Gold Cost Property Market Regaining Its Shine
The Gold Coast property market has been in doldrums for the last 8 years since the GFC. Construction ceased and properties had their values dropped by as much as 40% in some instances. During 2006-7, we took a cautious stand against the market and advised many of our clients to stay out. We deemed then it was a market driven by tourism with little to offer in terms of long term jobs in sustainable industries. That sets it up to suffer the most during an economic downturn.
The collapse of the Gold Coast market saw many developers such as the Raptis Group (developer of Hilton Surfers Paradise) went into bankruptcy and major luxury projects with incredible ocean views such as Soul, Oracle etc all fell to administration.
Well, we think that the worst is now over.
Over the last 12 months, many property observers and analysts have been highlighting that some of the best investment areas in Australia are in Brisbane and Gold Coast. Brisbane has been in the limelight with the 2014 G-20 Summit. But few if any investors have seen any action in Gold Coast, unaware of the quiet recovery that is taking place.
There is little doubt that the Gold Coast is at the bottom and we’ve got a good feeling that we are about to see growth coming back into the market soon. For a start, new casino licenses, hospitals, universities, light rail, infrastructure upgrades are commencing. Developers are starting to build again with cranes starting to populate the skyline. The Ho Bee Group - our very own Singapore based developer, has confirmed that Brookfield Multiplex will be helping them to build 223 units in a 41-storey residential tower in Surfers Paradise. And of course the much publicized 2018 Commonwealth Games will provide a significant economic boost as well.
So we think the market is back, with a vengence!
PROJECTS & INVESTMENTS
More than $13.7 billion in major infrastructure projects was planned with most now underway, and a further $76 billion worth of investment projects are either committed to or under consideration (June 2013 Investment Monitor, Deloitte Access Economics).
In 2014, the Gold Coast will launch Queensland’s first light rail network, connecting its business, entertainment and education districts. (http://www.goldlinq.com.au)
In a joint initiative with the Queensland Government, expressions of interest have been called for the development of a cruise ship terminal and associated tourism infrastructure in the city’s Broadwater. This development could be the largest piece of integrated tourism infrastructure in Queensland’s history and may include hotels, a casino, super yacht marina, retail stores, restaurants, entertainment and hospitality venues.
In 2018, the city will host the Commonwealth Games. It is projected that the games will generate approximately 30,000 jobs, $2 billion worth of infrastructure projects, new and improved world class sporting and event facilities and a major tourism boost.
POPULATION & JOBS
The population of Gold Coast in the last 5 years has grown over 12.7% annually. This peak in 2012 with the largest population growth of 10,800 people to 538,300.
Jobs kept pace with the population explosion. In the past 5 years, jobs in Gold Coast has grown by 1.4% faster than the average of 1.1% in Queensland. With the upcoming developments in Gold Coast, job growth is expected to increase further.
Gold Coast is showing early signs that it is out of the rough with unemployment rate falling to 5.61% in 2013 from its high of 9.5% a decade ago.
DEMAND & SUPPLY
Demand for homes have also grown over the last 10 years along with the population growth. Gold coast requires 5,000 new dwellings each year. Yet, building has been slow and approval was only at 2,500 last year. This takes into account that the massive oversupply situation created by the GFC previously has already been rectified with most of the stocks now absorbed by bargain hunters.
We are excited about the comeback, and we expect the market to peak within the next 3 years. We expect Gold Coast to be quite a performer in the next 5 years. This year would be the right time to plunge into the market while bargains are still on.
To help our clients understand and take advantage of the situation, we are looking to hold a market update event next week to talk about more about affordability, value, demographics and area specific on investing in Gold Coast and finding gems in the rough. Whether you already have something in Gold Coast or looking to take advantage of this cycle, do keep a lookout for our invite to be send out this coming Thursday.
Tan Cheng Wee
RunningStream International Pte Ltd