Life really does require being a critical analyst of all things. Vested interests are really in the game of deception in order to get what they want. There was an advertisement on the television in Sydney today which strikes me as nothing more than a media stunt by the NSW State Labor Party. The reason I say this is because they are proposing to develop a train line at a cost of $A16 billion from St James (City) to Rouse Hill 6 years in the future. Property investors would be inclined to get excited about such a line because of its potential to push up property prices, but ultimately the political will depends on its economic justification, particularly since they are looking at a private partnership. There are of course some things to note about the line:
1. A line costing $16 billion is going to require $500 million in earnings to make it worthwhile
2. This part of Sydney is not the most populated area
3. The line will include 14 new stations - however only about 5 of these areas have significantly dense populations. It could be argued the outer areas could have carparks to service a wider area.
4. This is a new line so there is the opportunity for the line to be a much faster service than existing lines. We can therefore expect this line to be more expensive, particularly since it will be servicing some high wealth suburbs. I would expect the tickets to be 30-50% higher than other train services in the city, with some justification.
5. It will be interesting to know what the government will be doing to capture some of the value from property development in these areas. Think of the cost recovery from property development where the government owns land, as well as the additional taxes it can make because of the higher property prices. These factors need to be considered.
Nevertheless one would have to be skeptical about this plan given the political value of the news in the next election, since the area skirts safe Liberal seats. I would not be surprised to see this line reduced to a shorter line to Epping, with development of the outer line (Epping to Rouse Hill) pushed back a number of years.
We cannot however overlook the political opportunism of advocating and promoting a project which stretches beyond the term of this government. For further details see the Sydlink website. The issue here is determining whether these projects are going to go ahead. There can be a whole raft of issues preventing them, so one has to be careful anticipating and actually buying property on the basis of such 'proposals'.
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Andrew Sheldon www.sheldonthinks.com
1. A line costing $16 billion is going to require $500 million in earnings to make it worthwhile
2. This part of Sydney is not the most populated area
3. The line will include 14 new stations - however only about 5 of these areas have significantly dense populations. It could be argued the outer areas could have carparks to service a wider area.
4. This is a new line so there is the opportunity for the line to be a much faster service than existing lines. We can therefore expect this line to be more expensive, particularly since it will be servicing some high wealth suburbs. I would expect the tickets to be 30-50% higher than other train services in the city, with some justification.
5. It will be interesting to know what the government will be doing to capture some of the value from property development in these areas. Think of the cost recovery from property development where the government owns land, as well as the additional taxes it can make because of the higher property prices. These factors need to be considered.
Nevertheless one would have to be skeptical about this plan given the political value of the news in the next election, since the area skirts safe Liberal seats. I would not be surprised to see this line reduced to a shorter line to Epping, with development of the outer line (Epping to Rouse Hill) pushed back a number of years.
We cannot however overlook the political opportunism of advocating and promoting a project which stretches beyond the term of this government. For further details see the Sydlink website. The issue here is determining whether these projects are going to go ahead. There can be a whole raft of issues preventing them, so one has to be careful anticipating and actually buying property on the basis of such 'proposals'.
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Andrew Sheldon www.sheldonthinks.com
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