The project that boosted the Gold Coast’s land value by $300million
Hate maths? So do we! Fortunately, A leading Queensland economist has crunched the numbers and determined the Gold Coast's new tram system between Broadbeach and Griffith University to be a roaring success.
Cameron Murray, an economist at Queensland University, has released his value capture analysis on the new infrastructure, and found that the tram has boosted the land value within the region by a total of $300million. This increase is no doubt a boon for those looking to sell property on the Gold Coast, especially in areas near to the tram line.
How does one tram add that much value?
To come to this conclusion, Mr Murray first studied the value of the land in the areas around the light rail project back in July 2104.
There are 1,324 plots of land located within a 400metre radius of the new light rail stations, and he discovered that they were worth roughly $4.2billion back then. Now, those same plots are worth more than $4.5billion – an increase of over $300million in just a couple of years from the installation of convenient public transport.
It's no secret in property that convenience in location will almost always offer a better selling price. Whether the real estate is near to local shops, schools, outdoor spaces, or public transport, such a feature can help vendors ask for a higher price.
Mr Murray also found that those plots located within just 400metres of a station increased in value by 7 per cent more than properties found 400metres to 2kilometres away. Such results, he said, are consistent with studies carried out overseas on similar projects.
Why land owners should be aware of value capture
The purpose of the study was for more than just helping land owners, however.
Stage one of the Gold Coast rail project cost a total of $1.2billion. Naturally, that's a high price tag for councils and governments to cover, so finding alternative ways to pay those expenses can help make such projects feasible.
As Mr Murray points out, real estate owners in nearby areas (within 2kilometres or so) are usually set to receive financial gains from these projects, even though they don't put in any investment themselves. What the value capture idea proposes is that land values are taxed for such projects to help pay for the costs. While there are already taxes on land values in place, Queensland does put caps on these figures.
Instead, Mr Murray has suggested that those taxes are expanded. For example, if the Gold Coast rail project included a 1 per cent land value tax rate, he predicts that it would generate $2.5million each year. Considering property owners are set to see as much as a 25 per cent value increase from such a project, it's an idea that could potentially benefit everyone.
Home owners and buyers on the Gold Coast need not worry about value capturing just yet, as Mr Murray's study was simply one to highlight just how much value was added by stage one of the new train system, and how much could have been covered by land taxes.
The stage two expansion of the rail system is now underway, and will see a light rail route introduced across 7.3kilometres between Parklands and Helensvale. This part of the project will cost an estimated $420million, and will include noise barriers for properties that back on to the system. Home owners along this route may also be able to look forward to improved land values in the coming years.
If you're looking to buy or sell a property near the new rail system or on the Gold Coast in general, talk to the local Ray White team that knows all the ins and outs of recent and coming developments that may help land you a better deal.