This article is from the Australian Property Journal archive
THE race to net zero could create a $62 billion opportunity for Australia’s commercial real estate industry in the lead-up to 2030, according to a conservative estimate of its ability to capture the evolving movement, with local farming families and service stations set to be major beneficiaries.
CBRE’s Untapped Investment Potential in Australia’s Emerging Renewable Energy Industry report notes that Australia’s net zero target of a 43% reduction in emissions from 2005 levels will require circa $1.239 trillion of additional investment.
The total capital commitment required in all industries is tipped to be as much as $9 trillion by 2060, with up to 120,000 square kilometres of land likely to be required to facilitate the transition and meet renewable targets.
“If the commercial real estate industry can capture a conservative 5% of this evolving industry and its anticipated investment, through the sale, leasing and development of renewable assets, this would represent a $62 billion opportunity just in the lead up to 2030,” said CBRE research analyst Cameron Douglas-Perrine.
“Leasing of these assets represents a major opportunity within the industry and our Pacific business has already seen an uptick in enquires for renewable energy projects from individual clients, developers and institutional investors.”
The requirement to triple renewable electricity capacity by 2030 will need a rapid increase in developments and infrastructure to facilitate in wind and solar power, energy transmission, hydrogen and battery storage capabilities and heat pumps.
More than 80 renewable energy projects are already under construction or due to be completed, representing a combined investment of $21.2 billion. However, further developments would be required to reach Australia’s interim and long-term targets.
But the report highlights that capital investment is being constrained by planning regulations, labour markets and a lack of transmission.
“Improving transmission lines is vital to cater to new renewable energy hubs across Australia and improve the capacity of our existing hubs,” Douglas-Perrine said.
Local farming families and landowners are set to benefit from corporate investment and commercial returns from renewable investors and developers seeking suitable carbon, wind, solar and battery sites, according to CBRE. Earlier this year, major energy provider Origin Energy purchased a 7,690-hectare farm in NSW for $35 million.
In the commercial property sector, an uptick in sale and leaseback transactions to help deploy capital for renewable research and development purposes is forecast.
Beyond the traditional commercial real estate sectors of office, retail and industrial, CBRE has also tipped that one emerging alternative sector – service stations – is well positioned to capitalise on the ongoing energy transition as service station operators prepare to transition away from fossil fuels to support electric vehicle (EV) charging stations and potentially hydrogen storage for long haul trucking.
“Given expectations that customers will remain connected to a charging station for an average of 15 minutes per use, convenience and retail has emerged as a major focus for service station operators,” CBRE capital markets manager Lee Holdsworth said.
“This shift has resulted in the evolution of the traditional service station from being a place to refuel, to becoming a one-stop shop for customers, offering a broad range of food, retail and convenience.”
EVs had a total Australian fleet size of close to 83,000 in April of 2023, and the Electric Vehicle Council estimates an EV fleet of one million is required by 2027 for Australia to reach its net zero target by 2050.
Holdsworth said the federal government’s heightened support for renewable energy projects is giving investors confidence that sustainable infrastructure assets have long-term growth prospects.
“Companies have a role to play in climate change and are therefore seeking opportunities that not only have a positive contribution to society, but also have a financial benefit for shareholders.”
