stacks having now been confirmed. (see also: Berejiklian and the Beaches Link – Premier facing a rebellion in her backyard. From our Principal. )


Weighing the benefits 

So will the Metro be a gold mine for Sydney residential and commercial property buyers?

The answer depends greatly on, as the saying goes, “timing, as well as time in” the market.

As Professor Bishop points out, it isn’t only the Metro that we need to consider: “It’s a question of thinking about a coherent public network. That’s about a thirty year public strategy and it doesn’t come cheap.” Such projects also take time to build and will be affected by swings in politics and changes in government.

Prospective Sydney buyers — whether using a buyers’ agent, who are able to navigate these complex public transport infrastructure plans, or are purchasing properties solo — should also bear in mind the massive five-plus year disruption in those suburbs presently serviced by the heavy rail stations that are to be converted to the Metro. For some years they will be left with scant, or no, rail services – that alone will exert downwards price pressure over the seven to ten year property cycle.

Conversely, properties already serviced by heavy rail – including the suburbs along the north shore, Illawarra, eastern suburbs and western suburbs lines – might experience congestion easing once the Metro starts. In other words, residential and commercial properties along existing heavy rail lines may benefit from an uplift derived from the Metro, even though they are not directly serviced by it.

The only certainty in all of this is that a project as vast as the Metro will favour the long-term and brave gambler.

 Image: courtesy Sydney Metro