- Diversification critical for WA to be competitive in the global arena.
- Overseas investors attracted to the sustainability of WA's economic growth.
- Land release process needs to be modernised to meet demand.
This week, key industry leaders from the property sector gathered at the Property Council of Australia’s (PCA) Invest and Grow WA event to discuss the future of Western Australia’s (WA) economy.
The panel was led by the Department of Jobs, Tourism, Science, and Innovation (JTSI) Director General, Rebecca Brown, and moderated by The West Australian veteran journalist Matt McKenzie. Panellists included CBRE head of capital markets WA, Aaron Desange, Brookfield Properties group executive Ian Campbell and JLL senior director of international capital, Kate Low.
Three themes dominated the discussion: diversity, sustainability, and the need for speedier approvals.
Diversifying to stay competitive in the global economy
In her opening address, Brown underscored the economic imperative for WA to diversify its economy to keep up with the rapidly intensifying international competition.
“The world is changing and changing fast. The importance of energy and food security, the need to decarbonise and transition to new energies, combined with the need to ensure a strong pipeline of quality jobs now and into the future, is significant. And also with a strong focus,” she said.
“A diversified economy is key to ensuring our economy is resilient into the future and the challenges that we will face.
The JTSI Director General stressed that WA needed to diversify, not only to reduce its reliance on the resources sector but also to diversify within the resources sector, focusing on rare earths and critical minerals and the downstream processing of these materials.
“In early 2023, the now premier released Future State, ensuring that WA’s strengths and comparative advantages are aligned to the areas of global growth.
“Future State is a holistic approach to support WA industry to unlock the investment needed to grow, focusing on a number of targeted areas, renewable hydrogen, critical minerals, advanced processing,” she said.
“Carbon capture utilisation, storage, naval shipbuilding sustainment, LNG decommissioning, high value, food and beverage manufacturing, medical products and digital health, space and cross technologies and regional tourism destination development.”
Brown also reiterated the property industry’s vital role in supporting these new target sectors.
Importantly, the state’s robust economy and strong leadership have been piquing the interest of global investors, with WA being seen as an attractive prospect for those looking to gain a foothold in the Asia Pacific (APAC) region.
“If you look at investment within APAC and global investors that invest in a pack, global investors are still very under-allocated to the APAC from an investment destination. So, if you’re a global investor and you need to invest your capital at the moment, where do you go?” Low said.
“Japan has been probably Australia’s biggest competition in terms of capital, just given where their interest rates are and the returns they can generate from that.
“If you look at South Korea, there are challenges within that market. Singapore is a small island. I think the cheapest real estate you can buy there, you might be lucky to get one floor for \
50 million. There are very limited opportunities in Singapore.
“China and Hong Kong, global investors are definitely a little bit shy on at the moment.
“Again, India is getting a lot of attention because of the growth, and so is Southeast Asia.
“A lot of investors are looking at Australia. It’s a very transparent market across the board; it’s English-speaking, common law. And so, if you look at that and you go, we’re in Australia, can we invest?
“Typically, investors will look at Sydney and Melbourne as sort of that first place to go once they’re set in those markets, and I think Melbourne does have some challenges off the back of COVID versus, you know, WA that handled it very well in comparison to what they went through.
“But then you look at that diversification based on where you can get growth. And investors at the moment are all looking at growth. I think WA definitely provides that versus the eastern seaboard.”
Indeed, Desange expressed that one of WA’s key selling points was its growth potential, together with the longevity of its resources sector.
“First and foremost, we’re not selling assets in WA. We’re selling the sustainability of the economy.”
Aaron Desange, CBRE Head of Capital Markets
Focus on sustainability and a sustainable economy
The panellists agreed that the global economy will undergo a massive upheaval over the coming decades, driven by the world’s move towards renewable energy.
“Our house view is that it’s bigger than the industrial revolution, but at the speed of the digital transformation,” Campbell said.
“It’s going to happen very quickly. You’ve got massive global policy drivers. The world wants to meet the Paris targets for decarbonisation. That’s going to require substantial increases in the amount of minerals and resources that come out of the ground.
“BHP makes the forecast that says that we’ll need twice as much steel in the next 30 years as we used in the last 30 years.
“Twice as much copper, four times as much nickel.
“I think we’re going to see an upsurge in economic activity driven by the transition like we’ve never seen before. And it will get. It’ll be very, very steady. It’ll be very strong, and it’ll be very long.”
Furthermore, they predicted that should WA profit from the global energy transition, it would experience long and sustained growth, one that would affect all sectors.
“I think it impacts on every single sector and the demand for every single sector. If you look at office, you’re obviously going to have more companies coming in, expanding headcount. That’s going to obviously be very positive for the office sector where you’ve got residential, you’re going to have more migrants coming in, and there’s going to be a huge demand for residential,” said Low.
“Same for industrial. So, I think across the sector, I think it’s very positive. It’s a longer sustained growth as opposed to a boom and that’s going to continue. If you look at India, just on steel consumption, compared to the global average, they’re about 70 kilos versus 220. So still a lot of growth to go in that part.”
Desange concurred that WA would experience a sustained uptick of growth rather than large spikes, with ‘beds, sheds, and meds’ being the main focus for investors. Here, ‘beds, sheds, and meds’ refers to high-quality residential homes, distribution warehouses, and medical technology.
Urgency needed to capitalise on WA’s advantage
Another common thread within the panel’s discussions was that land release in WA needed to be streamlined so that the state’s real estate sector is better poised to support the growth of other sectors.
Campbell argued that the WA’s land release policies were ill-suited to meet the country’s 2030 emission reduction target.
“We have this phenomenal opportunity sitting right in front of us. The struggle, if we are to meet what my former colleague Chris Bowen has said, is to achieve the targets by 2030 that we’ve set ourselves, is how can we?
“How can we get companies like Chalice to get their approvals to get the minerals out of the ground? How can Liontown get the approvals they need? How can the Pilbara iron ore miners replace their entire energy system in the next 10 years?
“How can they double the number of iron ore mines we’ve got at the moment? Double, quadruple the number of nickel mines we’ve got at the moment, and do it in a very short time frame.
“Now, I think the observation I’ve made is that we’ve got approvals and planning and permitting processes that were designed in the 60s, 70s and 80s. And it could take years just to get to the approval for some of those projects I’ve mentioned, and we don’t have that time.”
Bureaucratic delays have been one of the most commonly cited obstacles preventing more land release for commercial and residential projects.
While acknowledging these as valid concerns, Brown noted that additional elements slowed the approval processes. For instance, she stated that the State Government was seeing an unprecedented volume of requests.
Later in the discussion, Campbell proposed that technology may be the solution to speeding up the approvals to ensure they were in lockstep with WA’s growth.
“What we need is, and this applies to the energy transition and student housing and the whole WA economy, is that the timelines for approvals and permits and environmental approvals are something that we’ve struggled with for decades,” he said.
“And you have got to have good science. You’ve got to have good processes, you’ve got to have good stakeholder engagement, but it doesn’t need to take years.
“You’ve got all of the algorithms, artificial intelligence, and supercomputing that can actually pull together all of the data you would need to make a good decision in a fraction of the time.
“Somehow the people were charged with permits and approvals, and environmental assessments haven’t sort of figured out how to use those. So we actually need to apply all of that. We might need more resources, we might need to contract out some of that work, but we can’t wait.”
