THE New South Wales government’s infrastructure investment is a leading example for the rest of the country, which has struggled to keep up with a booming population. However value capture is a silver bullet.
Speaking at the Australian Property Institute’s National Property Conference on the Gold Coast, Urbis director and chief economist, Nicki Hutley said NSW’s recycling of assets has seen an absolutely massive investment into infrastructure.
“In road, in rail, light rail, and then soon to becoming the Western Sydney airport – (it is a) massive boost for the New South Wales economy, creating jobs just as they’re needed when some sectors are not doing so well,” she said.
“With an economy in flux, we need to make sure we have the best kind of infrastructure, and that means finding ways to finance that infrastructure,”
Hutley said as well as value capture, there should be more borrowing to invest in the future given current good credit ratings.
However contrary to popular belief, Hutley said value capture is not a silver bullet and the government should look at all forms of funding models.
Citing overseas, she told the conference that value capture may fund 5% to 25% of the cost of a project.
Macquarie Group’s infrastructure advisory division director Sammy Isreb agreed and said value capture is going fund an infrastructure project completely.
Having said, Isreb said there is no shortage of capital looking for projects that can make money.
Isreb said infrastructure is an attractive investment class as it offers stable returns over the long term and offers low volatility.
Australian Property Journal