Mining today, what tomorrow?
International concern over Queensland’s environmental record and the effect it could have on tourism begs the question: is the state property market destined to become reliant solely on the mining sector?
Townsville residents will remember with sadness the day they lost Tim’s Surf and Turf. The iconic restaurant used to serve 1kg steaks on the city’s waterfront but was shut down in 2007 to make way for a 20-storey international hotel. City officials told families who had been going there for years that this was an exciting sign of progress for tourism. They’re not saying that anymore.
Tourism and Events Queensland has reported in its regional snapshot of the city that total visits to Townsville over 2012 were down 2% from 2011 – a year when Queensland frequently made the news for natural disasters. Within that fall, there were 11% less international tourists than what the city usually gets in an average year.
And Townsville is just one example. Across Queensland a number of tourist markets are struggling. In the Gold and Sunshine Coasts, as well as in Cairns, tourists’ total dollar contributions to the economy are below long-term averages, a startling reality for an industry that generates around 6% of Queensland’s Gross State Product and accounts for 12.9% of all registered businesses in the state.
“Queensland continues to recover but it isn’t well spread. Tourismdependent areas continue to languish”
Tourism also has the benefit of being a sustainable industry. Unlike mining, tourism does not deal in non-renewable resources and can continue to generate money for the economy, provided the environment remains intact; yet that too is changing.
In June, a group of more than 150 scientists from 33 institutions around the world signed a statement detailing how the mining and gas boom along the Queensland state coast was hastening degradation to the Great Barrier Reef, one of the state’s biggest tourism generators.
This followed a Unesco report in March that found 43 development proposals in the vicinity of the huge reef were under assessment and that the federal and state governments had failed to improve water quality in the area. At the time, ecologist Hugh Possingham told ABC that more than half of the reef ’s coral had been degraded over the last 27 years.
“This is just going to accelerate that, so we should really be doing the reverse,” he said.
Unesco pointed out that ports on the Barrier Reef coast currently export 156 million tons of coal each year, with plans to expand that within the next decade. By 2020 an estimated 7,000 ships will traverse the reef every year, up from 5,000 in 2010.
Tourism and property
That rampant growth in mining activity has had an effect on the environment is hardly deniable, but it begs the question whether the same growth could be at the expense of tourism. And this is where the property market also gets interesting. The state’s best-performing property markets at the moment are almost exclusively mining-affected areas, while the worst performers are in markets where the local economy depends on tourism.
“Queensland continues to recover strongly… but it isn’t well spread. Tourism-dependent areas of the state, such as the Gold Coast and Far North Queensland, continue to languish,” claims Deloitte Access Economics’ Business Outlook report.
Data from the Real Estate Institute of Queensland confirms this, with March year figures showing house prices fell in four of the 12 regions it researches. In two of those four, tourism is a major component of the economy.
BIS Shrapnel senior residential manager Angie Zigomanis points out that property markets in touristaffected economies such as Townsville, Cairns and the Gold Coast may yet recover, but not because of tourism.
“With both Townsville and Cairns offering services to [a range of] mining projects, as well as a base for employees in and out of the projects, population growth should benefit with a rising shortage of dwellings emerging,” he says.
He adds that Gold Coast property may start to bounce back, thanks to its great appeal as a home for fly-in fly-out mining workers.
Suburb To Watch
Investors are often warned to steer clear of one-industry towns, and Airlie Beach, propped up almost solely by tourism, would certainly appear to fi t this category. However, the sheer volume of tourists results in a property market not short of good buying opportunities.
After large price falls over the last three years, Airlie’s unit market is slowly returning to life. RP Data May fi gures show average rental yields above 7%. That’s a good cash flow proposition, considering the median unit price of $315,000 is high for a regional Queensland area.
One could speculate about the area’s long-term future – relying on an industry that has not fared well since the GFC – but that would ignore its staggering tourism potential as gateway to Queensland’s popular Whitsundays area with a picture-perfect tropical setting and all-year good weather.
Amenities are well developed, with an abundance of shops and restaurants, parks and open spaces in easy reach. It is also a short drive from Proserpine Airport, which connects to multiple locations around Australia.
Airlie Beach best suits investors in holiday rentals but also has a small number of fly-in fl y-out workers from mining jobs in the Queensland interior who prefer to live by the beach.
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