Gladstone QLD - How is it Going????

[Timkot]

I live a little south of Calliope and am looking to rent there in the new year and I can confirm that there are many many dozens of empty new 4 bedroom houses sitting on blocks. People are desperate to rent them out and many a rent are down in the low 400's, but they can't rent them. Seeing 4 bedders now down in the 300's and offering free months rent etc.

I have friends who work in the real estate agencies in Calliope and its a horror story for investors. Same thing, estate lots sitting empty because the drop in land value has impeded many a persons abilities to get a loan due to deposit problems and of course the banks aren't in a hurry to lend to places going backwards.

Calliope has always been a brown wasteland that was lived in by people because it was cheap relative to Gladstone, well during the boom that stopped and building a new 4 bedder easily cost in the 500's. One of the big issues is that the cheap houses at minimum were costing 1200 to build which is about 300 a square meter more than in southern Queensland.

 

[norwoodman]

The one project that might provide little assistance to Calliope is the recently opened Calliope Crossroads grade separation - that will cut down travel times between Calliope and Gladstone. It's still a 15 minute commute though. There's not much else in terms of amenities out at Calliope.

 

[Timkot]

I was reading an article in the Gladstone Observer the other day and it was referring to how bad things are going to potentially get in the Gladstone area. Basically the article stated that there is over ten thousand (10,000) workers currently in Gladstone doing construction for Gas plans etc and that this number will drop to roughly 1500 during this year 2014, when that construction is over. The article also referenced the fact that the Arrow gas plant will in all likelihood not go ahead. The article referred to the parent company indicating consolidation of the current going concerns and not further work on future matters Also Arrow has been downsizing its workforce, so with the announcements by the parent company and the actions by Arrow the view now is that the construction of the plant will at the very least be mothballed. The article referenced this because the Arrow plant would have provided many thousands of new jobs so it would have taken up some of the slack of some of the 9000-10000 workers who will lose their jobs because that phase of development/construction is over.

Effectively the article was saying that Gladstone has currently over 1000 vacant rentals and that this will more than double during this year 2014.

I have friends in Gladstone in the real estate industry who do acknowledge that there are currently more than 1000 rental vacancies.

I was talking to a friend in real estate in Gladstone who told me about the different investment property companies in Gladstone/Calliope and their antics, such as they have been selling rental guarantee properties at guaranteed rents of 650 a week, but the houses are currently not rented because the company won?t accept less than 650 a week. This is about Calliope in particular and the fact is that new 4 bedroom houses, let alone old ones are now renting for no more than 400 a week. The agent was effectively saying that the company cannot rent out houses for 400 a week because they are trying to sell numerous other houses on the guarantees of much larger rent and that if they did rent them out cheaper they would have to disclose this, so in effect it wrecks their selling plans to rent out the houses for less.

On another note there is a development in Calliope where the developers failed to appropriately apply for the phone lines etc for the subdivision and that the new houses already built in the estate do not have phone lines and this means no adsl broadband etc. They are not able to rent out any houses in the street. I am about to rent in Calliope and my wife initially went into the estate to view possible rentals and then found out there was no phone lines etc. She said that none of the houses were rented out or lived in as they were all rentals, without phone lines. Apparently the late application means that phone lines may be supposedly in place within the next month or two but naturally when push comes to shove the developers won?t guarantee any timeline

 

[DEC]

I was reading an article in the Gladstone Observer the other day and it was referring to how bad things are going to potentially get in the Gladstone area. Basically the article stated that there is over ten thousand (10,000) workers currently in Gladstone doing construction for Gas plans etc and that this number will drop to roughly 1500 during this year 2014, when that construction is over.

There was this from 18/1/2012
http://somersoft.com/forums/showthread.php?t=76597

http://www.myprop.com.au/content/queensland-property-struggling-gfc

 

[Angel]

And the good news just keeps rolling in!

We've got new tenants from early December on a lease until March 2015. Should we just sell now and cut our losses? A 3/1/2 in Telina on 700 m2 corner block.

 

[norwoodman]

From the graph, you can remove Arrow, Boulder and BICET straight away as those projects have either been cancelled or highly unlikely to proceed. A few other of those projects have also been put on hold.

 

[edge81]

That graph is from John Rolfe at CQUniversity. He released a report in 2011 and 2013 and failed to change his assumptions for the 2013 report so people still thought the boom would last another few years despite the flat to falling market in 2013.

Selling up now may be hard as there are as many for-sale signs as there are for-lease signs. It is not uncommon for properties to be valued at $100,000 under sale value. This makes it very hard for the person wishing to buy the property to get finance.

Gladstone has a long way to go before it recovers to 2012 prices.

 

[Speedracer]

Hello All. I have been reading this post obsessively as we are currently considering a NRAS property in the Tannum Blue Estate, Tannum Sands - $460K - 320sqm Land, 200sqm Floor space. It is one of the last NRAs properties around as I understand. But the more I read about Gladstone the more confused I become. The land size is also a concern but I can't find much commentary of what people think about the Tannum Blue estate. To add to this it appears another estate 'The sands' seems to have a bit more of a coordinated strategy of contributing to town development and have larger block sizes at about 700sqm, but no NRAS and at higher prices closer to $500- 520K.

Can anyone share their views on 'Tannum Blue' & 'The Sands'? Big mistake or good opportunity?

http://www.tannumblue.com.au/
http://thesandstannum.com.au/

 

[norwoodman]

Hello All. I have been reading this post obsessively as we are currently considering a NRAS property in the Tannum Blue Estate, Tannum Sands - $460K - 320sqm Land, 200sqm Floor space. It is one of the last NRAs properties around as I understand. But the more I read about Gladstone the more confused I become. The land size is also a concern but I can't find much commentary of what people think about the Tannum Blue estate. To add to this it appears another estate 'The sands' seems to have a bit more of a coordinated strategy of contributing to town development and have larger block sizes at about 700sqm, but no NRAS and at higher prices closer to $500- 520K.

Can anyone share their views on 'Tannum Blue' & 'The Sands'? Big mistake or good opportunity?

http://www.tannumblue.com.au/
http://thesandstannum.com.au/

I would stay away from the southern end of Tannum Sands, as there is little in the way of amenities other than the existing high school, and considerably longer travel times to anywhere than the rest of the Gladstone area. There are a lot of larger blocks with relatively new houses asking similar prices to the brand new builds in the new estates.

 

[powderfingers]

Heres the article: http://www.gladstoneobserver.com.au/news/project-short-of-gas-for-start-up/2133489/

I had one house there, sold it in 2012, made a loss of 10k but happy I got out when I did. I definitely wouldn't be buying there anytime soon, Gladstone is still very much a declining market and a classic example of overdevelopment.

 

[Speedracer]

I would stay away from the southern end of Tannum Sands, as there is little in the way of amenities other than the existing high school, and considerably longer travel times to anywhere than the rest of the Gladstone area. There are a lot of larger blocks with relatively new houses asking similar prices to the brand new builds in the new estates.

Thank you. As Tannum sands is suppose to be a desirable place to live do you foresee these developments in the Southern End being a desirable place to live and success over time as they grow?

 

[Angel]

Hello All. I have been reading this post obsessively as we are currently considering a NRAS property in the Tannum Blue Estate, Tannum Sands - $460K - 320sqm Land, 200sqm Floor space. It is one of the last NRAs properties around as I understand. But the more I read about Gladstone the more confused I become. The land size is also a concern but I can't find much commentary of what people think about the Tannum Blue estate. To add to this it appears another estate 'The sands' seems to have a bit more of a coordinated strategy of contributing to town development and have larger block sizes at about 700sqm, but no NRAS and at higher prices closer to $500- 520K.
http://www.tannumblue.com.au/
http://thesandstannum.com.au/

Why would you want to buy a new house in the outskirts of Gladstone? If you say you have been reading this, then you would have read all through 2013 there are already massive vacancies and it is only going to get worse? If you want to buy an NRAS, then please stay in a capital city.

You can buy my house for less than $430K. It is walking distance to primary and secondary schools and a two minute drive to TWO major shopping centres. 5 - 7 minute drive to CBD. You can use the rumpus as a massive main bedroom.

 

[norwoodman]

Thank you. As Tannum sands is suppose to be a desirable place to live do you foresee these developments in the Southern End being a desirable place to live and success over time as they grow?

I think this depends somewhat on the second bridge across the Boyne River at Pioneer Drive being constructed - this would reduce the travel time from the southern end of Tannum Sands to the rest of Gladstone considerably.

Yes, those new estates are closer to the beach than other suburbs, but the quality of them doesn't really appear to be any better. I see better value in the northern more established end of Tannum Sands, which I would also be steering clear of in the short term.

 

[Angel]

That graph is from John Rolfe at CQUniversity. He released a report in 2011 and 2013 and failed to change his assumptions for the 2013 report so people still thought the boom would last another few years despite the flat to falling market in 2013.

Gladstone has a long way to go before it recovers to 2012 prices.

I used the Rolfe report (2011) as confirmation that Gladstone had a few more good years before being time to ditch. We were happy to purchase mid 2012 at $50K less than asking price and naively thought that would be the bottom.

I guess we have better things to do with our money and can carry forward the capital loss until we sell something else at a profit.

 

[Trippy]

I used the Rolfe report (2011) as confirmation that Gladstone had a few more good years before being time to ditch. We were happy to purchase mid 2012 at $50K less than asking price and naively thought that would be the bottom.

I guess we have better things to do with our money and can carry forward the capital loss until we sell something else at a profit.

If you want to invest in a mining town and question whether its time to buy in, hold or sell out you need to look offshore and expand your research base further than one report. As I detailed in my post on this thread:

http://somersoft.com/forums/showthread.php?t=94137&page=3

I don't think enough people look at global economics to get a perspective of where we sit in Australia and what the future may hold for us. We are a global village now. So much of our economy is tied to world events. Our manufacturing base is effectively gone. We are left with mineral exports ... one of our biggest customers is China. If you think we have a debt problem in Australia, just think about how our biggest customer is travelling ...

Quote:
Over all else hangs the fate of China. The sino-bubble is galactic. Credit has grown from $9 trillion to $24 trillion since late 2008, as if adding the US and Japanese banking systems combined. The pace of loan growth - 100pc of GDP over five years - is unprecedented in any major economy, eclipsing the great boom-bust dramas of the past century.

The central bank is struggling to deflate this gently, with two spasms of credit stress in the past six months. I doubt it will prove any more adept than the Bank of Japan in 1990, or the Fed in 1928, and again in 2007. This will be a bumpy descent.

China may try to cushion any hard-landing by driving down the yuan. The more that Mr Abe forces down the Japanese yen, the more likely that China will counter with its own devaluation to protect the margins of it manufacturing industry. We may be on the brink of another East Asian currency war, a replay of 1998 but this time on a much bigger scale and with China playing a full part.

Read more: http://www.smh.com.au/business/comme...#ixzz2pfsBci7n


If you think China will run and continue to consume our exported iron ore and coal then we have boom times ahead. Currently our export volumes are up on lower prices. If our volumes drop significantly or prices tank lower we are stuffed... If China decides to do something about it's polluted environment and change energy sources (read this as reduce coal consumption) we are stuffed...If we had alternate meaningful export markets (other than minerals) or even a multiple customers to equal China's consumption we would fair better, but we have tied ourselves to China (great while it lasted) and are now at the mercy of it's consumption demands or lack of demand.

Any talk of our domestic economy must be viewed in the context of world economies and the effect on us here....particularly if you want to invest a large chunk of money (or worse, borrowed money that is highly dependant on your ability to repay it) into a domestic investment with no research into the economics of the day and any effects on the same economy from external forces..

If China trips we fall over a cliff...very simple.

I sometimes wonder that as investors how much research some people do before investing in any form of investment. I sometimes get the feeling that there is the tendency to push "there is no better time to buy" and "get in now or you'll miss the boat" ... I believe there are times when it is better to sit on the side lines for a while and see how the play unfolds. Personally I think it will flip one way or the other over the next 12 months. I see our economy flat or slightly declining at the moment with never ending rising govt debt as a cherry on the cake....This is a bad outcome considering we have just exited a "once in a lifetime mining boom". Proceeds of the said boom have been squandered. We have had the boom now maybe comes the bust...

The declining work force in Gladstone and other mining related driven locations is a direct result of what is happening off shore, not onshore. If you are not looking further afield you are flying blind...

 

[Angel]

If you want to invest in a mining town and question whether its time to buy in, hold or sell out you need to look offshore and expand your research base further than one report. As I detailed in my post on this thread:

http://somersoft.com/forums/showthread.php?t=94137&page=3


The declining work force in Gladstone and other mining related driven locations is a direct result of what is happening off shore, not onshore. If you are not looking further afield you are flying blind...

Thank you for reminding us all how dumb I am. Was your brilliant piece of journalism written two years ago when our Asian neighbours couldn't get enough Gas fast enough?

 

[negt]

Thank you for reminding us all how dumb I am. Was your brilliant piece of journalism written two years ago when our Asian neighbours couldn't get enough Gas fast enough?

gladstone is cactus. so are most mining towns.rents will drop even more.life is good for all that are cashed up and will pounce on the losers.

 

[sash]

Trippy can't agree on this......

Australia is poised to be the largest LNG producer by the end of this decade. Places like Gladestone and part of the Coast of WA and NT will be key areas for further growth. Also the world does not revolve around China...you will find the China will continue to buy but places like Japan will become larger consumers of LNG as thhey balance the Nuclear option.

The other thing is China was the largest manufacturer of good but Beijing is in the process of moving away from manufacturing. Countries like Vietnam, Indonesia, India and Phillipines will move into this space as wages in China increase.

So yes China will slow down....but their place will be taken by others as the demand for cheap goods is still there. Also...the Chinese are increasingly unpopular not only in the West but also Asia....this is going to get interesting. Particularly..if countries like US, Taiwan, Japan, Korea, Indonesia, Phillipines, and Vietnam join together to negate a rising China and its military.

This was recently demonstrated by what happened when China tried to increase its claim on territorial waters. The US, Japan, Korea...put their warships in the new boundary jusrt to make a point. I countries like Vietnam, India, Phillipines and Indonesia join in..it will be interesting. I don't think China would like to confronting the large navies of India, Japan, and Indonesia....and some of these navies have no hesitation of firing on Chinese ships unlike the US!

If you want to invest in a mining town and question whether its time to buy in, hold or sell out you need to look offshore and expand your research base further than one report. As I detailed in my post on this thread:

http://somersoft.com/forums/showthread.php?t=94137&page=3



The declining work force in Gladstone and other mining related driven locations is a direct result of what is happening off shore, not onshore. If you are not looking further afield you are flying blind...

 

[Speedracer]

Why would you want to buy a new house in the outskirts of Gladstone? If you say you have been reading this, then you would have read all through 2013 there are already massive vacancies and it is only going to get worse? If you want to buy an NRAS, then please stay in a capital city.

You can buy my house for less than $430K. It is walking distance to primary and secondary schools and a two minute drive to TWO major shopping centres. 5 - 7 minute drive to CBD. You can use the rumpus as a massive main bedroom.

NRAS plus a land and build package is very attractive from a cash flow perspective. At a NRAS discounted rent of $400 in the estate we would have a positive return of $180 per week at a purchase price of $460,000. Estimating a 6% annual growth over the next decade.

NRAS should act as a safety barrier to some of the risks related to the rental market and although sentiment for Gladstone is negative at the moment I don't see people doubting the long term growth of the area over 10 years.

My concerns are the size of the block which is compensated by some extent by building a double story house. However i do lack knowledge in the desirability of the southern end of Tannum Sands. And am cautious that of the neighbouring 'the Sands' development has larger more expensive blocks.

It all looks good on paper, however this is my first investment and know that I lack a lot of practical knowledge.

 

[Angel]

I agree with your validation of NRAS meaning a virtually guaranteed supply of middle-income tenants and the positive cash flow aspect. However if there are no residents in Gladstone to take up your home, then there are no residents to take up your home. There are hundreds of empty houses at Calliope and Benaraby they cant give away, there are plenty more vacant brand new homes in Vantage and Little Creek etc, all just as nice as Tannum. There is no need for the Consortium to supply any more houses.

You see, as soon as your house is offered up for approved tenants at $400 a week, the other houses in the estate will also drop to $400 a week and yours will legally have to drop to $320 etc.

Is the marketing company offering you current stock at super discounted prices? What if the marketing company takes your deposit then the developer or builder goes broke? Have you been to Gladstone recently? How do you propose a 6% annual growth over the next ten years when the newspaper tells us that several of the proposed new developments at Gladstone will not go ahead?

Please look into NRAS somewhere else.