palm cove

[tess32]

I am new to this site,
returned from palm cove yesterday appears to be booming and turning into very classy tourist destination.
we are considering buying two apartments one in new sea temple resort and amphora resort (both under construction).
looking mainly for good capital growth as no/ minimal finance will be needed.
does anyone know the area? is it already overpriced??
more details avail on the properties if required.

tess

 

[Mrs Bird]

Hi Tess,

Yes I know Palm Cove very well as well as the 2 new resorts you are referring to.

As I have mentioned before on this forum we own a beachfront apartment at Palm Cove. It is an older style apartment with a regular clientale that comes back every year. Our income from the holiday rental covers body corp, rates and a few other expenses. It does not cover the interest on our repayments. It is a lifestyle asset and we went into it knowing that tourism in places like Cairns is highly voilatile and fickle.

Tess, whatever they are telling you with the expected forecasts of occupancy, it will not be the reality.No one can predict the Cairns market. Any disaster in the world will directly affect your apartment.You should have seen how many bookings were cancelled in our apartment after the Sars outbreak.

If money is no object then these apartments could offer you a wonderful lifestyle as they are in the most beautiful part of Australia. What occupancy rate did they give you? 70-80% Is your apartment guaranteed a view? These apartments are top of the range and have been on the market for several months...all being sold to Melbourne and Sydney residents. IMHO, you will be paying top dollar for these apartments and Body Corp fees will be a killer.

I know of a beach front property 1 bed apartment being sold for 200K, stinger net directly opposite. This may be a better investment if like us, you have your heart set in buying in Palm Cove.(Before any one asks it is not ours but I wish it was!)

pm me for further information if you like.

Mrs Bird

 

[Roz]

Hi Tess,
I live in Cairns and Palm Cove is a good choice for Capital Gain any of the northern beaches suburbs do well. Prices are rising fast at the moment. There is a huge amount of building going on. A little piece of advice I was given by a real estate agent in Cairns was if you want to buy a holiday unit, buy one that can be rented out as a permanent rental if the holiday market drops off.
Roz

 

[tess32]

thanks Mrs Bird and Roz

given the price moves in the area i feel that palm cove and surrounding areas should go up. being from melbourne i feel the current market here is overheated or at least plateaued with not much room for quick capital gains anymore.

we are working on figures of 50% occupancy for the resort apartment if we don't onsell once completed.

tess

 

[always_learning]

I have just back from Palm Cove nice place for a holiday. I was at the Angsana.

In my honest opinion, lots of building going on, lots of appartments. Market was geared to sell to people like me from interstate or OS wanting holiday and investment in one.

My overall investment opinion was "dont touch this with a forty foot pole".

The reasons are simple.

• Have a look in at Belle property RE, who are they marketing too? Hard core property investors or to "I want to feel good about buying some prestige property so I can boost to my relativies/friends/neighbours?" Marketing is targeted to those who make a statement, those who buy designer handbags, mercs and luxury holiday units.
• Who pays the high rental fees? holiday makers! What will happens during the next economic downturn (not if but when)? For the renters what is the first thing people cut back on? Expensive holidays! For owners what happens when things get tight, what is the first thing that is sold? the luxury unit in Palm cove! I would sell my unit before moving the family home to a tent under a bridge or pulling the kids from the private school!
• In an ecomonic downturn how much is your unit worth with high vacancies and lots of sellers?

One of the best things about IP is that it is backed by the absolute need for people to live somewhere. A IP in a big city will always be supported by people needing somewhere to live! Holiday's and holiday homes are by definition spending choices we make, and don't get included in humans basic requirement for food and shelter.

I had a look around the Cairns area, lots of nice beaches around, lots of near waterfront land. Palm cove was nice, but not significantly so! Port Douglas was better and a causal review of unit prices didnt seem so different!

Honestly I think stay clear of the designer units, from memory there where some nice but ugly older houses on big blocks walking distance to the beach in the mid 300~400K, very unfashionable, very "unBelle". I would buy one of these do it up a little for the family holiday market and lease it out! I couldn't lease a "nice" house for less than $2K/week.

 

[Pete]

Always Learning, those sound like harsh words - though I agree with them 100%.

Palm Cove is a great spot. Used to be a really nice restaurant there. I haven't been there for a while. The nearby Trinity Beach was my preference for a swim when I lived locally.

I bought an investment house in Cairns. Settlement was in December 1987. It was after taking my money out of the stock market in the last day or two of September, three weeks before the crash in October! $73,000 for a house that I tenanted in January at $160 week to the same tenants for over 10 years. Never put the rent up. Just after I bought the market went crazy and the place was apparently worth $140,000 within about 3 months, as I recall. And then interest rates went from something like 13% to 19.5%; in the days when investment rates were always a bit higher than for your own place. No problem for me as I had good rent and good income. The house was built in 1986 so had the 4% building depreciation. Negative geared with positive cashflow. It seemed like a wonderful investment.

Then there was the pilots' strike.

The whole Cairns market dropped for years. Ten years after the 1988 boom, prices had not recovered, I think. Has someone got some data on that? I think my place was worth about 120k in 1998.

News today (Thurs 30.7.03) of British Airways biggest three month loss ever - 73 million USD. Japan Airlines too doing it tough. Blaming SARS, and other things. Tourism is a fickle industry. Look what happened after Sept 2001 in NY. And last year's bombing in Bali. Cairns as I knew it, was heavily dependant on international tourism. It might be different now. I suspect the whole Cairns market has bigger cyclical swings than other places. It is not a big place for the number of visitors it receives.

I would not be buying a beachside unit off the plan with the aim of a capital gain. You might be very successful, and then again you might be waiting years for the next boom to just get even to cover costs. I'd go for a lower risk investment closer to home.

But, I'm out of touch with the current Cairns market. If you've done your research and are happy, then go for it.

All the best.

 

[Lincoln]

A few Thoughts!

Hello everyone,

I feel that a place like Cairns will only keep attracting tuorists. People work less hours than previousley and can keep in touch through communications while travelling......Transportation is cheaper and faster than ever....People will always want to kick back and relax.....Along with all the other travellers that have wound up deciding to reside in Cairns I particullary noticed quit a few Americans Proffesionals choosing Cairns as a permenant place of Residancy too.

There is a lot of Development just beginning in Cairns, and there is a lot of work in the construction industry garunteed for the next 5 years.

Right now Vacancy rates are extremely low....and the locals are kicking them self for not buying a couple of years ago...Interstate and OS investors who want some where to relax occasionally or maybe its not viable to purchase in thier place of residence resort to investing in cairns because of the convenience of a Tropically Holiday come Investment......

I would be sceptacle from buying off the plan and agree wit th advice of snapping up some old house on a decent sized block...
If the Trinity Park Development takes off....The property has already been purchased for 40 mil and Surveyance for dredging a new marina is under way...The locals off coarse want this develoment to go ahead and the Greens are going to have a tough battle stopping it! They are already there!

It will take around 5 years, but when Trinity Park recieves a Marina and a 80 mill Terrace Development the surrounding property wont need Cairns anymore...

just a few thoughts!

 

[tess32]

THANKS FOR THE REPLIES

I tend to agree with you about purchasing off the plan and have kept away from these types of investments, always knowing that all that fancy marketing.. well someone has to pay for it,

but in melbourne the people who bought off the plan when the city apartments first started going up have done very well and i scoffed at the prices initially and now have to eat my words.

however there is the problem of fickle tourist industry etc.. up north
as such i have changed my search to a house in palm cove or trinity beach. the resorts may or may not do well but i figure their presence will boost any existing property there, since there are only 120 houses in palm cove .....those blocks of land seem quite "precious"
tess

by the way cairns (and northern beaches)has definitely started to move ina big way how far? who knows?

 

[always_learning]

example house for $399K in Palm cove

Dont know how far from the beach, dont know how negotiatble the price is.

 

[Roz]

Hi Tess,
If you would like me to check out any house for you, or you need to know anything else about the area, just let me know I would be glad to help.
Roz