YIKES! Keep an eye on CAIRNS!!

Cairns Market Update

This extract from HTW Month in Review July 2014 - Lazy Half Million gives an insight into the Cairns residential property market:

"Cairns
In July 2013 our thoughts were that a $500,000 property investment in Cairns would have secured a well located modern executive style suburban dwelling, or alternatively an above average quality apartment in the Cairns CBD, located on the mid to upper levels of a near new high rise unit development. Indeed the purchaser or investor at this price level would have found a large range of sectors, styles and locations available to choose from. However it would have been hard to spend $500,000 on a new apartment due to the prevailing lack of unit construction. Since July 2013 the Cairns market has been gaining momentum and entered the ?start of recovery? phase. The market is seeing much stronger buyer demand evident and sales activity has lifted significantly. Properties are selling faster, stock is depleting and previously unsaleable stock is starting to move. The Northern Beaches market has also been stimulated by the proposed $8 billion Aquis resort development, which although still prospective at this stage, is nevertheless generating additional market activity and increased prices in its immediate vicinity. Prices have typically increased over the last twelve months in the more popular suburbs, but there has
been little change in other areas and overall price movements have been relatively modest. While the range of choice may be a little more limited, $500,000 would have very similar purchasing power in today?s market as it did in July 2013. The $500,000 mark in the Cairns market is relative to the current median price level of around $363,000 for an established house (compared to $362,000 as at July 2013) and $193,000 for a unit compared to $191,000 in July 2013. Our prognosis is for the market to continue its consolidation and for the recovery to become more widespread, as the market continues its progression from a buyer?s market to a balance of power between buyers and sellers. For this reason the potential is there at present for astute investment into the Cairns market."

Their full report is located here:http://www.htw.com.au/Downloads/Files/260-Month-in-Review-July-2014.pdf


Also, this latest Cairns Watch report by Herron Todd White gives an overall picture of the economy of the Cairns Region. Keep in mind that the data is based on a very broad region including Cairns, Douglas, Cassowary Coast and Tablelands: http://www.cairnswatch.com.au/uploads/uploads/201406fullreport.pdf


Cheers

Jen
 
The Cairns economy still presents a depressing picture. The local economy is still struggling with many empty businesses and shops going belly up. The job losses from Liberal Government austerity programs have hit the region hard. A colleague of mine up here the other week from Brisbane said he'd never seen the CBD so dead. Infrastructure works that have disrupted business in the CBD have also made it very difficult for some city traders to continue. Bottom line is that unemployment figures still do not make Cairns an attractive proposition for property investment at this point.
 
The Cairns economy still presents a depressing picture. The local economy is still struggling with many empty businesses and shops going belly up. The job losses from Liberal Government austerity programs have hit the region hard. A colleague of mine up here the other week from Brisbane said he'd never seen the CBD so dead. Infrastructure works that have disrupted business in the CBD have also made it very difficult for some city traders to continue. Bottom line is that unemployment figures still do not make Cairns an attractive proposition for property investment at this point.
Doozer, could you please back your comments up with a few facts or data? At this stage they are your assertions and personal observations, which I and many others would contest, including HTW.

I guess it also comes down to a matter of perspective. Plenty of economic commentators are more negative than property investors focussed on a specific property market. My understanding is that local observations re. the economy can often vary from what is actually happening in the property market. Personally, I would prefer to rely on what the data says is happening.

Cheers

Jen
 
The Cairns economy still presents a depressing picture. The local economy is still struggling with many empty businesses and shops going belly up. The job losses from Liberal Government austerity programs have hit the region hard. A colleague of mine up here the other week from Brisbane said he'd never seen the CBD so dead. Infrastructure works that have disrupted business in the CBD have also made it very difficult for some city traders to continue. Bottom line is that unemployment figures still do not make Cairns an attractive proposition for property investment at this point.
True. What is a big concern is participation rates have reduced a good 5-7% over the last 3 years. The government is certainly inexperienced.

The housing market should improve as Sydney roars ahead but the same could be said of anywhere else.

Why I came here is they are planning a 1500 room apartment complex in the CBD for Singapore buyers. Cairns does not seem to understand the concept of over supply. We have weak demand for retail space but they build more retail space, we have weakish demand for apartments so this could be detrimental to existing apartment owners.

Last year we had a few suburbs do very well, 15% gains while all others stagnated and 30% property sold for a loss (units?). Palm Cove ranks 7th nationwide in mortgage defaults. So tale of two cities..or economies. A lot of money in Australia and some will find its home here but until the holding costs are reduced and employment increased any gains may well be short lived or will be behind others.

If you want to review Cairns compare to Darwin in insurance, rates, employment, participation etc. Cairns is under performing but not sure what will turn it around. AQUIS may happen but many question the viability of the project. So any gains may be brief, Boom and bust once again.
 
True. What is a big concern is participation rates have reduced a good 5-7% over the last 3 years. The government is certainly inexperienced.

The housing market should improve as Sydney roars ahead but the same could be said of anywhere else.

Why I came here is they are planning a 1500 room apartment complex in the CBD for Singapore buyers. Cairns does not seem to understand the concept of over supply. We have weak demand for retail space but they build more retail space, we have weakish demand for apartments so this could be detrimental to existing apartment owners.

Last year we had a few suburbs do very well, 15% gains while all others stagnated and 30% property sold for a loss (units?). Palm Cove ranks 7th nationwide in mortgage defaults. So tale of two cities..or economies. A lot of money in Australia and some will find its home here but until the holding costs are reduced and employment increased any gains may well be short lived or will be behind others.

If you want to review Cairns compare to Darwin in insurance, rates, employment, participation etc. Cairns is under performing but not sure what will turn it around. AQUIS may happen but many question the viability of the project. So any gains may be brief, Boom and bust once again.
Surely the timeframe of AQUIS is a big factor. If building the project runs for almost 10 years with a massive labour force required then you would expect a big jump to start with everyone trying to get into the market. Then consistent growth until completion.
At a minimum the low vacancy rate and massive influx of employees will see rents skyrocket. Especially since the employee accomm will now be sourced from the existing supply rather than building new accomm as was orignally proposed.
 
Hi Everyone

If you are interested in a more fine-grained analysis of unemployment rates in the Cairns region, my research suggests that the suburb of Woree is a major contributor, with a 12% unemployment rate (2011) the highest in the region. I'm not exactly sure why or how, but have found that this area happens to have a very high concentration of motels, cabins and caravan parks. Could this have an influence?

For your ref, I'm using: http://atlas.id.com.au/cairns#MapNo...icAlias=dominant-dwelling-structure&year=2011.

I accept that the data is old, but still find it interesting.

In a nutshell, when you isolate specific suburbs, it seems that the unemployment rate across the region may actually be exaggerated by some very specific areas. For example, if you isolate all of the Northern suburbs, a very different picture exists.

Your thoughts and comments on this would be appreciated.

Cheers

Jen
 
There are some great links in the thread and its got me even more excited that this could be end in a big pay day if it goes ahead.

I've got 2 IP's in Cairns which I've had for a number of years now but I'm hoping this goes ahead and kicks things up a notch or 2.

Do you think this will affect Cairns city as well as the suburbs closer to Yorkeys Knob?
 
By no means is this research but a couple of different mates have just sold their houses in Bentley Park and Kewarra Beach. One got the full asking price and another at $10k more than expected from an 'offers over listing'.

Both were very happy with the prices and ease of sale. Also there was a mention of the agency close to doubling their previous high for sales for the month.

The vibe is definitely a little bit different than a few years ago.
 
The Cairns market

The outcome of the proposed Aquis development is yet to be determined. The reality is that whether or not it is approved is no predictor of it going ahead or its impact on the market. Nobody can make a call on these things. However, the Cairns property market does have a life of its own, and plenty of people are happy to comment on it. The following threads illustrate the divide in sentiment regarding the current state of the market:


From my perspective, and historically speaking, Cairns has never been a great investment market due to its reliance on tourism. Personally, I have been an observer of the market since the 1980's when Daikyo put it and Port Douglas on the international map. Since this time, the reality is that the region has been an underperformer for many years, and until recently would never have been considered as a potential investor market.

However, owner occupiers and re-locators appear to make up an increasingly significant part of the buyer market. My experience is that those who can no longer afford to invest in Southern markets are looking towards the North East coast of Queensland. This appears to be a combination of excessive property values in some areas, and an associated lack of affordability, combined with the lower values and lifestyle factors on offer. To add to this, Cairns' current position and affordability in relation to Southern cities seems to be making it relatively appealing to investors.

Cheers

Jen
(Disclaimer: these are my own views, and not to be taken as investment advice)
 
Yes, I saw the article and wondered where Ryder got his information from. Personally I think the title is misleading, and plenty people are jumping to conclusions. I visited the Aquis office in Cairns over the weekend to see what is happening.

What's actually fallen through is the Cairns Casino takeover bid, not the proposed Aquis development. My understanding is that it didn't get through probity before the timeframe for the takeover bid lapsed/was not extended. The Cairns Casino bid was originally a strategic move and a means to an end. The intention was to:
a. shore up the Licence, so that it could be used across the Cairns Casino site and the proposed Aquis Casino site, in the event that Aquis does not get granted a standalone Licence via the Qld governments Integrated Resorts process;
b. float it on the stock exchange to raise the necessary funds for the Aquis development to get moving;
c. use it to start marketing the region and the Aquis development to Chinese visitors;
d. develop processes and train staff required for the opening of the Aquis development.

The Canberra Casino takeover was a small component of the original Cairns Casino takeover bid. It was not an alternative investment, as the size of it as an investment is only a fraction of the size of the Cairns Casino as an investment. Also, the probity process in ACT is obviously smoother than that in QLD.

The reality is that they have been going through planning and approvals processes for a long time now, and it is proving to be a lot more complex than what they had hoped for. And that pretty much sums it up in my view. It's a setback for them, and they need to review their options and the way forward. They have extended their option to purchase the Yorkeys site in recognition of the complexity of the approvals process.

This is the link to the open letter from Tony Fung:http://aquiscasino.com/open-letter-to-the-cairns-community/#cpage-3

Anyway, as I've said before, the Cairns market is moving regardless of all of the above. I'm still seeing multiple offers on almost everything I'm interested in, jumps in prices, and reports of South East Queensland BA's also active in the region.

Cheers

Jen
 
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