Herron Todd White Cairns - The Year Ahead

As one of the many avid readers of the CairnsWatch report released by Herron Todd White I have followed the data presented with keen interest each month in and out for over the past 5 years. In the December 2010 edition of the CairnsWatch report it was officially stated that the Cairns property market was at the bottom of its overall cycle. Two years on and the CairnsWatch report still confirms that Cairns remains placed in the same position within its cycle although a general decline in median values throughout the region has been seen within that time. 

Herron Todd White can be forgiven for perhaps being a little too optimistic in their assessment of the future for the local economy at the time - whilst many areas within Australia have seen great recovery following the Global Financial Crisis, Far North Queensland has not been so lucky and to say that local business conditions throughout the past 4 years “have been tough” is a severe understatement.

We can only remain positive, and due to several important local economic developments (discussed below) we are currently experiencing our highest levels of local business and market confidence since the GFC first affected the region in early 2008. Herron Todd White’s assessment for the year ahead follows…

The Cairns residential property market remains at the bottom of the property market cycle, but there is light at the end of the tunnel with some tentative signs of consolidation that will continue during 2013.

The local economy is progressively improving, aided by a much stronger tourism season during 2012 and the recent start-up of direct air flights to China delivering greater numbers of Chinese tourists to Cairns. 

However it is taking a long time for these developments to filter through to the improvements in the consumer confidence that is needed to resurrect the local property market.

The building industry also appears to be making a comeback, with the latest statistics showing a 39% year-on-year increase in the number of building approvals issued for new house construction. Even so, conditions in the industry are still tough and unit construction remains dead-in-the-water.

"....the Cairns residential property market remains at the bottom of the property market cycle, but there is light at the end of the tunnel...."

One push factor for the market is that vacancy rates for rental property have lowered considerably over the past 12 months and are now extremely tight. According to our Cairns Rent Roll Survey, vacancy rates for houses have come down from a trend level of 4% in December 2010 to 2.2% in December 2011 and 1.3% in December 2012, while those for units have come down from 4.8% to 1.9% over the same period. In addition rents are climbing, rising by about $30 per week for houses and $15 per week for units over the past two years. Tight rental market conditions, rising rents and affordable property prices are providing the right pre-conditions for the market to gradually regain some momentum during the next 12 months.

Click here to download Herron Todd White's national report for January 2013

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Cairns CBD Aquarium Plan

PLANS for a $33.5 million aquarium in the heart of Cairns have taken a giant leap forward after the project's developers bought a 4000sqm block of land just a stone's throw from the city's popular Esplanade tourist strip.

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Trinity Beach business partners Daniel Leipnik and Andrew Preston bought the land from the owners of the Novotel Cairns Oasis Resort, bounded by Abbott, Florence and Lake streets, for $2 million.

"Buying this land shows our commitment to the Cairns aquarium," Mr Leipnik, who is the chief executive officer of Cairns Aquarium and Reef Research Centre Pty Ltd, said.

"We are very excited. The passion for this is our driving force. It is our primary love."

Expressions of interest for the design and development will close on March 15, and the Cairns Aquarium opening date is set for late 2016. Mr Leipnik said specialists behind aquariums in Melbourne, Sydney, Mooloolaba, Korea, Dubai and Singapore were being targeted for the design and development.

He said, apart from the aquarium designers, almost everything else involved in the building, including construction, supplies, marine life, website designs and signs, would be sourced from the Far North.

An estimated 250 people would be employed on the project, including 150 construction workers, nearly 80 full-time operational staff and up to 25 volunteers.

The businessmen have committed $15 million to the aquarium with the balance from private investors and local, state and federal government funding with applications before the three levels of government.

Independent research suggests between 355,000 and 360,000 visitors a year but the proponents are aiming for up to 500,000.

Mr Preston said the designers were being urged to provide something "innovative and unique" for Cairns.
"It will be a very spectacular, natural and iconic building with a wow factor," he said.

The ground floor will contain two "gigantic" tanks containing a million litres-plus of water. One would be a mini Great Barrier Reef and the other a freshwater lagoon.

There will be five main themes of dangers of the deep (sharks, irukandji, box jellyfish, stonefish, pufferfish and sea snakes), river monsters (sawfish, giant barramundi, freshwater stingrays, lungfish and crocodiles), reptiles and amphibians, mountain streams and rivers and life in the mangroves.

The mature mango trees and a eucalyptus tree on the site would be retained and be part of a Daintree-style boardwalk and mangrove lagoon feature.

The businessmen have signed a memorandum of understanding with the Reef and Rainforest Research Centre and are negotiating one with James Cook University.

They said they had previously negotiated with Ports North for waterfront land, as well as considering Cairns Regional Council property, but decided to buy their own.

Article printed in The Cairns Post - January 9th 2013

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Herron Todd White - Cairns 'Year in Review'

Within their national publication Herron Todd White has provided the following review of the Cairns marketplace throughout 2012.

The Cairns residential property market during 2012 has persisted at the bottom of the property cycle with sales rates remaining low and prices weak. Properties that were well located and correctly priced sold reasonably readily but properties that were ambitiously priced or in secondary locations continued to struggle. Even though the overall volume of sales has been gradually increasing, median property prices during 2012 reduced due to property price reductions and higher than normal proportions of low-priced mortgagee in possession sales.

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Our research indicates that 13% of the market during 2012 has been either mortgagee in possession or receiver sales. Property demand from investors and first home buyers has been weak and the market for bottom end housing and tourist orientated property has performed poorly. Demand for better quality houses and units in good locations has been reasonably solid up to around $600,000 but the market then tapered off quickly.

The mainstream residential market, which takes out the top and bottom 5% of the market, currently shows a house price range of about $225,000 through to $595,000. The median house price trend stood at $331,000 in September 2012, a 3.7% reduction since September 2011. The established unit median price has also reduced by 4.4% in the year to September 2012 due to the additional side-effects of greatly increased insurance charges and body corporate levies.

Vacancy rates for rental property have tightened considerably during 2012, especially for houses, moving the current market well beneath the ‘balanced market’ range normally accepted as a 3% to 5% vacancy rate. This reflects a lack of rental availability due to the lack of new rental housing construction and the slow state of the investment property market. The trend vacancy rate for houses was 1.3% during October 2012, while units showed a trend vacancy rate of 2.5% and the overall market vacancy rate stood at 1.9%. As a result of rental property shortages, rents escalated across all categories of housing during 2012, increasing between September 2011 and September 2012 by around $25 per week for houses and $15 per week for units.

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Chinese Businessman Buys Double Island Resort

Two recent large-scale commercial purchases are the talk of local business in Cairns at present; the first was mining magnate Clive Palmer's purchase of the Sea Temple Golf and Country Club at Port Douglas, and the second purchase by Chinese businessman Benny Wu based in Hong Kong of the Double Island Resort in Palm Cove. With commercial property values so affordable and light on the horizon for the local tourism industry these are likely to be the first of many large-scale acquisitions to come. Article text follows:

Double Island, Palm Cove

HONG Kong-based multi-millionaire Chinese businessman Benny Wu has bought luxurious Double Island resort near Cairns.

The former mining magnate told The Cairns Post he planned to spend $10 million developing and upgrading the resort to host wealthy Chinese holidaymakers and businessmen.

The deal with current owner, Sydney developer Sean Howard, was signed last night and witnessed by Cairns Mayor Bob Manning at the Kewarra Beach Resort, also owned by Mr Howard.

The price was not disclosed but the island was on the market for $8 million. Mr Howard paid $4.5 million for the island in 2000.

The purchase comes just a day after The Cairns Post revealed billionaire miner Clive Palmer had bought the Sea Temple Golf and Country Club at Port Douglas for about $7 million.

Double Island has a mix of accommodation, including Polynesian-style villas, luxury apartments and eco-tents all set amongst landscaped tropical gardens. The resort includes a beachside gymnasium, reportedly built for Keanu Reeves when the actor leased the island while filming The Matrix Reloaded.

Mr Wu said he "liked the island" and decided to buy it over lunch with Mr Howard about a year ago.

He intends to target "the very top end of the market" and fly in "very rich" holidaymakers and businessmen from Hong Kong, Shanghai, Beijing, Guangzhou and other emerging cities in China using the direct Shanghai service by China Eastern, proposed direct Guangzhou flights by China Southern and Cathy Pacific's Hong Kong service.

Mr Wu said he wanted to create an exclusive "private club" and encourage corporations to hold meetings on the island.

Article printed by The Cairns Post - 8th November 2012
Writer: Nick Dalton

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Cairns rental prices rise by $25 per week

AVERAGE house rentals in Cairns have increased by $25 a week and are likely to rise even more as the accommodation squeeze worsens, forcing more people to live in caravans or couch-surf as they wait for affordable properties.

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The latest CairnsWatch snapshot also shows unit rentals rose by $15 a week in the year ending September, an increase also attributed to the shortage of lease properties.

The release of the report comes as property managers say people are living at caravan parks because they are struggling to find rentals.

"We're still getting population growth, even though it's slower than normal, and there is a very finite supply of housing," Herron Todd White director Rick Carr, who authors the monthly report, said.

"Empty-nesters are still coming up from Sydney and Melbourne and other places for lifestyle reasons."

The survey shows the city's vacancy rate for houses was 1.7 per cent, while just 2.9 per cent of units were available for lease.

The average house jumped from $325 a week to $350 in the year ending September. Units increased from $240 to $255.

The rental squeeze has pushed more tenants -- mainly youths, single mothers and separated middle-aged people -- to seek help from welfare agencies such as The Salvation Army and OzCare.

Salvation Army Lieutenant Darren Kingston said: "It seems that we are getting busier and busier with people seeking accommodation.

"People have moved up here and found they haven't been able to afford mortgage repayments or the increase in rents. We're getting people in our welfare centre saying it's just too hard."

Lt Kingston said people stranded between homes often resorted to sleeping on couches at friends' homes.

Elders Real Estate Cairns senior property manager Tegan Hicks said securing a rental was highly competitive.

"We cannot keep up with the demand for houses to rent at present," she said.

"Units, if they are presented well and priced right, will rent quickly. Some tenants are living in caravan parks because they cannot find suitable rental properties."

Mr Carr said the property shortage appeared likely to continue over the next year.

The report shows only a slight increase in housing approvals last month.

"There haven't been any unit developments approved for a very long time," he said.

Article printed by The Cairns Post - November 3rd 2012

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Hotel Room Rates Set to Rise

Recent media coverage of the room rates for accommodation in the Far North has provided some hope to owners of holiday-style apartments. Throughout the past 3-4 years domestic tourism arrivals figures have maintained trend growth however in order to remain competitive many hotels have been forced to reduce their room rates by considerable amounts ultimately affecting the profitability for apartments and unit owners well-below historical returns. 

With holiday occupancy rates now showing considerable improvement local operators are now able to increase their room rates in order to restore profitability. A recent study suggests that hotel occupancy rates in Far North Queensland should return to pre-GFC levels within the next 3 years with the price of rooms to rise by 4.5 per cent.

Article text: The Deloitte Access Economics Tourism and Hotel Market Outlook released today shows average annual room occupancy rates in the Far North have improved to 58.1 per cent, but are still 5.5 per cent lower than they were five years ago.

The report said the average room rate would rise by 4.5 per cent to reach $132 by the March quarter of 2015, while the revenue per available room would also rise by 9.1 per cent.

"While growth in room rates and yields are expected to be relatively strong over the forecast period, they will remain considerably lower than the levels prevailing in the capital cities and broadly similar to other regional destinations," the report said.

Mercure Cairns Harbourside general manager Shane Edwards said there had been a noticeable increase in visitors since May.

"Occupancy has been quite strong certainly for the last three months and we’re more optimistic than this time last year," he said.

The Far North’s lower room prices will also help increase occupancy.

"Occupancy rates are forecast to reach 66 per cent by the March quarter 2015, driven among other things, by room rates which are considerably below those witnessed in other parts of the nation," the report said.

Mr Edwards agreed, saying room prices were still well below other Australian cities.

"If I look at average rates in 2005 they’re certainly nowhere near what they were back then," he said.

"I think if volume is consistent then rates will slowly start to increase in line with other cities."

The direct flights from China along with November’s solar eclipse have also given hotels confidence they will stay full beyond the traditional high season.

"With the extra people coming in it can only get better and we’re quite excited about it, usually when you see a dip we’re hoping that occupancy levels will stay high," Mr Edwards said.

Tourism Tropical North Queensland chief executive Rob Giason said the past six months have seen good growth and sustained occupancy.

Article posted by The Cairns Post - August 30th 2012

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Cairns Post: Rental Demand On the Rise

Not "breaking news" by any stretch however I have chosen to post this article simply to highlight the level of coverage that is being given to the rental market within local news sources at present. With the lengthened slow-down in local construction experienced there is little doubt that this will be an ongoing topic of particular concern within our marketplace for a long time to come.

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Article text: DEMAND for rental properties has risen in Cairns with reduced vacancy rates across the region and Queensland and median house sale prices have fallen in the same period, according to two separate reports.

The Real Estate Institute of Queensland (REIQ) released the March residential vacancy rates on April 30 that showed Cairns rental vacancies have dropped by 1.3 per cent since this time last year.

REIQ Cairns chairman Greg Clyde-Smith described the property market as “reasonably healthy”.

“Cairns has quite a different economy from the rest of the state but the figures revealed are not that different – from 3.8 (per cent) last year to 2.5 per cent this year, it’s a substantial drop,” Mr Clyde-Smith said.

“We are showing signs of growth as tourism is slowly starting to recover.”

Mr Clyde-Smith said sales were also quite lively although property prices aren’t very high and he forecasted that if the economy recovers as well as expected it will bring more jobs to the region, which will put more pressure on the rental market.

“There has also been an increase in inquiries for investment properties and we are hopeful the interest rate changes from the reserve bank yesterday (May 1) will enhance sales,” he said.

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An RP Data report to January 2012 said median sales prices of houses in the region had dropped.

At Clifton Beach median sales prices were down by 20 per cent in a year (23 sales) and 15.6 per cent in a quarter, while rental yields in the same area increased by 5.6 per cent.

At Holloways Beach the median house price per quarter dropped by 12.2 per cent (-33.6 per cent in a year with 14 sales) while rental yields increased by 8.1 per cent.

The Cairns Post - Saturday May 5th 2012
Writer: Denise Carter

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Cairns Post: PNG investors eye Far North Queensland

PAPUA New Guinea residents are the largest foreign investors in the Far North, according to the latest figures from the Registrar of Titles.

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They bought commercial, residential and other property worth $4.5 million out of $16 million of foreign purchases in the last financial year.

Next on the list was the UK ($3.5 million), NZ ($2 million) and Japan ($1.9 million).

Other notable buyers were from the Czech Republic ($680,000), Greece ($530,000), Hong King ($491,470), Argentina ($490,000) and Malaysia ($394,300).

Hong Kong residents own the largest amount of land (1116ha) followed by Belgium (492ha), the UK (352ha), Japan (278ha) and China (91ha) while UK investors own the largest number of land parcels (257) followed by Japan (214), NZ (212) and PNG (101).

CBRE Cairns managing director Danny Betros said there had not been many large sales to PNG investors in recent times.

He said the last large sale was the $19 million three-storey office building at 120 Bunda St to a PNG consortium in July 2010. The building was bought by Mineral Resources Lihir Capital Ltd, a company that receives royalties from the $1 billion gold project on Lihir Island, and invests in property and other concerns on behalf of the community.

In May last year, a PNG family’s first foray into the Far North’s commercial property market was expected to be the start of further investments.

The Honale family bought the home of Channel 7 local news in Mulgrave Rd, Parramatta Park, for $3.2 million.

Mr Betros said there were about 12 groups representing PNG investors active in the Far North. He said the mining boom was sparking interest by PNG investors in the Far North as well as because of its close proximity.

It is understood a PNG consortium is also eyeing off one of the Cairns CBD’s largest office blocks, the Corporate Tower.

Greg Wood of Knight Frank Cairns said interest in property in Cairns had dropped off following the political stability in PNG.

Mr Wood said he expected the number of Australians and others working in the PNG resources sector to start buying mainly residential properties in Cairns for their families.

The Far North’s lifestyle, attractive property prices and the resource boom is drawing investors from PNG as well as Western Australia and Darwin who are snapping up prestige waterfront homes and land in the elite Bluewater estate.

The Cairns Post - Wednesday, April 11, 2012
Writer: Nick Dalton
Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

2012 Valuer-General's Snapshot Report for QLD

Click to View the Report

The Queensland State Department of Environment and Resource Management has published its 2012 land valuation report including commentary on key findings. A full copy of the 'Snapshot of the 2012 Valuation' can be found at the departments website HERE.

If anything the Cairns region has faired well in contrast to surrounding regions and proves that local markets continue to "bounce along the bottom of the overall market cycle". A summary of the Cairns region valuation statistics within the Snapshot report follows:

"The weak economy in the Cairns local government area continues to affect the property market. The key industries of tourism and construction are negatively impacted by the strong Australian dollar, a decline in employment, low levels of building activity and 

the severe weather conditions in 2011.

The residential and rural homesite market within the area has experienced historically low levels of sales activity.

Despite this, residential land values overall have 

reduced by just one per cent.

The exception to this trend is higher valued beachfront properties in the area extending from Port Douglas south to the Northern Beaches of Cairns and through to Brampton Beach where reductions in land values of 10 to 15 per cent have been common. Land values in the Gordonvale locality have also been reduced due to the high number of distressed vendor sales influencing the market. Residential land values within Port Douglas have generally stabilised following the declines of previous years.

Distressed sales are also prevalent in the commercial and multi-unit market sectors. The industrial market has softened, driven by decreasing financial returns. Land values in all three sectors have been reduced within the Cairns region."

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Keeping Momentum on Strata-Title Insurance Inquiry

A formal parliamentary report on insurance costs was recently submitted to the government detailing a series of recommendations in response to the inquiry meetings held throughout Far North Queensland. Very interesting was the final recommendation which calls for the government to "outline the plan of reforms it will undertake with the Queensland Government to establish a competitive and affordable insurance market for residential strata title insurance, with a focus on North Queensland..."

Insurers Face Fresh Scrutiny

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The Cairns Post - March 23rd 2012

THE pressure must stay on insurance companies and government if recommendations to address the spiralling costs of body corporate insurance are to have any chance of success, Far Northerners say.

Late Wednesday, the Federal Government’s Social Policy and Legal Affairs Committee released a series of recommendations in response to the inquiry that visited Cairns and Port Douglas in January.

Yesterday, chairman Grah-am Perrett said the committee had heard stories of "heartache, stress and despair".

Mr Perrett said a number of factors did not add up when looking at the increases, from the insurance industry’s claim reinsurance was to blame, to body corporate manager commissions, to the fact building codes had improved in the past 30 years yet a massive leap in premiums had taken place.

Leichhardt MP Warren Entsch, who pushed for the inquiry along with Cairns-based Queensland Senator Jan McLucas, said the recommendations "were not a silver bullet".

"I have been dealing with property owners who are struggling to keep their homes after being hit with strata title insurance increases of up to 1000 per cent," he said.

"Some people have had to borrow just to pay their insurance and if they’re faced with the same premiums next year, it’ll tip them over the edge."

Cairns Chamber of Commerce president Anthony Mirotsos said it was encouraging that the committee had put forward a substantive action plan with "tangible outcomes and deliverables".

"It puts insurance companies on notice that this is being investigated and we’re not just going to continue handing out cheques," he said.

Sue Chapman, manager of Verandahs Boutique Apartments at Port Douglas, said it was important to keep the pressure on.

"They’ve gone out and sourced information from a huge area, they’ve come to us, they’ve actioned it very quickly so now it’s absolutely vital that we keep the momentum going," she said.

Cairns unit owner Ian Jamieson saw nothing to alleviate the hardship people were facing.

"I can’t see the insurance companies reducing their prices so the crisis remains, it’s just bad news for investment in Cairns for people on fixed incomes."

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

Cairns Property Market Review by Herron Todd White

A current review of Cairns' property market conditions provided by Herron Todd White in their national 'Month in Review' publication March 2012:

Investors are sadly lacking in the Cairns residential property market at present. However with the market presently showing downward pressure on property prices and upward pressure on rents, rental propositions to investors in Cairns ought to be becoming increasingly attractive.

“Tight rental market conditions, rising rents and ‘affordable’ property prices are providing strong fundamentals for investors. Once the word gets around, please form an orderly queue.”

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In December 2010 the median house price in Cairns was $368,000 and the median weekly house rent $320. Twelve months on, in December 2011, the median house price in Cairns has headed south, to $332,000, while the median weekly house rent has headed north, to $330. Rental yields have thus improved significantly.

Vacancy rates for rental property have reduced considerably over the past twelve months, with the market now sitting at the lower end of the ‘balanced market’ range normally accepted as a 3% to 5% vacancy rate. Houses for rent are in short supply, with a vacancy rate of 2.1% during January 2012, while units recorded a trend vacancy rate of 4%. The overall market vacancy rate stood at 3.1%.

The rental market is expected to come under further pressure during 2012 because of on-going demand and the lack of new private rental housing construction. Tight rental market conditions, rising rents and ‘affordable’ property prices are providing strong fundamentals for investors. Once the word gets around, please form an orderly queue.

View the full 'Month in Review' publication HERE

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

The Future for FNQ Holiday Accommodation

Holiday style properties have historically been most attractive to lifestyle investors in search of their own property which they can use themselves and lease out in the meantime in order to cover costs, with the added benefit of long-term capital growth.

Unfortunately, a deflated international tourism market in the far north experienced throughout the past 3 years has diminished the ability of these holiday properties to cover those ongoing costs. Many holiday properties only barely manage to return enough each year to cover body corporate levies, council rates and other ongoing costs leaving owners with very little by way of net investment return.

The majority of investors who are purchasing holiday styles properties within the region are now purchasing with a long-term strategy in place. They focus on the high level of affordability of such properties relative to the overall market cycle and project for future earnings to be achieved when the tourism industry eventually returns to strength.

Without a long-term perspective it can be very difficult for purchasers to see value in these properties within current local tourism conditions. However, the latest Deloitte Access Economics’ Tourism and Hotel Market Outlook has brought some welcomed news stating that the accommodation industry in Cairns should start seeing gradual improvements throughout 2012 and projecting sustained growth up to 2014.

“The Tropical North Queensland (TNQ) region has faced challenging conditions in recent times, losing market share, particularly as the Japanese source market has declined. Occupancy rates and RevPAR (average yield per room) have fallen sharply since the onset of the GFC.

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However, our forecasts suggest a turnaround in performance for the TNQ hotel market, with occupancy rates to be flat in the first half of 2012, before increasing six percentage points – from 57% to 63% – by end-2014.

RevPAR is forecast to increase by 27% over the period 2011 – 14, however, again, this is off a relatively low base. Indeed, by the end of 2014 RevPAR for TNQ region is forecast at just $86, which is the lowest yield among the regions reported here.”

Download the full report here

It is expected that tourism industry growth will be fuelled by the emerging Asian economies of China and India. These markets also often prefer nature-based tourism whereby Far North Queensland is positioned to take advantage.

Peter Musso licensed real estate agent at Ray White Cairns Beaches selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica and surrounds.

CAIRNS POST: RENTALS LIFT FOR REGION

CAIRNS real estate agents hope the city’s rental vacancy rate will drop lower than 4.2 per cent in coming months pushing investors back into the property market as the region comes into its peak season.

Real Estate Institute of Queensland Cairns zone chairman Rick Szelpuk said rental vacancy figures for February were the lowest they had been in a long time after hovering between 5 to 6 per cent.

“Cairns is doing extremely well if you look at the February figures – they say houses in the Cairns central area, which includes Cairns North, Edge Hill and those suburbs, was at 3 per cent, at the northern beaches it was 2.5 per cent and the southern corridor was 3 per cent and if you put them all together there is an overall 2.8 per cent vacancy in the housing market.

“Units were slightly higher. In the Cairns central area the vacancy rate was 5.6 per cent, northern beaches 6.2 per cent and the southern corridor 2 per cent with an overall vacancy for units at 5.6 percent.

“Overall, that’s a 4.3 per cent rental vacancy rate for Cairns and that’s a pretty damn good
number considering what we’ve been through in recent times.

“As we head into our busiest period of the year, it’s a strong confidence booster as the vacancy rate can only go down and we should see investors going ahead and buying again.”

LJ Hooker Edge Hill associate director Amanda Boccalatte says houses have become more popular than units with people taking advantage of cheaper rents.

“Rent is certainly very affordable and many tenants have upgraded from a unit or townhouse to a house as they are getting more value for their money,” she said.

“One bedroom units aren’t as popular as they used too be because the prices have dropped, therefore, houses are more affordable.

“We only have 37 properties vacant and it’s the lowest it has dropped since January when we had 60 properties availableble so it’s a very positive sign.”

LJ Hooker Port Douglas director licensee Michael Samson said the seaside town had really felt the pinch in the global financial crisis.

“It’s getting better for us ass the wider area outside Port Douglas, which includess Mossman, has a vacancy rate of 10 to 13 per cent while Port Douglas is well under 10 per cent,” he said. “We’ve got people looking for houses so that’s a good sign for us. However, units aren’t as popular.”

Source: The Weekend Post 26th March 2011

Peter Musso - Ray White Cairns Beaches - Property agent selling real estate in Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach

VICTORIAN INVESTORS ASSURED

Victorian-based investors in North Queensland property have been reassured that the residential real estate market in the Cairns region “will come back”.

Ray White Cairns Beaches Director Paul Stirling has held seminars in Melbourne this week with existing property owner clients to update them on the current state of the market.

Mr Stirling said Victorian investors were crucial to the long term future of residential property in North Queensland as they made up approximately 30 per cent of the investor market.

“Our meetings here in Melbourne with North Queensland property investors have been well received,” he said. “We have held three presentations with mostly existing investors. We provided them with facts and figures on where the market was from 1990, its growth patterns since then, where it is now on the ‘Property Clock’ and what the current economic indicators are pointing to in the near future.

“Many of these people are long term investors who have owned property in the Cairns region for between three and 10 years. They appreciated that we made a 4,000km journey to meet them face to face and bring them up to speed. Favourable comments were received regarding the content and factual nature of the seminar information – in particular the figures on vacancy factors in a rental market that is beginning to tighten from a balanced status."

“Our advice is that we feel the market has bottomed and there is growing confidence that the market will come back. “We’ve just given them the clear cut information to make a decision they’re comfortable with. If you don’t have to sell then don’t sell, unless you can use the yield for better purposes or investment elsewhere.”


Mr Stirling said he and the office’s business development manager Rachel Blok were breaking new ground by meeting with more than 60 investors during their Melbourne visit. “We held investor seminars last year in Perth and early next year we will be holding them in Sydney,” he said."

“It’s a good opportunity to provide an update on the residential market and information from a property management perspective to our long term investment property owners. But we also take the opportunity to meet potential new clients and we host a small function where owners can meet in a relaxed atmosphere.”

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Peter Musso - Ray White Cairns Beaches - Property agent selling real estate in Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach

Investor Optimism Growing

An increase in university enrolments and speculation over Cairns' role in the Papua New Guinean gas project is fuelling new optimism in the housing market.

While the Real Estate Institute of Queensland's March 2010 quarter report showed the median house price in Cairns fell by 0.7 per cent to $370,000, there was cause for optimism, REIQ Cairns chairman Rick Szelpuk said.

"A lot of people will move to Cairns looking to rent property initially. Also, with the Australian dollar getting more realistic, it allows opportunity for tourists to visit and Cairns can benefit from this."

Mr Szelpuk said the 30 per cent increase in mid-year enrolments at James Cook University was another positive sign. He said it was a good time for investors to buy property to rent out to university students.

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Peter Musso - Ray White Cairns Beaches - Property agent selling real estate in Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach