QSuper recently expanded its global infrastructure portfolio, and QSuper members now have direct exposure to Sydney’s Westlink M7 Motorway (M7) – one of Australia’s most commercially successful toll roads.
The M7 is the first direct toll road exposure for the portfolio, which currently invests in key assets such as Brisbane Airport, Thames Water, and New Zealand utility Powerco.
The M7 is an operating toll road with over three and a half years of traffic history. It is located in Sydney’s key western growth corridor and offers substantial time savings compared to competing routes. The road bypasses 47 sets of traffic lights and allows improved travel speeds, significantly reducing travel times. Additionally, the road has taken significant traffic off the existing western Sydney network.
Here are some key facts about our newest infrastructure investment:
Location
The M7 links three of Sydney’s key arterial motorways (the M2, M4 and M5) and forms part of the Sydney Orbital Network, a 110-kilometre orbital road around the Sydney CBD. The M7 itself is 40 kilometres long, with two lanes in each direction, and its motorway grade permits travel speeds of up to 100 kilometres per hour. It is located in western Sydney, which is expected to be the future growth centre of Sydney, with significant land releases and government planning to encourage new businesses, residents, and employment.
Traffic growth
Since opening to traffic in December 2005, the M7 has experienced strong traffic growth. Average workday trips have grown from 99,698 in February 2006 to 137,320 in the June 2009 quarter, representing growth of 10.1% per annum. Traffic is continuing to grow.
Revenue
The M7 has fully electronic tolling (i.e. no toll booths), and tolls are charged on a ‘cents per kilometre’ basis, which is capped at 20 kilometres. The average tolled vehicle kilometres travelled per day grew from 1.1million in February 2006 to 1.5 million in the June 2009 quarter, representing growth of 9.9% per annum. Tolls increase quarterly in line with inflation; therefore, toll revenue increases as a function of traffic growth and inflation. Average daily revenue grew 12.3% per annum between February 2006 and the June 2009 quarter.
Alternative assets such as infrastructure provide a great source of diversification from traditional asset classes such as shares and fixed interest. Our investment in the M7 further diversifies our infrastructure portfolio by both geography and sector, and we expect it will provide stable returns for the longer-term benefit of QSuper members.
So the next time you’re in Sydney, make sure you take a ride on the M7 and see your investment in action!