The first thing most people speak of when they are talking about a residential investment is usually how many kilometres it is from the city’s CBD.
The magic figure of staying within 10 kilometres of a CBD looms large for most property investors.
Back in the day it was industry and major shopping precincts that occupied the city centre. In modern cities many businesses want their industrial premises and warehouses close to major transport routes and on cheaper land so they have migrated to the outer suburbs.
Shopping centres have also moved out of the CBD and the only people who usually shop in the city either live or work there.
Business offices are obviously still prevalent but that is starting to be offset by new office precincts that are sprouting in middle and outer ring suburbs offering cheaper office space to business that don’t need to be in the CBD.
In today’s Australian cities employment nodes are being developed away from the CBDs so their status as the be all and end all may be on the decline.
According to Terry Ryder on Property Observer, being close to the CBD ‘is no longer a proper benchmark for the worth of a piece of real estate’ and that ‘today there are many factors more important than the CBD in terms of what you need to be near to have intrinsic value’.
For example in Sydney, analysis by the Committee for Sydney and PwC has found that Sydney’s ‘economic centre of gravity’ is at Concord, which is 9 kilometres west of the CBD. The economic centre of gravity refers to the point around which all economic output is evenly balanced.
The report found the CBD of Sydney contributes around 20 per cent of the city’s economy, which means 80 per cent of their economy is being produced elsewhere.
The report suggested Sydney’s economic centre of gravity had been drifting north-west for more than ten years off the back of commercial hubs that have developed at Macquarie Park, Sydney Olympic Park, Parramatta and other suburbs.
The report found Melbourne’s economic centre of gravity is now 6.7 kilometres south-east of the CBD.
Commercial centres and employment hubs have moved further from cities’ CBDs. Where they have taken up residence in areas that have good transport links, strong infrastructure and affordable real estate, we have invariably seen the most demand from property buyers.
One needs to only look at the performance of real estate recently in a suburb such as Glen Waverley to see it in action.