The size of the tourism investment pipeline increased in 2015, and included a total of 173 projects worth $59.8 billion – a net increase of $6.5 billion (or 12.0%) in value and a net increase of 6 projects from 2014. Since 2011, the value of the tourism investment pipeline has grown by $23.6 billion, with around $4.0 billion of projects completed and open for business over the same period.
The value of the aviation pipeline increased largely as a result of the revaluation of existing fleet orders, following a 17% decline in the value of the Australian dollar against the US dollar in 2015. Three airport projects worth $480 million were completed in 2015, while six new aviation infrastructure projects worth $495 million were added to the pipeline.
Arts, recreation and business services
The arts, recreation and business services pipeline saw strong interest with 15 new projects worth $1.6 billion entering the pipeline in 2015. Twelve of these projects are in regional Australia, with a total worth of $1.4 billion. Once completed, they could encourage increased dispersal of international and domestic visitors outside of the capital cities.
Strong investment interest in accommodation developments realised 26 new accommodation projects in the pipeline at the end of December 2015. These projects were valued at $1.3 billion and accounted for 4,480 rooms.
Compared with 12 months earlier, the value of the accommodation pipeline declined by $600 million, while the number of rooms increased by 330 to 15,900 rooms.
While the value of the pipeline decreased, it should be noted that there has been a structural shift within the industry, as investors increasingly pursue mixed-use developments rather than typical ‘standalone’ hotels. These developments provide accommodation alongside leisure and retail facilities, and appeal to investors because they offer increased returns and diversification of risk across a variety of complementary uses.
Mixed-use projects are very common in Asia and many developers in Australia now see them as the future for real estate development.
Mixed-use developments are outside of the current scope of the tourism investment pipeline. They are, however, a significant part of Australia’s tourism industry, with 79 mixed-used projects valued at $35.1 billion at the end of 2015. By comparison, the mixed-use pipeline at the end of 2014 was valued at $33.6 billion and was spread across 69 projects.
The mixed-use pipeline has the potential to generate around 24,000 additional rooms. When combined with the 15,900 rooms from standalone accommodation projects, accommodation supply could grow by around an additional 39,900 rooms, if all projects are completed in their publicised forms.
Location of projects
The growth in the value of the pipeline has been supported by strong growth in the number and value of investment projects located not just in metropolitan areas of Australia, but also in regional areas. Growth in the number and value of regional projects in the pipeline indicates that investors are willing to invest in regional areas, for the right projects. This interest will help improve access to regional Australia, which should in turn encourage greater visitor dispersal outside of the capital cities.