All,
I've followed just about every 'Gladstone' thread on the forum for the last few years, but haven't contributed too much to any of those the discussions; maybe now it would be opportune to remind speculators on some fundamentals to consider.
Drawing on my past, present, future exposure to Karratha and these very same discussions about investing in the Pilbara, what will happen in Gladstone is that as soon as the construction & commissioning of the LNG plants is done - every company on site will demob - period; they will be gone in a very short space of time.
Forget the 10,000 workers needed and all that political & media BS..once construction is complete, the first major demob will occur, then any remaining staff required for commissioning & handover will go very shortly afterwards..there will be no jobs for people to hang around in Gladstone for..they will chase other jobs, probably back over in WA as Ginas' Roy Hill gets underway and Twiggy & Co start recruiting again (that is if the ex Gladstone drones have the skill sets req'd by Gina & Twiggy etc. doubtful, but ya never know).
For Gladstone (bearing in mind not all the touted full scale of the LNG projects is going to happen - most of it has been scaled right back and some of the major players are still reviewing their commitment & Cap ex positions), the only new / sustained work and growth will come from the peripheral / ancillary / support businesses the LNG plants may seek to extend contracts to for local ongoing civils, plumbing, electrical, laundry, cleaning & catering services etc. These are all very small scale and not the employers of thousands of people.
Sadly the Bligh Govt and I guess "Can Dos" army of sycophants didn't read the state of global economies (they couldn't read Qld's finances let alone the larger world wide LNG industry markets) and the massive cessation of Cap Ex by the four major LNG players spruiked ad-nauseum for Gladstone a few years ago. Without being able to crystal ball very well, it was a case of open slather broad acre development of real estate in the Gladstone region at all costs driven recklessly on blue sky forecasting.
Surely anyone with a modicum of understanding would have realised that the emphasis in Australia on FIFO was always going to mean that not everyone was going to be housed in resi properties in Gladstone??? Sure, some supervisors and other players on these projects might be allocated housing on the mainland during construction & commissioning, but certainly there was never going to be a sustained demand for 'thousands' of houses.
Unfortunately investor greed and poor research is now biting people badly (I have colleagues who bought into Gladstone at its peak, even though I tried to warn them), but sadly the lemmings thought it was going to be Karratha & Hedland boom times all over again. The fact is this was never ever going to happen as there is too much free developable land in the Gladstone region; Karratha & Hedland had no spare tracts of land that could be quickly released as it was all tied up in Native Title or locked up with the WA Govt via Landcorp (they released land very very slowly and in tidbits at a time), so property was scarce and prices sky rocketed and held those heights for years until the construction & commissioning of the Woodside Pluto LNG plant was finished, then companies demobbed and over 300 houses went straight back onto the rental market and Karratha has dropped 30 - 40% ever since!
I drove into Gladstone once a few years ago and I noticed then the huge expanses of available land - this stayed in my mind ever since. I think those who came in and pinch hit in Gladdy i.e. they bought, rented and sold or for those bought, developed and sold out would have made good coin. For those who bought at peak retail prices and are still holding, you may be neutral or marginally positive on yields, but don't expect any return to those heady Capital Growth peaks any time soon.
I think guys like Matt NZ would have done extremely well in their development ventures and some of the long time Gladdy holders on the forum would have done quite ok too (Rooster, Big Tone and others), but unfortunately some of the Johnny come lately types could be hurting and have a not so happy tale to tell.
As I've stated a number of times in my commentary on Karratha, well researched & creative investors may still very well be able to make a few bucks out of Gladstone, but be very, very careful because even though it's not the cliched "one horse mining town", it ain't a hell of a lot different!!
When the industrial economics tank for any industrial or agricultural sector, the ar$e will drop out of its exposure in any town whether it's Karratha, Hedland, Blackwater, Renmark, Mildura, Newcastle, Woolongong, Roxby Downs, Kalgoorlie and yes, even Gladstone with its multi industry circumstance, they'll all hurt badly when companies stop splashing the coin around.
I'm not stating doom & gloom, just stating the obvious that happens in each and every one of these towns during & after the halcyon & prosperous construction days.
Personally I've had my fill with industrial supported towns, in particular Karratha (am still holding IPs there as the cash is too good to let go). I'm not bullish in any way shape or form, but I am happy to hold for the long term.
Now that my marriage separation and property settlement matters are done and dusted, it's time to make up the massive financial loss and to get back into some serious investing, so I've moved onto my first commercial office suite (zoned purely for a specialist field) acquisition in my SMSF. Figured because the ex got 66% of my super
that I really needed to leverage what little was left in it; simply relying on company contributions and TTR in a few years time just was not going to make up the lost ground - leverage was going to be the sonly way to get the balance back up where it needs to be in 8 yrs time when I turn 60.
It's a new ball game, but carries with it some good reward.
I wish Gladdy holders well - at least you've had the nurries to have a go!!
Cheers!
