Looks like a few years at best before it crashes, if this is right.
http://www.myprop.com.au/content/queensland-property-struggling-gfc
http://www.myprop.com.au/content/queensland-property-struggling-gfc
Gladstone Property Crash
- Thread starter DEC
- Start date
I received this a few months ago.
Note this is a 10 year forecast of currently confirmed investments. Over time there will be further stages of existing projects (such as stages 3,4,5 and 6 of APLNG) and additional projects still to be approved which are not included in this graph.
Even since this graph was produced in August, there has been a large power plant announced, with an extra 1,000 construction workers from 2013 and a massive extension of the Stocklands shopping centre for another 660 construction jobs and another 1,000 flow on jobs on completion.
http://www.gladstoneobserver.com.au/story/2011/10/26/18b-to-build-power-station/
http://www.gladstoneobserver.com.au...kland-expands-shopping-centre-amanda-brookes/
It also doesn't include the additional operational workforces on completion of these massive projects, which adds approx 5,000 more direct permanent jobs which people will need to be housed into, along with their families. Add on a few thousand more flow on jobs to support the direct positions.
They are building temporary accommodation on Curtis Island and at Calliope for approx 10,000 of these 17,000 odd peak construction workers, which will be removed when they leave and the permanent workforce arrive.
The only uncertainty is whether they can fill all of these vacancies, otherwise Gladstone is going to be an amazing market for at least the next decade.
The state government is willing to approve pretty much anything in Gladstone, as the industrial powerhouse of Queensland and soon to be Australia. It is a deep water port with endless energy supplies and unlike either Port Hedland or Karratha doesn't suffer from being very remote. Do some research on the decades of investment planned in those markets to understand the scale of investment still to come in Australia's 3rd super-infrastructure town and while you are at it, research the rental yields and what happened to house prices when LNG came to town.
Note this is a 10 year forecast of currently confirmed investments. Over time there will be further stages of existing projects (such as stages 3,4,5 and 6 of APLNG) and additional projects still to be approved which are not included in this graph.
Even since this graph was produced in August, there has been a large power plant announced, with an extra 1,000 construction workers from 2013 and a massive extension of the Stocklands shopping centre for another 660 construction jobs and another 1,000 flow on jobs on completion.
http://www.gladstoneobserver.com.au/story/2011/10/26/18b-to-build-power-station/
http://www.gladstoneobserver.com.au...kland-expands-shopping-centre-amanda-brookes/
It also doesn't include the additional operational workforces on completion of these massive projects, which adds approx 5,000 more direct permanent jobs which people will need to be housed into, along with their families. Add on a few thousand more flow on jobs to support the direct positions.
They are building temporary accommodation on Curtis Island and at Calliope for approx 10,000 of these 17,000 odd peak construction workers, which will be removed when they leave and the permanent workforce arrive.
The only uncertainty is whether they can fill all of these vacancies, otherwise Gladstone is going to be an amazing market for at least the next decade.
The state government is willing to approve pretty much anything in Gladstone, as the industrial powerhouse of Queensland and soon to be Australia. It is a deep water port with endless energy supplies and unlike either Port Hedland or Karratha doesn't suffer from being very remote. Do some research on the decades of investment planned in those markets to understand the scale of investment still to come in Australia's 3rd super-infrastructure town and while you are at it, research the rental yields and what happened to house prices when LNG came to town.
Evening All,
Guys don't get too moist about the numbers of peak labour workforce and ongoing permanent jobs created by the proposed projects. As phallic as the graph looks, it will be short lived or just won't reach a climax at all!!
The numbers are of course a spruikers wet dream; the reality is the construction numbers will not be reached. If for some magical reason they are, it will only be for a week or two, then numbers will fall away rapidly as construction phases are completed and workers are demobbed.
The ongoing permanent jobs created will be significant no doubt, but once again not what is being quoted. There will be periphery positions created in town as small businesses evolve on the back of industry and community demand. Don't get me wrong, all these projects are brilliant and just what Gladstone, Qld. & Australia needs. Just don't get too bullish based on the statistical softporn.
Most white collar employees involved with construction activities will move onto other projects with their respective company, or will relocate to Brisvegas, Adelaide or other head office locales depending on the company. Many, many others will move interstate, or overseas chasing other projects, construction & commissioning etc.
Don't forget you've got Darwin Inpex Icthys, WA Chevron - Gorgon, WA Woodside Pluto 2 & Browse, WA BHP Macedon/Scarborough/Pyrenees and a sheetload of other projects within and outside of oil & gas once you start looking at coal, iron ore, uranium, bauxite etc. etc.
All of these projects cannot run concurrently; the companies all know it and the State Govts. all know it. You can only fly in so many 4-5-7s to build all this stuff. So what happens is the companies all go over to where the 4-5-7s come from and they get stuff done there (especially in oil & gas) everything is built in Batam, Korea, Phillipines, Japan and elsewhere in modular form and floated over to Oz when needed. Many of the workers previously sent O/S to play on these projects will come back and be heavily involved on site piecing it all together - so yet further dilution of quoted numbers.
Back to Gladstone:
The companies driving these projects always stack their workforce requirements to secure:
1). As much State or Federal Govt. support - the pollies lose their loads with this stuff, it means cameras & publicity for otherwise sinking political careers.
2) As much funding as they can from JVPs or other financiers (it is built in cash fat) to allow for the omnipresent cost overruns even prior to FID!!!.
3). As much local resident support because you will be surprised at just how much impact local residents have. It can destabilise to the point of delaying plans for any project.
We've seen all the numbers & stats before first hand in Karratha & Pt. Hedland. The reality is the numbers simply do not get reached!!
What tends to happen during all the different phases of construction activity is people flit from job to job, company to company hoping for better money or continuity in employment. Some guys even time their run and swap shirts three or four times to maintain continuity of wages. Some guys will TA or lollipop for civils, then TA for initial steel works, then jump ship and work in cladding & insulation for another mob until finally they score a job as runner or TA for the ongoing contracted maintenance company whether it be TW, United, McMahons or whoever. The same applies to a lot of the supervision too. As they face being demobbed & lay offs, they'll jump the fence. Another dilution of the statistical porn.
As peak works decline on one project, people jump ship big time, there is a mass migration of people from project to project. You always see the same faces, they're just wearing different shirts from last time you saw them three weeks ago or whatever.
NOT ALL THESE PROJECTS CAN OR WILL RUN CONCURRENTLY!! No matter what the graph says.
Depending on which company yacht tacs to the starting line first can impact enormously on other project commencement time lines and investment decisions. The other big hairy beasties in the equation are funding, current world & company economic outlook, and other world wide company LNG, Coal, Alumina etc. production reaching world markets. These companies time their runs as much as possible to within a micky hair of what other companies are proposing in terms of flooding markets with product and hedging of sales contracts.
So although the graph looks orgasmic to Joe Public and his investing ambitions, very little of the numbers quoted has credence, so there is some flaccidity factor to it all. The reality is there will be great times ahead for investors in this region, for people hoping to secure permanency of employment and for the ongoing drive for infrastructure so that the greater Gladstone region will actually become an attractive place to live, rather than the prehistoric cesspool it currently is. The only place worse than Gladstone in terms of having no soul, vibrancy or appeal is Adelaide. Great places to invest if you study them well, but otherwise both places are holes!
So, as I've said in many previous posts about Karratha & Hedland, i'll say the same about Gladstone and Adelaide......by all means throw your money at them, but make sure you research your markets & acquisitions very well. Even more so these days with Gladstone because of the very, very temporary climate FIFO & DIDO create.......tread carefully and you'll be rewarded.
Don't think for a minute the FIFO camps will be removed as soon as a project is finished. They will be sold to other players like Aspen Villages and the like; they'll then sublet or contract rooms out to other companies needing worker accommodation. There simply will not be an endless, over inflated, demand for houses on land in Gladstone!!
Now for the baseball bat:
The difference between Gladstone Region and Karratha or Hedland is.....land!! There is so much land around Gladstone quietly sitting there in reserve just waiting to be released in time. Karratha & Hedland didn't have this big baseball bat to knock resale prices for six.....Gladstone does.
By all means get excited about stats - i'll stick to supply & demand thanks!!
Guys don't get too moist about the numbers of peak labour workforce and ongoing permanent jobs created by the proposed projects. As phallic as the graph looks, it will be short lived or just won't reach a climax at all!!
The numbers are of course a spruikers wet dream; the reality is the construction numbers will not be reached. If for some magical reason they are, it will only be for a week or two, then numbers will fall away rapidly as construction phases are completed and workers are demobbed.
The ongoing permanent jobs created will be significant no doubt, but once again not what is being quoted. There will be periphery positions created in town as small businesses evolve on the back of industry and community demand. Don't get me wrong, all these projects are brilliant and just what Gladstone, Qld. & Australia needs. Just don't get too bullish based on the statistical softporn.
Most white collar employees involved with construction activities will move onto other projects with their respective company, or will relocate to Brisvegas, Adelaide or other head office locales depending on the company. Many, many others will move interstate, or overseas chasing other projects, construction & commissioning etc.
Don't forget you've got Darwin Inpex Icthys, WA Chevron - Gorgon, WA Woodside Pluto 2 & Browse, WA BHP Macedon/Scarborough/Pyrenees and a sheetload of other projects within and outside of oil & gas once you start looking at coal, iron ore, uranium, bauxite etc. etc.
All of these projects cannot run concurrently; the companies all know it and the State Govts. all know it. You can only fly in so many 4-5-7s to build all this stuff. So what happens is the companies all go over to where the 4-5-7s come from and they get stuff done there (especially in oil & gas) everything is built in Batam, Korea, Phillipines, Japan and elsewhere in modular form and floated over to Oz when needed. Many of the workers previously sent O/S to play on these projects will come back and be heavily involved on site piecing it all together - so yet further dilution of quoted numbers.
Back to Gladstone:
The companies driving these projects always stack their workforce requirements to secure:
1). As much State or Federal Govt. support - the pollies lose their loads with this stuff, it means cameras & publicity for otherwise sinking political careers.
2) As much funding as they can from JVPs or other financiers (it is built in cash fat) to allow for the omnipresent cost overruns even prior to FID!!!.
3). As much local resident support because you will be surprised at just how much impact local residents have. It can destabilise to the point of delaying plans for any project.
We've seen all the numbers & stats before first hand in Karratha & Pt. Hedland. The reality is the numbers simply do not get reached!!
What tends to happen during all the different phases of construction activity is people flit from job to job, company to company hoping for better money or continuity in employment. Some guys even time their run and swap shirts three or four times to maintain continuity of wages. Some guys will TA or lollipop for civils, then TA for initial steel works, then jump ship and work in cladding & insulation for another mob until finally they score a job as runner or TA for the ongoing contracted maintenance company whether it be TW, United, McMahons or whoever. The same applies to a lot of the supervision too. As they face being demobbed & lay offs, they'll jump the fence. Another dilution of the statistical porn.
As peak works decline on one project, people jump ship big time, there is a mass migration of people from project to project. You always see the same faces, they're just wearing different shirts from last time you saw them three weeks ago or whatever.
NOT ALL THESE PROJECTS CAN OR WILL RUN CONCURRENTLY!! No matter what the graph says.
Depending on which company yacht tacs to the starting line first can impact enormously on other project commencement time lines and investment decisions. The other big hairy beasties in the equation are funding, current world & company economic outlook, and other world wide company LNG, Coal, Alumina etc. production reaching world markets. These companies time their runs as much as possible to within a micky hair of what other companies are proposing in terms of flooding markets with product and hedging of sales contracts.
So although the graph looks orgasmic to Joe Public and his investing ambitions, very little of the numbers quoted has credence, so there is some flaccidity factor to it all. The reality is there will be great times ahead for investors in this region, for people hoping to secure permanency of employment and for the ongoing drive for infrastructure so that the greater Gladstone region will actually become an attractive place to live, rather than the prehistoric cesspool it currently is. The only place worse than Gladstone in terms of having no soul, vibrancy or appeal is Adelaide. Great places to invest if you study them well, but otherwise both places are holes!
So, as I've said in many previous posts about Karratha & Hedland, i'll say the same about Gladstone and Adelaide......by all means throw your money at them, but make sure you research your markets & acquisitions very well. Even more so these days with Gladstone because of the very, very temporary climate FIFO & DIDO create.......tread carefully and you'll be rewarded.
Don't think for a minute the FIFO camps will be removed as soon as a project is finished. They will be sold to other players like Aspen Villages and the like; they'll then sublet or contract rooms out to other companies needing worker accommodation. There simply will not be an endless, over inflated, demand for houses on land in Gladstone!!
Now for the baseball bat:
The difference between Gladstone Region and Karratha or Hedland is.....land!! There is so much land around Gladstone quietly sitting there in reserve just waiting to be released in time. Karratha & Hedland didn't have this big baseball bat to knock resale prices for six.....Gladstone does.
By all means get excited about stats - i'll stick to supply & demand thanks!!
Not that it impacts on the 'numbers' and bullish nature of this thread & all things Gladstone, but I just read both the Observer articles and more importantly all the comments from locals & others.
So funny and eerie in that it sounds just like being back in Karratha circa 1998 pre 'boom' (used that term for those of you who get off on hearing it) and indeed post 'boom' (there you go again) in 2009 and all is not necessarily for the better if you are local.
Ian.
So funny and eerie in that it sounds just like being back in Karratha circa 1998 pre 'boom' (used that term for those of you who get off on hearing it) and indeed post 'boom' (there you go again) in 2009 and all is not necessarily for the better if you are local.
Ian.
Matt,
Gladstone & Karratha histories read as somewhat similar in a lot of facets especially WRT very little industrial & residential infrastructure development and indeed stable populations from 1970 up until 1990/2000.
Both towns serviced predominantly local grazing industries and while Gladstone had coal pre 1970's, Karratha had iron ore, then salt.......gas came in 1980.
People resided in both towns primarily because they were working in the aligned industries and other areas of employ servicing townships both boasting the megre population of 5000+ permanent residents.
There were the same lifestyle features attributed to both regions too. Coastal communities with ready access to island archipelagos for sailing, fishing and other recreational activities. The mix of work & lifestyle was very healthy (other than smelter emissions).
Both towns although isolated from metropolitan environs by distance offered a very attractive, relaxed, strong community based lifestyle for those who were prepared to live without certain luxuries Brisbane or Perth offered.
Some of those people although getting on in years, still reside in those areas. As do of many of their children, some now with their own children.
Karrathas' permanent population went from approx. 5300 in 1996 to where it now sits at approx. 12,000 permanent. I can tell you this doubling, almost tripling of population smashed Karratha for a good 5 - 7 years in terms of stretching facilities & services beyond what you might care to imagine. Gladstone is in this boat now.
Access to doctors, dentists, waiting 6 - 7 hours at Nickol Bay Hospital, obstatrician travels down from Hedland once a fortnight (previously once a month), regularly hearing stories of people (including us) having to drive 2 1/2 hours to Port Hedland hospital with wife in advanced labour because Nickol Bay was full (9 babies born on the day prior so they couldn't admit my wife), people don't qualify for RFDS in those circumstances either, no childcare availability, trying to get a table at either of the local Chinese restaurants in Ktha or Dampier, primary schools bursting at the seams with Grades 1 through to 6 all as split classes with in excess of 36 children per class room and teacher, children having a turnover of 3 - 4 teachers per class per annum.
I can tell you the public were angry at the insipid response from the WA State Govt for not spending on expansion infrastructure directly, or assisting Shire of Roebourne with funds when all the while companies like Hammersley Iron / RIO / Dampier Salt / Woodside are all announcing plans to expand their operations even further.
I can tell you as fact, living in a Karratha (and the same applies to Hedland & Gladstone) during those times was very difficult and a test of will power, relationships and the family unit. Many people broke - many left town. The same has & is happening in Gladstone.
What I see in Gladstone & read in the online 'Observer' is the same sentiment that was and still is present in Karratha & Hedland. The infrastructure can't cope and the best Council can do is lobby the State Govt. for assistance and at best, Gladstone for the next ten years will be stretched and unable to handle the population growth which will come and all it can do is try and play 'catch up' always 3 - 5 yrs behind the play because infrastructure doesn't appear overnight.
All my commentary above is only addressing the perspective of longer term locals who have been living in these places for often many years prior to any significant expansion plans were announced by industrial players. Although the towns are industrial & people knew what they would be living amongst, there used to be a balance; things were manageable; not any more.
The comments in The Observer aren't driven by 3 people only!! Every town & city has serial editorial commentators being published in papers; but for every 1 who writes in, there are 100 thinking what is written. If you care to read back dated copies of The Observer, you will find many, many articles written by local journos on many of the same issues......it's not just confined to editorial comments.
What Australias' massive resource sector growth in such a very, very short period of time has done is smashed towns & infrastructure and in so doing has completely obliterated any 'balance' there may have been.
I'm very, very pro development & growth and have done very well out of investing in these climates & places, but I've also lived there and seen the carnage that comes with it when the growth is just too much, too quick.
WRT your comment:
"If you didn't want to live in an industrial town, why move to Gladstone?"
.......a bit of hollistic consideration, awareness of Gladstones' machinations and empathy for the 'locals' might actually assist your investing.
The reason I say this, is because the IP environment in Karratha & Hedland is changing as more dwellings are constructed and land becomes available. Newman is already doing likewise with major land releases pending. Dilution of resale pricing becomes apparent and in time those huge rents being paid will be significantly reduced.....I can tell you this is fact for three of my properties in Karratha where Woodside no longer needs them and is not renewing leases - this is right across all their Pluto project tenanted properties Karratha. Rio too will once again sell off some of its stock of properties (it doesn't lease privately) as the newer apartment complexes hit the market and they buy them up. Take Newman for example where recent construction of Fairways housing is bought up by BHP & FMG for their people, values & rents of older stock in Newman will start to retrace once the construction / expansion phases are over and workers leave town for other projects.
Depending on your line of investing in Gladstone (going by some of your previous posts you are developing and intending to cash in on top rents and a bit of CG along the way). I don't know what your tenure will be in terms of post 'peak returns window', or how you intend to manage any retraction in a few years. It's not so much needing to have a defined exit strategy, but more a case of how do I handle these investments after the peak? We all have to do this no matter where or in what we invest. I think having a greater empathy and understanding of Gladstones' needs will help you when the time comes......and it will come. Sure you can always sell, pay your CGT and kiss Gladstone goodbye is one way to do it. Then again you may wish to tap into your equity peak and leverage off into other projects, commercial or whatever while you can.
By doing some study of Karratha without my Wooside hat on, I have since made contact with other parties after identifying some of the community needs, I've proposed deals as mutually beneficial without being exploitive.
With the tracts of land available for release into the Gladstone & surrounds residential market, I would suggest investors there will only ride the crest of the wave for a shortish period of time by comparison to Karratha. As a case of fact for example, my Karratha window for two new builds was 2006 to 2012 (6 yrs of peak rent benefit), now I've shored up medium term continuity slightly below peak rents. Capital growth has gone from $317K 2006 to $785K (bank val 2009) and back down to $680K (bank val) last month on those two 'new' properties and as expansion projects finish, these values will no doubt retrace further until a market equilibrium is reached.
So short term returns & gains will be good, but Gladstone will like every other resource sector driven community retrace towards equilibrium I believe in a much shorter term than seen in Karratha due to the abundance of land, public sentiment and State Govt. awareness! It's a critical awareness not held previously, but they've seen how Karratha & Hedland were hit and how those towns have been mismanaged by their WA State Govt counterparts. Also as others have mentioned elsewhere on this board.........
"Gladstone is no Karratha!"
Best wishes & good diligence,
Ian.
Gladstone & Karratha histories read as somewhat similar in a lot of facets especially WRT very little industrial & residential infrastructure development and indeed stable populations from 1970 up until 1990/2000.
Both towns serviced predominantly local grazing industries and while Gladstone had coal pre 1970's, Karratha had iron ore, then salt.......gas came in 1980.
People resided in both towns primarily because they were working in the aligned industries and other areas of employ servicing townships both boasting the megre population of 5000+ permanent residents.
There were the same lifestyle features attributed to both regions too. Coastal communities with ready access to island archipelagos for sailing, fishing and other recreational activities. The mix of work & lifestyle was very healthy (other than smelter emissions).
Both towns although isolated from metropolitan environs by distance offered a very attractive, relaxed, strong community based lifestyle for those who were prepared to live without certain luxuries Brisbane or Perth offered.
Some of those people although getting on in years, still reside in those areas. As do of many of their children, some now with their own children.
Karrathas' permanent population went from approx. 5300 in 1996 to where it now sits at approx. 12,000 permanent. I can tell you this doubling, almost tripling of population smashed Karratha for a good 5 - 7 years in terms of stretching facilities & services beyond what you might care to imagine. Gladstone is in this boat now.
Access to doctors, dentists, waiting 6 - 7 hours at Nickol Bay Hospital, obstatrician travels down from Hedland once a fortnight (previously once a month), regularly hearing stories of people (including us) having to drive 2 1/2 hours to Port Hedland hospital with wife in advanced labour because Nickol Bay was full (9 babies born on the day prior so they couldn't admit my wife), people don't qualify for RFDS in those circumstances either, no childcare availability, trying to get a table at either of the local Chinese restaurants in Ktha or Dampier, primary schools bursting at the seams with Grades 1 through to 6 all as split classes with in excess of 36 children per class room and teacher, children having a turnover of 3 - 4 teachers per class per annum.
I can tell you the public were angry at the insipid response from the WA State Govt for not spending on expansion infrastructure directly, or assisting Shire of Roebourne with funds when all the while companies like Hammersley Iron / RIO / Dampier Salt / Woodside are all announcing plans to expand their operations even further.
I can tell you as fact, living in a Karratha (and the same applies to Hedland & Gladstone) during those times was very difficult and a test of will power, relationships and the family unit. Many people broke - many left town. The same has & is happening in Gladstone.
What I see in Gladstone & read in the online 'Observer' is the same sentiment that was and still is present in Karratha & Hedland. The infrastructure can't cope and the best Council can do is lobby the State Govt. for assistance and at best, Gladstone for the next ten years will be stretched and unable to handle the population growth which will come and all it can do is try and play 'catch up' always 3 - 5 yrs behind the play because infrastructure doesn't appear overnight.
All my commentary above is only addressing the perspective of longer term locals who have been living in these places for often many years prior to any significant expansion plans were announced by industrial players. Although the towns are industrial & people knew what they would be living amongst, there used to be a balance; things were manageable; not any more.
The comments in The Observer aren't driven by 3 people only!! Every town & city has serial editorial commentators being published in papers; but for every 1 who writes in, there are 100 thinking what is written. If you care to read back dated copies of The Observer, you will find many, many articles written by local journos on many of the same issues......it's not just confined to editorial comments.
What Australias' massive resource sector growth in such a very, very short period of time has done is smashed towns & infrastructure and in so doing has completely obliterated any 'balance' there may have been.
I'm very, very pro development & growth and have done very well out of investing in these climates & places, but I've also lived there and seen the carnage that comes with it when the growth is just too much, too quick.
WRT your comment:
"If you didn't want to live in an industrial town, why move to Gladstone?"
.......a bit of hollistic consideration, awareness of Gladstones' machinations and empathy for the 'locals' might actually assist your investing.
The reason I say this, is because the IP environment in Karratha & Hedland is changing as more dwellings are constructed and land becomes available. Newman is already doing likewise with major land releases pending. Dilution of resale pricing becomes apparent and in time those huge rents being paid will be significantly reduced.....I can tell you this is fact for three of my properties in Karratha where Woodside no longer needs them and is not renewing leases - this is right across all their Pluto project tenanted properties Karratha. Rio too will once again sell off some of its stock of properties (it doesn't lease privately) as the newer apartment complexes hit the market and they buy them up. Take Newman for example where recent construction of Fairways housing is bought up by BHP & FMG for their people, values & rents of older stock in Newman will start to retrace once the construction / expansion phases are over and workers leave town for other projects.
Depending on your line of investing in Gladstone (going by some of your previous posts you are developing and intending to cash in on top rents and a bit of CG along the way). I don't know what your tenure will be in terms of post 'peak returns window', or how you intend to manage any retraction in a few years. It's not so much needing to have a defined exit strategy, but more a case of how do I handle these investments after the peak? We all have to do this no matter where or in what we invest. I think having a greater empathy and understanding of Gladstones' needs will help you when the time comes......and it will come. Sure you can always sell, pay your CGT and kiss Gladstone goodbye is one way to do it. Then again you may wish to tap into your equity peak and leverage off into other projects, commercial or whatever while you can.
By doing some study of Karratha without my Wooside hat on, I have since made contact with other parties after identifying some of the community needs, I've proposed deals as mutually beneficial without being exploitive.
With the tracts of land available for release into the Gladstone & surrounds residential market, I would suggest investors there will only ride the crest of the wave for a shortish period of time by comparison to Karratha. As a case of fact for example, my Karratha window for two new builds was 2006 to 2012 (6 yrs of peak rent benefit), now I've shored up medium term continuity slightly below peak rents. Capital growth has gone from $317K 2006 to $785K (bank val 2009) and back down to $680K (bank val) last month on those two 'new' properties and as expansion projects finish, these values will no doubt retrace further until a market equilibrium is reached.
So short term returns & gains will be good, but Gladstone will like every other resource sector driven community retrace towards equilibrium I believe in a much shorter term than seen in Karratha due to the abundance of land, public sentiment and State Govt. awareness! It's a critical awareness not held previously, but they've seen how Karratha & Hedland were hit and how those towns have been mismanaged by their WA State Govt counterparts. Also as others have mentioned elsewhere on this board.........
"Gladstone is no Karratha!"
Best wishes & good diligence,
Ian.
Fantastic post thanks Ian. Great to hear the insights of someone who has already lived through this kind of expansion.
I do actually empathise with many locals. What most concerns me is the uproar that came when rents went to $450 per week, I really don't think most locals understand what is about to hit them when rents reach $1450 per week and are entirely unprepared.
As someone with significant investments in Gladstone (I have 3 development sites, with a total of 15 townhouses planned), I closely follow local news and issues diligently.
It is extremely disappointing that the State Government isn't investing heavily in the region. Instead they talk about ring fencing the royalties for Queensland education funds, rather than reinvesting in the areas which are delivering the boom. They try to appeal to the masses to get re-elected, rather than the locals that are impacted.
Even the attempted solutions are very bad policy. ULDA is a shocker. It would be far better to offer rent subsidies for the disadvantaged than to give $100k+ free equity to those on $100k a year.
The State governments own figures show they expect the population to double in the next few years. They need to invest heavily in infrastructure and services like expanding rather than cutting down services at the hospital and build several more schools to cater for the huge demand. This is what at least 10% of the royalties should be ring-fenced for.
The regular observer online posters blame everything on LNG and are extremely negative. The issue isnt LNG, it is the government's lack of response to the issues that they starting to experience.
Given that I will have a high level of exposure to the Gladstone market, I will be selling down most of the townhouses, to keep a more balanced portfolio. I'm looking at other similar markets as opportunities to do more developments.
I do actually empathise with many locals. What most concerns me is the uproar that came when rents went to $450 per week, I really don't think most locals understand what is about to hit them when rents reach $1450 per week and are entirely unprepared.
As someone with significant investments in Gladstone (I have 3 development sites, with a total of 15 townhouses planned), I closely follow local news and issues diligently.
It is extremely disappointing that the State Government isn't investing heavily in the region. Instead they talk about ring fencing the royalties for Queensland education funds, rather than reinvesting in the areas which are delivering the boom. They try to appeal to the masses to get re-elected, rather than the locals that are impacted.
Even the attempted solutions are very bad policy. ULDA is a shocker. It would be far better to offer rent subsidies for the disadvantaged than to give $100k+ free equity to those on $100k a year.
The State governments own figures show they expect the population to double in the next few years. They need to invest heavily in infrastructure and services like expanding rather than cutting down services at the hospital and build several more schools to cater for the huge demand. This is what at least 10% of the royalties should be ring-fenced for.
The regular observer online posters blame everything on LNG and are extremely negative. The issue isnt LNG, it is the government's lack of response to the issues that they starting to experience.
Given that I will have a high level of exposure to the Gladstone market, I will be selling down most of the townhouses, to keep a more balanced portfolio. I'm looking at other similar markets as opportunities to do more developments.
G'day Matt,
Yep, there is something about State Govts., more so the Ministers, that sees them live day in / day out in an environment so rarified that the coining of phrases such as , "out of touch", "out of touch with reality" and "out of touch with electorates" just come rolling off the tongue of the public without challenge.
What gets me, is that these ministers actually believe their own rhetoric and won't here a word against it.
I'm sure they didn't all start out that way; generally most of them have gone into public office because they have felt they can make a difference & indeed represent the voters. In time they come up against the political machine and are very clearly told "this is the line you will follow & this is what you will say"......in a short period of time they just become a part of the sycophantic cog in the machine.
Enough of that politics cr@p.
From your other posts you've done a lot of groundwork & research with your proposed developments; from that I'd still be sitting very comfortably in your chair right now. It may be that the profit margin might be a tad diminished, but you're still going in at wholesale, so you'd still be miles in front regardless.
How have you found access to the people you need to play for you in Gladstone? That is, have you found people such as, drafters, surveyors, builders, plumbers, storm water & hydraulic engineering, concrete workers and so on readily available and willing to be involved in your projects, or have you had to look further afield in say Rocky and elsewhere?
I can't see that you would have to sell down too much too quickly as I assume you will build slightly up-spec and pitch the rentals at corporates rather than public.
The good thing with the corporates is you just get the peace of mind and continuity in leases & they can pretty much look after themselves. Even after Gladstone reaches its' peak, you only have to drop rents back a poofteenth and keep your corporate tenants on board with you for a bit longer - surprisingly, if you do the righty by them, they will respond to a bit of goodwill. I've seen other guys get a bit greedy with Woodside and they were the first ones to lose their leases.
I'm heading back up to Gladstone for a few days in three weeks time - if you need anything checked up on, or photos taken etc. sing out - happy to help.
Cheers,
Ian.
Yep, there is something about State Govts., more so the Ministers, that sees them live day in / day out in an environment so rarified that the coining of phrases such as , "out of touch", "out of touch with reality" and "out of touch with electorates" just come rolling off the tongue of the public without challenge.
What gets me, is that these ministers actually believe their own rhetoric and won't here a word against it.
I'm sure they didn't all start out that way; generally most of them have gone into public office because they have felt they can make a difference & indeed represent the voters. In time they come up against the political machine and are very clearly told "this is the line you will follow & this is what you will say"......in a short period of time they just become a part of the sycophantic cog in the machine.
Enough of that politics cr@p.
From your other posts you've done a lot of groundwork & research with your proposed developments; from that I'd still be sitting very comfortably in your chair right now. It may be that the profit margin might be a tad diminished, but you're still going in at wholesale, so you'd still be miles in front regardless.
How have you found access to the people you need to play for you in Gladstone? That is, have you found people such as, drafters, surveyors, builders, plumbers, storm water & hydraulic engineering, concrete workers and so on readily available and willing to be involved in your projects, or have you had to look further afield in say Rocky and elsewhere?
I can't see that you would have to sell down too much too quickly as I assume you will build slightly up-spec and pitch the rentals at corporates rather than public.
The good thing with the corporates is you just get the peace of mind and continuity in leases & they can pretty much look after themselves. Even after Gladstone reaches its' peak, you only have to drop rents back a poofteenth and keep your corporate tenants on board with you for a bit longer - surprisingly, if you do the righty by them, they will respond to a bit of goodwill. I've seen other guys get a bit greedy with Woodside and they were the first ones to lose their leases.
I'm heading back up to Gladstone for a few days in three weeks time - if you need anything checked up on, or photos taken etc. sing out - happy to help.
Cheers,
Ian.
Thanks Ian,
I'm actually going to be in Gladstone again next week (3rd trip in 5 months) and plan to continue making regular trips. Thanks for the offer though.
I have a great draftsman / town planner. Very good to deal with, but like everyone else has too much work on. Typically takes 1-2 months to book him in, but does a great job. My first development received the DA in 2 months!!
Builders are the hardest to get booked in. I went to market recently for quotes. From 4 builders, only one was in a position to respond, the rest already had too much work on for the next 6 months to a year. The only one that I am hoping to have on board can't start building until May.
I could go a bit broader, and look at out of town builders, but have been warned against this. The builders warranty is worth a bit more when its a local who is still going to be in town in 5 years time. Interested to hear the thoughts of others on this.
Overall I have been really impressed with the willingness of local people to go out of their way to help you when they can, even though they are often stretched.
I'm purpose-building for the corporate rental market, but where possible, retaining features that will still appeal to the public. My theory is maximise the rental yield and the values will follow. Where possible, when I think the market is at or near its peak and the market is extremely tight, I will leverage this position to get high yields on multi-year contracts, then sell based on the rental yield.
There has been a swift change in the market for development properties, in the past 6 months they have jumped around $150k as the locals (and other developers) are starting to understand their value. For a long time there was no premium applied at all and this led to supernormal profits. i.e. properties across the road from each other which were very similar and on the same sized blocks sold for similar prices... the only difference, the one I bought was zoned for 5 townhouses, the other was just a normal house on the other side of the road. The other unusual anomoly was the older houses on large blocks for townhouses were selling for $100k+ less than the townhouses being built on these sites were selling for. i.e. 3 bed house in high $300s, 3 bed townhouse in high $400s and low $500s.
Cheers,
Matt
I'm actually going to be in Gladstone again next week (3rd trip in 5 months) and plan to continue making regular trips. Thanks for the offer though.
I have a great draftsman / town planner. Very good to deal with, but like everyone else has too much work on. Typically takes 1-2 months to book him in, but does a great job. My first development received the DA in 2 months!!
Builders are the hardest to get booked in. I went to market recently for quotes. From 4 builders, only one was in a position to respond, the rest already had too much work on for the next 6 months to a year. The only one that I am hoping to have on board can't start building until May.
I could go a bit broader, and look at out of town builders, but have been warned against this. The builders warranty is worth a bit more when its a local who is still going to be in town in 5 years time. Interested to hear the thoughts of others on this.
Overall I have been really impressed with the willingness of local people to go out of their way to help you when they can, even though they are often stretched.
I'm purpose-building for the corporate rental market, but where possible, retaining features that will still appeal to the public. My theory is maximise the rental yield and the values will follow. Where possible, when I think the market is at or near its peak and the market is extremely tight, I will leverage this position to get high yields on multi-year contracts, then sell based on the rental yield.
There has been a swift change in the market for development properties, in the past 6 months they have jumped around $150k as the locals (and other developers) are starting to understand their value. For a long time there was no premium applied at all and this led to supernormal profits. i.e. properties across the road from each other which were very similar and on the same sized blocks sold for similar prices... the only difference, the one I bought was zoned for 5 townhouses, the other was just a normal house on the other side of the road. The other unusual anomoly was the older houses on large blocks for townhouses were selling for $100k+ less than the townhouses being built on these sites were selling for. i.e. 3 bed house in high $300s, 3 bed townhouse in high $400s and low $500s.
Cheers,
Matt
What are your thoughts on Bundeberg? It's API's location of thr month.
"We've heard lots of talk about Gladstone as an emerging mining hub for central Queensland, but what about Bundaberg, the sub-tropical regional city just a two-hour drive south with a population of 45,000?
Will the city famous for the iconic Bundaberg Rum, its sugar production, loggerhead turtles and soon its cash flow positive opportunities feel any spin-off effects from the mining boom further north?"
"We've heard lots of talk about Gladstone as an emerging mining hub for central Queensland, but what about Bundaberg, the sub-tropical regional city just a two-hour drive south with a population of 45,000?
Will the city famous for the iconic Bundaberg Rum, its sugar production, loggerhead turtles and soon its cash flow positive opportunities feel any spin-off effects from the mining boom further north?"
Gladstone - property seems to be flat for the last two months
Would you think LNG projects/Gladstone be affected too this year?
Would it cause the project in pipe line to be canceled?
Europe crisis causing China slowing down this year.
- coal has lot its power; almost 20% reduction in coal exports/prices.
- costs and long time-frames for regulatory approvals, affected AbotPoint (Rio tinto pulled out), and (hence Bowen)
- Doubts over whether or not BHP's new big Olympic Dam uranium mine will go ahead. Agreement would lapse around December if BHP delays its decision on proceeding. (hence Whayalla)
- BHP's decision to close Norwich Park
Would you think LNG projects/Gladstone be affected too this year?
Would it cause the project in pipe line to be canceled?
Europe crisis causing China slowing down this year.
- coal has lot its power; almost 20% reduction in coal exports/prices.
- costs and long time-frames for regulatory approvals, affected AbotPoint (Rio tinto pulled out), and (hence Bowen)
- Doubts over whether or not BHP's new big Olympic Dam uranium mine will go ahead. Agreement would lapse around December if BHP delays its decision on proceeding. (hence Whayalla)
- BHP's decision to close Norwich Park
Are they fixed price contracts?
Dont know about other ones but the contract between APLNG and Sinopec are highly demand oriented. APLNG is contracted to supply X amount of gas every year but only as long as Sinopec needs the Gas. In theory Sinopec can any day stop purchasing it from APLNG which is a risk which APLNG was ready to take.
However I do not think APLNG would go into such a contract without doing their own DD and the fact that they signed such a contract tells a lot about the confidence they have in the demand for Gas in China.
from what I have seen so far within APLNG, the kind of growth that GLadstone will be having in the next couple of decades is beyond anybody's imagination.Whether it shows in the property value is anyone's guess.
Also my wife is working on projects to transport resources mined in Queensland to Gladstone and she has no end in sight.
To understand the potential in Gladstone it might be better to think of its rise as a major Port in the coming years. I would not be surprised if it turns into a city by 2030.
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