The Boom, Bust, and Rebirth of Perth
And yet, it serves as the natural gateway to Australia for many countries, providing the fastest direct flights between parts of Europe and Asia, with new direct routes from India in the works. Touched by the Indian Ocean to the west, Perth is far from the rest of Australia (Adelaide, the next closest large city, is a three-hour flight away), situated in the southwest of a state so massive that, if it were its own country, it’d be the 10th largest internationally.
But it’s also far from feeling small.
Western Australia’s mining boom in the mid-aughts brought fast riches to Perth. But when demand slowed and prices dropped a decade later, the entire state was left with multiple unfinished projects, a massive deficit, and a depleted reputation for being too expensive, despite unemployment reaching a 16-year high.
And yet now, a few years out from the fall, that’s already changing. Western Australia has a second chance at building a rich, sustainable economy, with the bones of a high-functioning, inviting infrastructure already in place.
Nowhere is this more evident than in the capital, where a stunning waterfront, events area, and dozens of hotels—all newly constructed in the last few years and all eager to perform—await discovery. It’s a rare window to catch a city in transition: the ultimate low-volume, high-value combination. You wouldn’t know from looking at Perth’s award-winning wine regions and pristine white-sand beaches glittering against turquoise ocean water that it hasn’t always been smooth sailing.
In 2003, the price of iron ore (used to make steel) was just shy of $32 per ton. It had been relatively stable for years, seeing only modest climbs and losses. But then something big happened: In the two years following, the mineral’s value jumped by more than 100%—thanks in part to demand from China builders—and it just kept climbing. Mining royalties went from $290 million in 2002 to $5.4 billion a decade later.
It was reportedly one of the biggest booms in international history. And in Western Australia, which is responsible for 38% of the world’s iron ore production, it ignited recognition as a legitimate international player, stable even when the global economy was tanking. Here, even unskilled workers driving a truck could pull in $150,000 a year. It was like a second coming of the 1890s gold rush, which gave life to the struggling state. Outside of global crises like wars and the Great Depression, Western Australia had sustained growth since then—why would this time be any different?
In 2015, following a year of distress, the international mining industry all but collapsed. China had slowed its demand, while some of Western Australia’s top iron ore producers amped up supply in hopes of outlasting the little guys without sustaining too many losses.
Iron ore wasn’t the only resource to hit a downturn: commodities across the board were suffering. Business investments dried up. Local government plans for big development in Perth, including a $440 million waterfront at Elizabeth Quay designed to attract investors and reconnect Swan River with the city, came under fire for squandering funds. What was proposed to be the Western Australia–equivalent of the Sydney Harbour was one big construction site, and business owners alleged revenue losses of up to 80% because of it.
Within a year, the very state that had been driving an entire country’s economic success for a decade was being blamed for GDP contractions. Both the state’s then-Premier Colin Barnett and its tourism council insisted that, despite the highest deficit in history, it had to plow on. Otherwise, visitors (and their dollars) would be deterred by the sight of unfinished business.
It was a bleak four years. But it worked.
Today, visitors to Western Australia get a glittery welcome in Perth. Two new elegant pedestrian bridges—Elizabeth Quay and the larger Matagarup, which opened just last year—connect once disjointed parts of the city, like the (also new) 60,000-seat Optus Stadium, which sits just across Swan River from Perth’s central business district.
After sporting events and shows, revelers and headliners like Taylor Swift and Ed Sheeran don’t need to go far: The luxe Crown Towers—complete with a casino, onsite mansions, hundreds of rooms with panoramic views of downtown, and multiple upscale restaurants and bars mixing first-class craft cocktails—is just a 10-minute walk away.
Crown Towers is one of nearly 30 new hotels to open in Greater Perth in the last few years, with another dozen on the way, the Ritz-Carlton among them. Projected to open in 2020, the hotel and its 204 suites will be at the core of The Towers at Elizabeth Quay, a mixed-use set of high-rises overlooking the once-controversial Elizabeth Quay waterfront precinct that just a few years ago was part of the freeway. Reflecting the adjacent Swan River in its glazed facades, The Towers’s 379 luxury apartments range from $455,000 to a $8.75 million penthouse, with listed properties starting at around $555,000, supporting reports that Perth is the most affordable capital in the country right now.
One of the hottest additions to the city can be found in its restored historic core, where the 19th-century former State Buildings with Victorian facades have been transformed to house luxury boutique hotel COMO The Treasury, a chocolatier, and upscale drinking and dining options. For a bite, start at Petition Kitchen, where it’s all about shareable plates, particularly the chopped broccoli salad with toasted grains, walnut, and a crumble of sheep’s feta—the only item to remain fixed on the menu since opening. Walk down the hallway to Long Chim, a street food–inspired chain opened by Michelin-starred chef David Thompson, for a nightcap with a Thai twist under dozens of colorful bamboo umbrellas that hang above the courtyard.
While more than a quarter of all of Australia’s premium wine is produced three hours south of Perth in Margaret River, the city’s Perth Hills, just 30 minutes away, is its best-kept secret. The historically agricultural region is considered new to wine, with Bickley Valley’s vines really taking root in the 1990s, but the entire Wine (and cider!) Trail that has evolved is dotted with award-winning makers, which you can access on your own or with a driver as part of a private charter.
Small vintners, like Myattsfield Vineyard, welcome guests by sabering the neck of bottle of bubbly and let you taste vintages before they’re bottled. Nearby Core Cider House is part orchard, part cellar door, and part park, with patrons strewn about the lawns for picnics on a nice day. What started with just a few apple trees (and some bootstrap grappa) in 1939 has since grown into 8,000 fruit trees, including apples, plums, and pomegranates, that go into traditional ciders, sparkling lemonades, and experimental brews you can only get onsite.
Despite unpredictable seasons of abundance and scarcity, Perth, like its vines and orchards, has adapted—and without a bitter aftertaste.
More must-read stories from Fortune:
—The Dolomites: Where Italian cuisine and adventure reach new heights
—These Eastern European winemakers are on the cutting edge
—This remote ranch in Wyoming should be your next all-inclusive luxury vacation
—Murals are the must-have accessory for new Seattle hotels
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.