Article supplied by Crawford Realty
Port Hedland and Newman poised for next boom as Roy Hill ramps up
The property markets in Port Hedland and Newman are poised for another boom in the coming months as the Pilbara’s latest mega project, the $10 billion Roy Hill iron ore mine, ramps up development, fuelling demand for accommodation in the project’s two key service centres.
70% owned by Gina Rinehart’s Hancock Prospecting and 30% owned by the project’s other equity partners POSCO, Marubeni and China Steel Corporation, the 55mtpa Roy Hill mine is located 115km north of Newman and will export ore out of Port Hedland. The project has an estimated 30 year life term.
Pilbara’s next infrastructure boom
Roy Hill requires significant infrastructure, encompassing a mining operation for iron ore crushing, screening and processing, stockpiling and train loading, a 344km heavy-haul railway from the mine site to Port Hedland, and a port facility at Port Hedland for receiving, stockpiling and screening.
Early works have already been completed such as clearing the centreline for the railway and dredging of the harbour, accommodation camps, airport, bulk earthworks for the mine processing plant and railway. An overall completion date has been set for mid 2015 when production is expected to commence.
This huge volume if infrastructure is creating several thousand temporary jobs, while the operation of the mine will require a workforce of 2,000 permanent employees.
Shortfall in mine camp capacity to drive demand for rental property
The project has estimated that up to 8,500 temporary jobs could be created during the construction phase. Many workers will be housed in the project’s multiple camps - four 300 room camps along the proposed rail track, a 2,000 room permanent mine accommodation village at the minesite and the 1,200 room Gateway Village in Port Hedland. But with camp capacity totalling 5,600, a potentially significant shortfall is likely, with housing in Newman and Port Hedland required to ‘fill the gap’.
Quality rental properties in the two towns are expected to once again be in high demand for executive level staff and families, quickly absorbing current supply and creating highly lucrative positive cash flow and capital growth opportunities for investors.
Worker numbers on the rise as construction activity escalates
Construction at the mine site has already begun with 1,700 workers from various contractors and subcontractors including Samsung, John Holland, BGC Contracting, Forge Group and NRW Holdings reportedly now on site – double the number of personnel onsite in December.
Works and worker numbers will accelerate over the next six to 12 months as these large scale contractors ramp up work on the mine and associated infrastructure. 1,200 workers will arrive onsite in February to begin construction on the huge processing facility.
Camps will benefit property market
Rather than stifling growth in the property market, the mining camps will actually support sustainable house price growth over the long term and decrease volatility and oversupply; a situation which has occurred from other projects when large numbers of temporary workers accommodated in towns have left en masse when the construction phase slows.
Government committed to sustainable growth
Adding to the industrial activity, the government’s mandate to transform the towns of Newman and Hedland into ‘Cities of the North’, undertaking extensive civil infrastructure upgrades and development. The attractive lifestyle and employment opportunities offered by the towns are expected to drive significant population increases.
Construction of a new Newman town centre (new supermarket and 42 shop complex) is due to start in February, helping to support and facilitate a population increase of 6,000 by the end of 2015.
South Hedland is currently undergoing a significant revitalisation, transforming the town centre with new residential and commercial buildings, leisure and entertainment facilities. Hedland’s population is projected to more than double by 2035.
Seasonal trough offering low cost market entry
The Pilbara market’s current seasonal trough in the lead up to the busy winter period is providing an opportune time to access the market at a lower entry point before Roy Hill activity really heats up.
Residential and commercial leasing enquiries are already on the rise and as more Roy Hill tenders are awarded, demand for worker housing is anticipated to increase.
Rinehart has also flagged an expansion of Roy Hill to include a second mine in the future, maintaining excellent the long term prospects for these areas
With well located, quality stock available at attractive prices and significant population increases on the back of rising industrial and civil activity, these towns are stand out investment opportunities for 2014.
For more information, please download a free positive property report.
The above information is supplied by Crawford Realty.
Disclaimer: while due care is taken, the viewpoints expressed by contributors or sponsors do not necessarily reflect the opinions of Your Investment Property.
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