Hi Sash, how do you figure that exactly?
Karratha
- Thread starter venno
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Hi Sash, how do you figure that exactly?
You may Matt, but that's not the norm at the moment if not developing.
Have you had to adjust your figures based on the glut of supply there at the moment and what looms for the new year?
Back to Karratha, do people expect this drop in rental returns to have the same effect on sales and asking prices?
Rooster
10% is the yield estimate from the rental agency, at the purchase price, not the development cost. Will soon be marketing 4 bed, 3 bath townhouses in Gladstone with expected yield of $1,100 to $1,200 per week fully furnished. Central West Gladstone location. I just got the rent estimate back today and have others that I have developed renting in this range with the same agency.
In the new year, there are literally thousands of extra workers to arrive, so expectations are that the market will get tighter in early 2013.
The Moranbah vacnacy rates have increased dramatically....some of the lemmings who bought will panic and there will be a flood of properties on the market. This will drive prices down...in a mining town it will be more pronounced....at this point it will be time to buy. This will take time. Coal will still be in demand....the companies just need to sort the unions out!
Hmm.......anyone who is telling you $1100 to $1200 furnished for a townhouse is telling porkies..this is what Karratha properties will rent for. Fully furnished houses (4x2x2) are getting $800-$900. The other thing I was told by local agents (multiple ones) is that most people have their own furniture. So a 4x2x2 will rent on average for $600-750...with most renting around the $620-680 mark.
As for supply it is increasing not decreasing...a lot of people jumped in. So prices will not move as aggressively next year. Not saying that Gladstone is not viable...just need to be realistic in terms of returns.
Hmm.......anyone who is telling you $1100 to $1200 furnished for a townhouse is telling porkies..this is what Karratha properties will rent for. Fully furnished houses (4x2x2) are getting $800-$900. The other thing I was told by local agents (multiple ones) is that most people have their own furniture. So a 4x2x2 will rent on average for $600-750...with most renting around the $620-680 mark.
As for supply it is increasing not decreasing...a lot of people jumped in. So prices will not move as aggressively next year. Not saying that Gladstone is not viable...just need to be realistic in terms of returns.
Sash, we aren't talking about renting a 4/2/2 to a family. It is renting to corporates who require more bathrooms and are looking to rent fully furnished, no maintenance in central locations, for 4 workers.
Even 2/2/1 apartments can get $1100-1200 per week in central Gladstone.
I know of other 3 bed 3 bath townhouses in central locations achieving $1,100 - $1,250 per week. You just need to know the right type of property to buy to attract the right kind of corporate tenant.
Even 2/2/1 apartments can get $1100-1200 per week in central Gladstone.
I know of other 3 bed 3 bath townhouses in central locations achieving $1,100 - $1,250 per week. You just need to know the right type of property to buy to attract the right kind of corporate tenant.
I also know of 3 bed 3 bath townhouses in central locations having their leases not renewed by corporates. Previously leased at over $1200 per week with a very high finish and now to be re-leased where the market is now, which is $850 - $900 a week.
I'd just caution on how bullish your expected rents are and how high the demand will be once the other two camps open up.
Rooster
Thanks, that is in line with what the agency has advised. I have a mix of 3 bed 3 bath and 4 bed 3 bath townhouses about to go up. The agency advised $850-950 for the 3 beds which is as you say where the market is at now.
I think this is the crux. we were looking to put a camp into the centre of town but it seemed there was plenty of supply from the new camps
Camps are a different market again. You are looking at least 3 times the rental cost to put 4 workers in a camp each week. Ausprop, what rate per night per person were you working on during your feasability?
sorry, honestly I can't recall, it was earlier this year and I struggle to remember what i did last week
despite the rates and the requirements etc it still removes demand from the system
Mate....it doesn't matter. The companies want to reduce costs as the cost of things like commodities are down and price is labour is up. Their profits are down....
So what are they doing....they are looking to bring costs down. They are now setting the top rent amounts they are willing to pay. They have done this in Moranbah where it went to 1800-2500pw and now are now offering only 900-1200pw. When this is done....it sorts things out.
Have you talked to any real estate agents on the ground. I thnk you will most will not agree with 1100-1200pw furnished.
Remember the market sets rents ....if you are well above...you won't get a look in!
So what are they doing....they are looking to bring costs down. They are now setting the top rent amounts they are willing to pay. They have done this in Moranbah where it went to 1800-2500pw and now are now offering only 900-1200pw. When this is done....it sorts things out.
Have you talked to any real estate agents on the ground. I thnk you will most will not agree with 1100-1200pw furnished.
Remember the market sets rents ....if you are well above...you won't get a look in!
The aim isn't to compete with the workers that are bound to be in camps due to the EIS that Bechtel are working under. The aim is to target the 2nd tier contractors that can't afford the crazy rates in the camps and want a nice, central place to stay in. This market aren't staying in the expensive camps, regardless of the number of spots available in them.
Terry Ryder put out a new report on Gladstone this month, in it he advises QGC said "in June 2011 there were 1,356 full-time employees working on the project, plus 2,500 working for contractors." The fulltime employees will all be in camps, but most of the contractors can be targeted.
When Bechtel advises they have another 3,500+ workers on their way in the next few months, you can probably double that with the extra contractors still to come. A huge target market that don't want to pay huge accommodation costs for temporary camps.
Terry Ryder put out a new report on Gladstone this month, in it he advises QGC said "in June 2011 there were 1,356 full-time employees working on the project, plus 2,500 working for contractors." The fulltime employees will all be in camps, but most of the contractors can be targeted.
When Bechtel advises they have another 3,500+ workers on their way in the next few months, you can probably double that with the extra contractors still to come. A huge target market that don't want to pay huge accommodation costs for temporary camps.
I am talking with agents in Gladstone every week and there on a regular basis. There is plenty of interest in the product at that price point and there is not much competition (read almost no competition) for high spec 4 bed 3 bath townhouses.
The objective is simply to meet the market requirements, at a decent cost per worker, with plenty of bathrooms, which 4 x 2s don't meet and are restricted to typically the family market, which is very constrained in what they are willing to pay.
Last time I was up that way it looked like the new MAC Karratha Village near Gap Ridge Camp has been moved into?
CITIC's camp at Fortescue Roadhouse still seemed reasonably active also, with overflow from their primary project camps
Devil Creeks off the highway and with DCGP in full production now, I wonder if they are accommodating personnel other than the small team of Apache staff required at the plant?
