Market Report Northern Territory (June 2009)


Territory booming all over

Strong government and private investment in NT is fuelling the Top End property market's incredible gains.

Darwin's capital growth continues to defy gravity. "We've been going very strongly for five years now," notes Ryan O'Hanlon, CEO of the Real Estate Institute of NT (REINT). "There's been huge investment, huge population growth. Darwin's had a very, very tight rental market for a long time. Vacancy rates have been extremely low and rents have been very high."

The Top End's greatest strength - its connection to the resources industry - could also be seen as its greatest weakness. With all of the eggs currently in a basket marked 'Inpex', you wouldn't want the deal with the Japanese oil and gas giant to fall through. "If Inpex come to town there will probably be more resources [companies arriving]," says O'Hanlon. "We'll probably become a huge gas hub of Australia. There's a strong likelihood of that."

At the moment, in any case, supply can't keep up with demand anywhere in the Territory. From the waterfront suburbs of Darwin to Tenant Creek, from Palmerston to Alice Springs, everywhere is undersupplied. "The amount of homes that we can build compared to the increased population - there's still a deficit and there will be for the next 3-5 years," says O'Hanlon.

There are three main areas in which investors can do particularly well, according to O'Hanlon. First, the prestige suburbs near the water, such as Millner, Coconut Grove and Nightcliff. "And then there's the northern suburbs [the Casuarina region], where there's some reasonable deals still out there for [buyers]." Third, there's Palmerston, the booming population centre 20 minutes outside Darwin. "We are built on a peninsula, so the simple fact is we have to develop south, and Palmerston is probably the area where all our land is," O'Hanlon notes.

Real estate agents are salivating over the possibilities of the 1,000-lot Arafura Harbour development at East Point, but its outcome is still uncertain. O'Hanlon has the latest update: "The first draft has been knocked on the head," he says. "The developers have gone back to the plans and the ball's in their court, whether or not they look to redo their plans and reapply." Acknowledging that there are environmental concerns with the project, the REINT and its members are still hopeful the project will go ahead in some form. For investors, the good news is that Arafura is unlikely to lead to unit oversupply in the city, even given the development's size and scope.

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