AUSTRALIA ECONOMIC OVERVIEW In 2023, the Australian economy exhibited resilience and recovery on multiple fronts, although inflation and higher interest rates did impact on sentiment. One noteworthy aspect was the low unemployment rate, sitting at 3.9%19 as of December 2023, reflecting strong demand for labour across many sectors. The major contributors to the resilient job market were strong investments from both the private and public sectors. In addition, the continued rebound in tourism contributed to retail and hospitality job growth, while underlying population growth and an aging population underpinned growth in health and social assistance sectors. The resurgence of international migration significantly influenced the Australian economy in 2023. As such, population growth surged to 2.4% YoY to 26.6 million in FY 2023, well above the pre-COVID-19 level of 1.5%19. Australia, traditionally reliant on immigration for population growth and economic activity, saw a return of skilled workers, students, and other migrants. This influx underpinned consumer spending, despite the headwinds from rising interest rates. Housing demand also benefitted with residential vacancy rates remaining low and dwelling prices rising by about 10% in 2023 across Australia. Despite local and international headwinds, GDP growth remained positive in 2023. GDP grew by 1.5% YoY to December 2023, although growth was just 0.2% QoQ in 4Q 202319. Despite these relatively positive results, growth in GDP per capita has been negative, largely due to real consumption of households dropping off on the back of inflationary pressures. Inflation in Australia remains above the RBA’s range of 2-3%, with the December reading at 4.1%. The inflation rate in Australia peaked at 8.4% in December 2022 and has been trending down since then. The outlook has improved in recent months with bond markets now expecting the RBA to hold interest rates at 4.35%, with two rate cuts expected over the course of 2024. Looking ahead to 2024, the Australian economy appears poised for steady growth given the stabilisation in interest rates and continued decline in inflation. One key headwind is likely to be the slowdown in the Chinese economy which will continue to impact the tourism sector as well as mining exports. Unemployment rate is likely to soften slightly given challenges in some SYDNEY, AUSTRALIA industries, and some concerns around the global economy. Population growth is also expected to moderate to more normalised levels over the course of 2024. This is partly because of the dissipating “catch-up effect” after the pandemic. The Australian government is also looking to curb some migration, particularly the international students. TRENDS IN THE DEVELOPMENT OF SYDNEY Economic Overview and Trends As the largest city and financial hub of Australia, Sydney, the capital of New South Wales (NSW), houses approximately 5.3 million residents. In 2023, it ranked as the 4th most liveable city in the world according to the Economist Intelligence Unit. Economic growth for New South Wales was solid in 2023, with State Final Demand up 1.7% YoY to September 2023. This was despite the relatively flat real household consumption, given higher interest rates causing mortgage holders to restrict spending. Dwelling prices observed strong growth in Sydney, up by 11.1% for the year, largely as a result of an elevated population growth and an undersupply of new housing. Sydney (as well as Melbourne) were the greatest beneficiaries of the reopening of international borders, with the international student population rebounding in 2023. Visitor arrivals have also come back strongly, although they remained below pre-COVID-19 levels due to flight capacity issues, as well as a slower than expected rebound in tourists from China. Investment in NSW Infrastructure The infrastructure pipeline in Sydney is part of the government's plan to enhance the city's growth and development. This involves numerous projects across different sectors including transport, health and education. The transport sector is a key focus, with significant investments in rail, roads, and airports. The Sydney Metro project, currently under construction, is the largest of these projects. Projected to be completed in 2024, it is expected to significantly reduce travel times across the city and improve connectivity. Additionally, road projects like the recently completed WestConnex aim to ease traffic congestion. Finally, the newWestern Sydney Airport will increase air traffic capacity into Sydney, with completion expected by 2026. Health infrastructure is also being prioritised, with several new hospitals and healthcare facilities being constructed. This includes the Royal Prince Alfred Hospital redevelopment and the Liverpool Health and Academic Precinct redevelopment. 19 Australian Bureau of Statistics 112 CAPITALAND INTEGRATED COMMERCIAL TRUST INDEPENDENT MARKET REVIEW
RkJQdWJsaXNoZXIy NTkwNzg=