Values of real assets: Focus on infrastructure and housing in Australia

The importance of infrastructure to society cannot be over emphasised because it is needed by individuals, communities, and societies. For instance, communities cannot be classified as developed in the absence of infrastructure development. In real estate parlance, the provision of infrastructure is a necessary condition for residential (housing) growth and development. Conversely, there can be no infrastructure planning without incorporating the residential needs of the population. Adequate provision of infrastructure in the form of roads, bridges, energy, electricity, and utilities contributes to the quality of life or the improvement in the welfare of the residential population. Additionally, it is expected that when infrastructure is provided, there will be cash inflow or revenue to cover the cost of the infrastructure. This latter argument is important for the private sector's involvement in major infrastructure, such as toll roads. Against this backdrop, infrastructure has the twin benefits of social welfare and profit generation. In this thesis, the values of infrastructure and housing in Australia are examined. These two assets have been considered in this study due to the argument that infrastructure and housing are complementary, and they may also belong to the same asset class under the following conditions: (1) Infrastructure and housing share common attributes (2) The investment outlay of the housing project is huge. (3) For residential (housing) development to take place, infrastructure development is always incorporated. This is because, residents need roads, bridges, among others for a better quality of life. The thesis argues that the value of an asset depends on the accuracy of the valuation method and other existing factors. The valuation method could be traditional or innovative, whereas the existing factors may be internal (inherent) such as the attributes of the asset or external such as a major sporting event. In this thesis, three studies have been examined and they are substantially interconnected. The connection between Studies 1, 2 and 3 is identified in the following ways. (1) The two asset classes complement each other. This suggests that without infrastructure there could be no housing projects. (2) The two assets have common characteristics. For instance, both of these assets belong to the real asset class and their provision could provide a sense of pride, wellbeing, and belongingness to the residents. (3) The two asset classes are triggered by a government initiative. In other words, it is a precondition that government's approval is always needed for infrastructure and residential development. Principally, housing has been viewed as an infrastructure, and the application of the valuation techniques used in infrastructure could enhance the housing literature, and vice versa.