Stalled Sydney investors go troppo - again
TROPICAL Queensland and the world-famous Whitsundays is a favourite holiday destination, especially for property investors needing to escape the rat race (and a slowing market).
With bitter memories of the GFC finally fading, familiar patterns are emerging in Australia’s property market, including a migration northward to tropical Queensland when southern capitals go into hibernation.
A long and frenetic run of property price growth in Sydney has peaked and recorded a 1.4 per cent fall on the Residential Property Price Index in the last quarter*.
Melbourne’s peak is expected to be six months behind Sydney.
At the other end of the scale, or cycle, is one of Australia’s most internationally recognised destinations, the Whitsundays.
After grinding out a long decade at the bottom of the property cycle, all the major price influences have turned in favour of the Whitsundays and it’s a case of déjà vu for investors.
Property prices on Hamilton Island and the Whitsunday Coast (Airlie Beach) surged from 2002 to 2007 off the back of soft markets in Sydney and Melbourne.
But in the wake of the Global Financial Crisis in 2008, both domestic and international visitor numbers declined as potential tourists lost their cash and their confidence.
To compound the problem, the Australian dollar spent most of the past 10 years trading above 85 US cents, reaching parity in 2010 for the first time since the dollar floated in 1983.
Overseas visitors suddenly found they couldn’t get as much Down Under for their dollar and looked for cheaper alternatives.
Other cycles coming off their lows are the resource industry, which is once again filling thousands of pay-packets in the drive market, and the natural cycle of the property market.
For PRDnationwide Whitsunday Principal, Christie Leet, it was a long and tough decade.
“For a long time it seemed like everything was against us and we just had to hold faith, knowing that we had a powerful and successful product,” he said.
“The Whitsundays combines the reef, the islands, beaches and national parks with a lifestyle that is the envy of the world.
“People will never stop loving the Whitsundays so it was just a matter of time and now our time has come.”
With the regional economy back on track, the dollar down, and the GFC all but forgotten, no vacancy signs are appearing for the first time in years and the tourism industry is in search of more accommodation.
“When the GFC hit, we had just gone through a construction phase so the impact was twofold. There was a lot more product on the ground but tourism numbers had drastically reduced,” Mr Leet said.
“In addition, all the construction workers were suddenly leaving town, lifting vacancies in the rental market.”
With population and tourism numbers back on track and increasing, demand is starting to outstrip supply but there are limited opportunities for development.
Development potential on Hamilton Island is limited to about 100 more properties and while there is room for a much larger population on the Whitsunday Coast, waterfront opportunities are almost all gone.
PRDnationwide Whitsundays Director of Sales, Craig Williams, described the Whitsunday Coast as a narrow strip of coastline wedged between the Great Barrier Reef Marine Park and Conway National Park.
“Waterfront is the most valuable because they’re not making any more coastline and at the moment the last beachfront development, at Funnel Bay, is almost sold out.”
Like the Whitsunday Coast, the Funnel Bay development is surrounded by national park and the Great Barrier Reef Marine Park in a secluded bay six minutes from Airlie Beach.
Stage one, The Beaches, comprises 10 large beachfront allotments and four garden view lots in a private, gated community.
Stage two includes waterfront blocks with views over the Coral Sea, nine house and land lots (Beach Hut Lane), and apartment opportunities with elevated views backing onto the national park.
Mr Williams said the scarcity of beachfront land and a property market that has just swung into an upward trend was attracting interest from southern capitals.
“In the past we have seen property booms move up the coast like a wave, from Melbourne and Sydney to Brisbane and up the Queensland coast,” he said.
“However, we have seen property running hot in the southern capitals for most of the past decade without seeing the boom shift northward, until now.
“With prices coming off the boil in Sydney, some investors have the opportunity to cash in at the top of one market cycle and re-invest at the bottom of another.”
A Broad Property Research and Advisory report released this week showed short-term indicators were all pointing toward growth and the long-term forecast for the Whitsundays was just as positive.
The $16 billion investment in Adani’s Carmichael Mine includes Fly-In-Fly-Out workforces based in Townsville and Rockhampton (both in the drive market).
It will also use Mackay, the Whitsundays’ closest regional centre, as a service centre for construction and operation.
Major investments are also planned for redevelopment of Whitsunday islands, including Hayman ($100 million), Daydream ($65 million), and Lindemann ($600 million).
“Each phase of construction and development brings workers and their families to the region, providing an immediate boost to the population and economy,” Mr Williams said.
“But the long-term impact is the boost in tourism product, taking the Whitsundays to a new level with each cycle.
“All the natural attractions and the laid-back tropical lifestyle don’t change. They are just more accessible for visitors than ever before.”