Tasmania’s $30 billion infrastructure boom fuels investor interest

Tasmania is climbing investors’ watchlists, driven by ambitious residential and commercial projects across the state.

The $30 billion of major infrastructure works over the next five years include the Macquarie Point stadium, hospital upgrades, regional highway works, renewable energy initiatives and large-scale data centre developments.

While the new 23,000-seat stadium in Hobart for the new AFL Tasmania Devils has been the most controversial addition, there are equal parts excitement and debate about the plans for data centres.

“But these will all have a significant impact on the Tasmanian economy, as well as on the vicinity of these projects,” says Tom Balcombe of Ray White Commercial Tasmania. “Things like the Marinus Link [an electricity interconnector between Tasmania and Victoria] will have a positive impact on commercial land values in the area.

“Then if you look at the new stadium, it includes 27,000 square metres of commercial space across the precinct and residential being developed as part of the project. It’s a very good time for investors seeking a slightly higher yield to the mainland in a potentially less competitive environment to Sydney and Melbourne.”

In the residential sector, house prices are doing well, too, according to the latest Domain House Price Report. Hobart house prices are at record highs as growth accelerates, rising 4.7 per cent in the March quarter.

Domain chief of research and economics Dr Nicola Powell says, “Growth has accelerated from the previous quarter, representing a sharp turnaround from the decline recorded at the same time last year.

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“This marks the fourth consecutive quarter of gains – the longest uninterrupted stretch since 2020-22 – with prices now surpassing their previous peak for the first time since mid-2022. Annual growth strengthened to 14 per cent, the highest level since June 2022, highlighting a clear rebound in market conditions.”

With firming prices and an optimistic outlook, the cluster of new projects is mostly welcomed by onlookers. Jenna Cairney, chief executive of Master Builders Tasmania, says it’s injecting a great deal of confidence into the economy.

“There’s a lot of excitement on the horizon,” she says. “We’re seeing a really exciting pipeline moving forward.”

Tourism also continues to be a strong driver, with more visitors already travelling to Tasmania to watch sport and sample the wines from the burgeoning number of cellar doors before touring the state.

Independent economist Saul Eslake says the upmarket hotel chains now setting up will tend to boost the tourism industry and attract visitors who might spend more than in the past.

“So, there’s certainly a lot happening, but my worry is that Tasmanian finances, relative to our economy, are the worst of the nation,” he says. “While we do have a lot of infrastructure projects going on, the government is borrowing a lot of money to help finance them.

“And while we have plans for data centres, where are we going to get the power from? We’ve knocked back a few investment proposals in recent years because we haven’t been able to supply the electricity required.”

Balcombe admits there are challenges, but is confident they can be overcome in the long term. “It still remains something of a safe haven for investment,” he says.