Regional Australia Budget focus will benefit commercial property

The budget is always a positive for commercial property. After all, job creation is a big focus.

This year however it is regional Australia that is the clear winner. In many markets with previously small commercial property sectors, it is likely that there will be growth in tenant demand and this in turn will drive investment.

Geelong is number one but other regional areas to benefit

A train that takes half an hour from Geelong to the Melbourne CBD now has funding. And this will benefit all sorts of commercial property in this regional city.

The rail link will build upon the Geelong City Deal, continual investment in the road infrastructure between Geelong and Melbourne and upgrades to the airport.

It will increase the number of people living in the region and this will lift demand for shopping centres. The opportunity to draw upon a bigger workforce will improve the quality and quantity of industrial and office floorspace.

Funding for rail projects, particularly fast rail, was a key part of the Budget. Picture: Getty

While Geelong did very well from the budget, it looks like many more regional areas will become linked to big capital cities by fast rail. A total of $40 million was provided to look at the viability of fast rail from Sydney to Wollongong, Sydney to Parkes, Melbourne to Albury Wodonga, Melbourne to Traralgon and Brisbane to Gold Coast.

These business cases are already underway for Sydney to Newcastle, Melbourne to Greater Shepparton, Brisbane to Moreton Bay and Sunshine Coast and Toowoomba to Brisbane.

An expansion of the City Deals initiative was also announced. These City Deals have been already positive for places like Townsville, Launceston and Geelong. Additional City Deals have been committed in Perth and South East Queensland.

The budget announced Regional Deals to Barkly (Tennant Creek region in the Northern Territory), Albury-Wodonga and Hinkler (Bundaberg and Hervey Bay)

Other positives for regional Australia include $100 million for regional airports, more money for farming communities and $220 million in improved internet and mobile service.

Infrastructure boost great for industrial property

Better transport infrastructure is good news for industrial property and it is no surprise to see this be such a major focus for this year’s budget.

Industrial property will be one of the big winners from the budget.

In total, there has been $100 billion allocated over 10 years from next financial year in transport infrastructure.

This includes $1 billion to improve freight access to ports, increasing the Urban Congestion Fund from $1 billion to $4 billion and a range of major road initiatives such as $1 billion to improve the Princes Highway across New South Wales, Victoria and South Australia.

Can tax breaks help the retail sector?

It is hard to find good news for retail property at the momentbut the budget does provide more money to consumers through tax breaks, hopefully making up for at least some of the dismal wages growth we have seen over the last few years.

A focus on small business is also likely to help retail spending. Some of the tax cuts for businesses with turnover less than $50 million may flow through to shopping centres but the expansion of the instant asset write off to $30,000 will provide another boost.

Nerida Conisbee is chief economist for REA Group.