Market Update
Market Update
Cairns ready to ride a tidal wave of prosperity
Cairns looks ready to make a strong comeback in its economy and property market
Cairns ready to ride a tidal wave of prosperity
In the wake of the GFC and Cyclone Yasi, Cairns is poised for massive economic growth, according to Cairns property expert Gerard Obersky.
Long-time friend of McCarthy Group and Cairns property expert, Gerard Obersky, was in Sydney recently to brief us on the latest developments in Cairns, and the outlook for this lighthouse city in far north Queensland. The news is overwhelmingly positive, and the consensus view emerging is that Cairns is poised for a three to five year run of unparalleled prosperity. This is good news for the stricken families up north, and welcome confirmation for McCarthy Group investors of its potential as a ‘Hot Spot’.
There is a truism in property investment that it is not a get-rich-quick scheme, and that those investors who do well, are in it for the long haul, and don’t sell up when storm clouds appear on the horizon.
Nowhere is this more the applicable than in Cairns, which suffered from the GFC’s effect on tourism and other economic activity, and now from the cyclone that tore through its outskirts.
Always a person bursting with optimism, Gerard Obersky could not conceal his delight as he took us through Cairns’ unfolding economic recovery, leaving piles of independent reports and evidence in support of his case.
The next three to five years will provide the equity growth and rental increases that will more than repay the patience of those who saw the beauty and economic promise of Cairns and invested there,” said Gerard.
Gerard is enthusiastic about Cairns as an investment opportunity because:
The population is growing rapidly.
- Cairns is enjoying annual growth well above the national average – in 2000, the population of Cairns was 130,000. Today it is over 164,000.
- Far north Queensland is the second-fastest growing region in all Australia.
The rental market is tilting in favour of landlords.
- Vacancy rates are trending down, with houses at 3.3% and units at 4.9% in December 2010.
- Building approvals are very low, with only 43 houses and no new units approved in November 2010.
- Unemployment has halved post-GFC, and is now slightly above the national average.
- Ad a result of these factors, the Herron Todd White Cairns Watch report anticipates that the rental market will be “in stress” by the end of 2011, driving rental prices higher.
Tourism is recovering strongly.
- Domestic flight arrivals are setting new records.
- International arrivals are almost back to where they were pre-GFC, and there are new international air schedules from Japan and Hong Kong
- 2010 enjoyed a 24.8% increase in international arrivals over 2009 levels.
- The recovery in tourism spreads straight into retail, accommodation and restaurants, and then filters throughout the local economy.
The reconstruction investment and effort after Cyclone Yasi benefits the economy.
Remember Cyclone Larry?” asks Gerard. “Over $2.4 billion was poured into reconstruction and recovery after that, setting Cairns up for years of strong growth.”
Cyclone Yasi will do exactly the same,” he says. In its wake there is huge demand for materials and workers to rebuild houses, businesses, roads and other infrastructure.
Even the road freight costs to Cairns have doubled, with so much freight heading north, and trucks heading home empty.
Clearly, there is a lot of positive news for Cairns. There are other significant projects already underway in Cairns, showing that the ‘big-time investors’ are already confident, including:
- A new $200 million air terminal
- A new cruise ship terminal
- Ten major conventions already booked over the next few years, with more in the wings
- Major developments in mining, specifically at Consolidated Tin Mines
- Plans to upgrade the Bruce Highway and the sealing of 155km of the Hann Highway
- A 10-point plan to establish a $240 million cultural precinct
- The major maritime influence of Cairns as a seaport, including fishing, the naval base, super-yachts, and now the second-busiest cruise ship location, after Sydney
- Internationally recognised education and health facilities.
We are seeing a gathering of fundamental influences that will underpin Cairns’ growth for years to come. This is great news for our clients who are already invested there.
At McCarthy Group we are delighted with the overwhelmingly positive messages delivered to us by Gerard Obersky. We have wasted no time in passing these on to you as our valued clients, so that you can either be encouraged and confident as a current investor, or expand your own research if you sense a big opportunity ahead.
If you would like to have further information on the outlook for Cairns, or meet with us to discuss your investment portfolio in the light of the latest Cairns outlook, please call me or one of our team on (02) 9687 3601.
McCarthy Group
For more info:
http://www.mccarthygroup.com.au/cairnsready.html
Cairns looks ready to make a strong comeback in its economy and property market
Having been hit hard by the global financial crisis, which reduced overseas tourism on which its depends, Cairns has shown signs of economic revival and unemployment in the region has halved.
In the 1980s, Cairns was one of the stars in the Australian property firmament, boosted by surging tourism and investment from Japan. Those glory days have long since faded and Cairns has been overtaken by Townsville as the key city in North Queensland.
However, there are signs Cairns is ready to challenge again.
Figures published recently indicate Cairns is one of Queensland's fastest-growing regions.
Nearly 5200 people moved to Cairns in the 2009 fiscal year, bringing its population to 164,356.
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Related Coverage
- Cut-price train fare to lure tourists Courier Mail, 1 Apr 2011
- Ticket to ride for overseas visitors The Australian, 31 Mar 2011
- Tourism up, and it's all thanks to Oprah The Australian, 23 Mar 2011
- Don't forget toruism, says veteran The Australian, 14 Feb 2011
- Cairns now facing a flood threat The Daily Telegraph, 4 Feb 2011
End of sidebar. Return to start of sidebar.
The 3.2 per cent growth put Cairns among the top four fastest-growing regions in the state, after Ipswich, Moreton Bay and the Fraser Coast.
According to Tourism Australia, the Cairns region is the fourth-most popular destination for international tourists in Australia after Sydney, Melbourne and Brisbane.
It is a popular travel destination for foreign tourists because of its tropical climate and proximity to attractions such as the Great Barrier Reef, Daintree National Park and Cape Tribulation.
Cairns has Australia's seventh-busiest domestic airport and sixth-busiest international airport.
A new $200 million terminal is now open and tourist numbers are improving. The latest figures show international arrivals at Cairns airport are up 30 per cent, with the number of Japanese visits increasing 45 per cent.
Improvements in the economy of Cairns and the far north show in unemployment figures.
The jobless rate for the region in September 2009 was 13.8 per cent but by November last year it was down to 6.8 per cent -- still above the national average of 5.2 per cent but trending in the right direction.
Thousands of jobs that were lost during the global crisis have reappeared.
The upswing has been buoyed by growth in the tourism sector and flow-on booms in related areas such as retail.
A new carpark at Cairns Base Hospital was opened in November as part of a $450m upgrade.
The old carpark will close to make way for major redevelopment.
The first stage of this will be construction of the new clinical services building, due for completion in 2013.
At the same time there are hopes for a second public hospital in Cairns, after an announcement in December that 20ha had been bought by the state government for "future health services".
A 10-point plan to establish the $240m Cairns cultural precinct has been established by Cairns Regional Council. Councillors have agreed to an action plan as the next stage towards construction at Trinity Wharf late this year.
The plan to upgrade an alternative route to the frequently flooded Bruce Highway has been hailed as "a multi-million-dollar lifeline for the far north" in the wet season.
Although it will take six years to complete, the sealing of the 155km stretch of the inland Hann Highway has been labelled "a vital economic saviour for the region".
The far north is crippled financially each wet season when flooding cuts the Bruce Highway for days at a time.
Meanwhile, there have been several positive events for tourism in Cairns.
Five hundred extra tourists a week could pass through the airport as a result of Cathay Pacific upgrading its Hong Kong flight to a daily service late last year.
Also, in November it was revealed that Japanese officials were pushing for a third direct aviation link between Japan and Cairns.
A delegation from Nagoya has been to Cairns, Sydney and Brisbane to talk about reinstating flights between the far north and their city.
At the moment, there are direct flights from Cairns to Osaka and Narita.
Another key event for tourism in November was the opening of a cruise ship terminal and the arrival of the first cruise vessel. The Silver Shadow docked at the new facility with 382 passengers and 276 crew members.
Growing income from conventions is in prospect.
Ten international conventions are expected to bring 8500 delegates spending $40m in Cairns over the next three years.
This follows a visit by the decision-makers of 12 prestigious conventions to the region, hosted by the Cairns Convention Centre.
The resources sector is not a major part of the Cairns economy, but a tin mine is being developed near the city.
Cairns-based Consolidated Tin Mines is making strong progress towards the start of its large-scale mining operation at Mount Garnet. The $125 million mine is due to start milling in 2013.
Managing director Ralph De Lacey says the mine has a potential 30-year lifespan and, based on projections, would produce one million tonnes of ore which would be processed into 5000 tonnes of concentrate, worth conservatively $100m a year.
Terry Ryder is the founder of hotspotting.com.au
The Australian - January 27, 2011 12:00AM
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