Change is the only constant in real estate: Terry Ryder

Change is the only constant in real estate: Terry Ryder
Change is the only constant in real estate: Terry Ryder

A feature of real estate’s recent history is the poor growth in sea change locations. A feature of the present is that many of these places are on the rise. A likely feature of the future is considerable price growth in Australian places where tourism is big.

Over the past five years coastal centres where the economy turns largely on tourism have struggled to deliver real estate growth. Many have gone backwards. In Queensland, the Gold Coast, Cairns and the Whitsundays have been among the worst of them.

The message has been that tourism economies are highly vulnerable to economic, political and natural disasters, both at home and abroad, as well as currency fluctuations and wild weather.

A tale of two northern cities illustrates how much things changed. Cairns was king in the 1980s when tourism was thriving and Japanese investors were the prime movers and shakers. Townsville down the road was the poor cousin.

That is a distant memory. Townsville, with its broadly diverse economy, has taken over as the capital of the north, while tourism-dependent Cairns has struggled. Townsville has delivered good real estate growth while Cairns has been one of the great under-achievers.

But change is the only constant in real estate. We’re now seeing evidence of those coastal markets rising again and Queensland property consultant Simon Pressley believes it’s a sign of major things to come.

Pressley, who runs 6 Point Property and the propertyology.com.au website, has published a research report which makes a strong case for a strong future for tourism-based locations. And it’s all to do with the Asian Century in which we are now immersed.

“I believe that Australia’s tourism industry will be the next sector to produce investment riches,” he says.

Pressley says the major force behind this is “the enormity of the rise of Asia’s middle class”.

“Asia is in the midst of urbanisation which has created unprecedented demand for ‘rocks and crops’ – the iron ore and coal to construct numerous new gigantic cities plus the agricultural products to support Asia’s new-found modern diet.

“Dinosaurs, koalas, crocodiles and casino chips will be Asia’s next interest in Australia. The numbers are already showing that Australia is high on their list of most desirable holiday destinations.”

Incomes are rising in nations such as Malaysia, India, China and Indonesia and our proximity to these expanding Asian markets heralds the beginning of a new era of tourism growth and investment opportunities.

Pressley says: “China has already overtaken the UK as our second highest source of tourists, behind only New Zealand. And we are only a couple of laps into this Asian Century marathon.”

His report includes some impressive numbers on the importance of tourism to the national economy: it adds $35 billion to GDP each year, employs 500,000 people and is on target to attract six million international tourists this financial year – spending, collectively, $102 billion.

We are now getting half a million Chinese visitors a year and the Tourism Forecasting Committee predicts one million per year will arrive by 2020.

“Asia’s middle class is rising faster than Gina Rinehart’s bank balance,” Pressley says.

It’s probably not coincidence that Chinese investors are becoming a major force in Australian residential property, spending increasingly large sums on real estate in Sydney, Melbourne and the Gold Coast.

Pressley also warns that investing in tourism-based economies can be a trap for Australian investors. “Tourism locations deliver one of the biggest sucker punches imaginable for the DIY property investor,” he says. “People confuse the emotion they feel when away relaxing with property market fundamentals.”

Very true – it’s why so many people have blown their savings on a high-rise apartment on the Gold Coast.

But the latest statistics show that the strongest growth in sales of residential property in Queensland are being seen in those coastal tourism-based markets, headed by Hervey Bay and the Sunshine Coast, but also including Cairns and the Gold Coast.

Keep watching this space.

Terry Ryder is the founder of hotspotting.com.au

Terry Ryder

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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