Mackay, Central QLD

This coastal town is located about half way between Cairns & Brisbane, originally a sugar cane town, Mackay now enjoys the diverse benefits of other industries supporting it. Only a 1.5 hour drive from Airlie Beach, the gateway to the Whitsunday Islands, and a 2 hour drive to the thriving hub of the mining activities of the Northern end of the Bowen basin.

Only few regions in the mining industry get to identify themselves, as Bernard Salt would classify, a muscle town. That is, the strength of the industries and services of the town are vital to the efficiency and productivity of the enormous minerals and resources sector that is rapidly expanding all throughout regional QLD. Separating themselves from a “motel town” is something that takes decades of infrastructure investment and smart governing on a local and state level.

The Mackay regional council has a population of just over 120,000 people. With unprecedented growth expected over the next 20 years. It is poised to be one of the largest growth regions by in QLD over the next decade. Mainly attributed to the benefits of the mining industry, people will choose to call Mackay home rather than living in a “motel town” closer to work where lifestyle, education and diversified employment are not comparable to that of a regional centre in many ways.

These factors make what I believe to be a property investor’s haven, especially considering the performance results of many areas across Australia as of late. Mackay is further developing itself as a vital muscle town to a diverse range of expanding, prosperous industries. With new shopping centres opening and expanding, along with educational opportunities, the current economic climate in Mackay is upbeat and making a strong progression towards its goal of being one of the highest growth regions in QLD over the coming decades. In 2009-2010 The Mackay region (Mackay-Isaac-Whitsundays) generated over $18.1 billion in economic value.

In the below Development Register from REDC, there is an outstanding amount of private and government investment to come in the region of Mackay and its surrounds. It appears that a significant amount of development is planned and occurring to achieve the predicted growth levels. The main factor that will hold communities such as Mackay, Emerald & Gladstone back is the slow release of land and developments which will hinder the population growth. Fortunately enough, as is shown below, the Mackay Regional Council are extremely co-operative in ensuring this problem does not exist.

Whilst you could assume that such aggressive levels of land releases could hinder capital growth in a region like Mackay, my opinion is that this won’t be the case. Mackay will continue to have a sustained, long term future when it comes to housing. Capital growth will be the envy of many property investors around Australia, whilst rental yields should get stronger. As an investor, you need to recognise the importance of a region like Mackay and invest for its security and long term growth that it will provide. It does not provide an investor with the rental yields seen further inland like Moranbah and Dysart, if it did, you would not see so much economic and infrastructure development that helps sustain and take Mackay in to the future. Muscle towns must provide affordable, quality housing to people, that’s why it’s a muscle town.

People use, and will continue to use Mackay as a home town. Many will bus or drive in from the mines in the north of the Bowen basin for their shifts, and returning home to spend their pay cheques. As Mackay provides a lot of the trades, services and equipment to the Northern Bowen Basin, the jobs in this sector will grow massively in the coming years, providing direct employment within the mining industry whilst living and working in MacKay. Couple this along with enormous external economic contributions that the mining sector provide to the rest of the economy, it is not hard to see how and why Mackay is poised for unprecedented growth in the coming decades.

As a property investor, I take the view that Mackay is a place for long term buying in order to capitalise on continuous growth in housing prices. Whilst holding property there, you should find yourself fairly close to being neutrally geared (after tax) at capital value for the first couple of years until CPI takes you into positively geared territory. Whilst on a local level, “rents are rising dramatically”, this seems to be at a more subdued pace than other mining regions. However, over the next 5 years as we see many of the below projects begin construction; a large reliance will fall on Mackay to provide the goods and services to make all this possible.

When it comes to areas for investing, the Northern side of Mackay is where a lot of the current development is occurring, with a little bit to the west. However, for a simplistic approach, I believe that the Northern beaches areas and towards the CBD will be the most popular places to live as they provide proximity to all Mackay has to offer with the beach lifestyle to the North. However, I don’t think that capital growth will differ that much within the different regions as the population growth will put significant demand on the housing market and no matter what property you have, there will be a need for it. 

MACKAY POPULATION GROWTH

 MACKAY REGION POPULATION GROWTH

DEVELOPMENT REGISTER (www.redc.com.au)

PROJECT NAME	DETAILS	PROPONENT	EST. COST (M)	TIMING		STATUS
AGRIBUSINESS
Cogeneration plant	Construction of a 36MW cogeneration plant at racecourse Mill	Mackay Sugar Pty Ltd	$120	10’-13’		In progress
Ethanol Project	Installation of a 600ML pa fuel ethanol plant at racecourse mill	Mackay Sugar	$85	2015 (completion)		Not started
Sarina Distillery Upgrade	Fuel-grade ethanol production to be upgraded from 38 million litres to 60m litres a year at Sucragen distillery Sarina	Conneq Infrastructure Services Aust	$18	08-09		completed
TOTAL  AGRIBUSINESS			$223
COMMUNITY INFRASTRUCTURE
Botanic Gardens Upgrade	Redevelopment of Mackay Botanical Gardens including developments of an outdoor performance centre	Mackay regional council	$13	11’-12’		Not started
Mackay Base Hospital Redevelopment	New 3 story hospital on current site, able to accommodate up to 318 new beds. New emergency and outpatients departments, renal support services, day oncology, dental services unit, birthing and delivery suites, special care nursery, ICU.	QLD health	$405	09-13		In progress
Mackay Showgrounds Upgrade	New and improved facilites at showground	Mackay Show Assoc.	$10	2011		Not started
Mackay Sports stadium	Sports stadium for Rugby League games. The stadium will hold 15,000 spectators	Woollam Constructions	$11	07-11		In progress
Ooralea Racetrack Redevelopment	Redevelopment of Racecourse into a top-class racing and community venue	Mackay Turf Club	$18			Not started
COMMUNITY INF. TOTAL			$457
CONSTRUCTION
Andergrove Urban Development Area	Up to 180 lots on site, quality affordable housing	Urban Land Development Authority	$4.2		11’-12’	In Progress
Andergrove UDA – stages 2-3	Development approval for 41 residential lots on Bedford road, Andergrove	ULDA	$4.8		2010	Not started
Blacks beach Cove	Housing development in Blacks beach. 850 site, 350 developed so far	Private developer	$60		09’- current	In Progress
Breezes Retirement Resort	Residents community centre, over 50’s lifestyle village with 221 two and three bed villas. Stage 1 = 206 homes and 11 apartment	Becton Property Group			07-11	In Progress
Bunnings Warehouse	Proposed hardware store for Holts Road, Richmond	Bunnings Warehouse			2010	Not started
East Point	Integrated development including an international standard hotel, apartment complex, resort villas, retirement villas, retirement village, shopping village, residential lots and a cultural centre – 250 rooms	Eastpoint Mackay Pty Ltd	$150		12’-20’	In Progress
Glenrowan residential estate	340 lots, built in stages, stage 1 and 3A developed and sold with houses built. AV Jennings now doing balance of stages 2-9	AV JENNINGS Mackay Pty Ltd	$34		07-current	In Progress
Inspire CBD	Office precinct, retail. 149 room hotel and 130 residential unit and townhouse development	Pointglen developments	$170			Not started
Leichardt on river	11 story mixed use development comprising dual key, residential apartments and restaurants – 168 rooms total	Martinek Pty Ltd	$35			Not started
Nabilla meadows	500 lot subdivision at Marian	Pointglen developments	$20		10’	In Progress
NB services	5 warehouses and offices for “service” industry use	Gros-Dubois	$2.5			Not started
Pacific Parks Estate	9 stage development with parklands, open spaces, rec facilities, high and low density	Pacific property developers			07-10’	In progress
Parklands Estate	Refurbishment and development of buildings to accommodate mixed residential, commercial and retail uses	Nebo Rd Pty Ltd	$102			Not started
Pioneer lakes	Stages 1-8 33 residential lots with further exoansion to include another 170 lots. Stage seven will include 173 retirement villas. Also industrial and childcare	Pioneer lakes pty ltd			09	In progress
Plantation Palms	2000 residential lot estate in the Northern beaches. 60% parkland.	Xcel properties	$1,500		07-20’	In progress
Richmond Hills	500 lot residential subdivision	Pointglen developments	$200			Not started
Settlers Rise	100hectare masterplanned 12 stage community	Cougar Development	$120		2011-	In progress
Shoal Point Waters	Small tourism precinct with commercial facilites, high & low density residential developments. Over 1000 alotments	Pointglen developments	$600		01’-11	In progress
The Beach	Four stage residential development	Pacific coast developments	$200		07’-	In Progress
The Pier	2 residential towers, restaurants & Boardwalk. 54 apartments		$87		07-	In Progress
The Waters @ Ooralea	236ha housing estate including 250 retirement dwellings. 10,000sqm commercial and 2321 house and unit sites	Cougar developments	$80			In Progress
Town beach Dev.	Tourism/res. 266 units, 15 houses, retail	Pointglen dev.	$150			Not started
Universal Self Storage	Self storage facility	Pilot Group	$4			Not started
WaterFront Landing	9 story residential complex. 41 units	JD Dodds	$35			Not started
TOTAL CONSTRUCT			$3,558.5
MANUFACTURING/INDUSTRY
Evolution Paget Industrial Estate	242,073 SQM industrial. 41 lots. High impact industry zoning	Mirvac & ICPS	$200		08’ -	In Progress
Harbour City Central	32 Industrial sheds/office development	Res. Dev. Mackay	$20		08-11	In Progress
Industroplex	Industrial Estate stages 5 and 6	FKP Property	$40		11-12’	Not started
South Mackay Industrial Estate	Major industrial estate	QLD dept infrastructure and planning	$7		08’-	In Progress
TOTAL MAN./IND.			$267
PORTS (AIR & SEA)
Dalrymple Bay Coal Terminal 9X	Construction of another 2 berths, 2 rail recieveal routes and new stockyards	North QLD Bulk Ports Corporation				Not Started
Dalrymple Bay Coal Terminal 8X	Work on existing yards	NQBPC	$1,000		09-18’	Not started
Dudgeon Point Coal Terminals	3 new coal terminals to join Dalrymple bay and hay point. Expanded port will export between 250 – 300 mtpa	NQBPC	$8,000		2013	Not started
Hay point coal terminal expansion	Port capacity to increase from 44mtpa to 55mtpa	BHP/Mitsubishi alliance	$2,340			In progress
Mackay marina expansion stage 4	Stage 4 planned with approximately 50 more berths	Port Binnli	$8		2010-	Not started
Mackay Airport upgrade	Terminal and runway revamp/upgrade	Mackay Airport	$10		10-100’	Completed
TOTAL PORTS			$11,358
PROFFESIONAL SERVICES
Dentist Training facility	Dental training facility and refurbishment of a 32 unti comples for student accomodation.	James Cool University	$2.57			Not Started
Emmanual Catholic Primary School Expansion	Classrooms and school hall expansions	ECPC	$2.8		09-11	In Progress
GP Super Clinic	Construction of GP super clinic	Aust. Govt.	$7			Not started
Mackay Christian College Campus Dev.	Development of a new primary school campus and a mutli purpose hall	Mackay Christian College	$15		09-11	In Progress
Mackay GP superclinic	Construction of new GP super clinic with 12 rooms, pharmacy, chiropractor, dentist etc	Dr John Mcintosh			10-11	In progress
Mater Hospital Clinical training facility	Construction and fitout of a new 2 story clinical training facility  at the Mater Hospital	James Cook University	$2.6			Not started
SMART centre	Sustainable Mining Automation and Robotic Technologies Centre	CQ University	$42		2012	Not Started
TAFE training centre	Engineering College for apprentices and adult learners	TAFE	$32.5		2012	Not Started
TOTAL PROFFESIONAL			$104.47
RETAIL
Bunnings Warehouse	New bunnings warehouse approved	Wesfarmers	$30			Not started
Canelands Central Expansion	Expansion of existing major retail centre & MYER. From 38,000 SQM to 66,000 SQM.	Lend Lease	$220			In Progress
Dan Murphy Mt Pleasant	Expansion of Mt Pleasant Tavern to include Dan murphy’s store	Dan Murphy	$5			Not started
Homemaker centre	Bulky Goods Homemaker centre	Lancini group	$60			Not started
Marian Town centre	3200sqm supermarket, 1500sqm specialty stores, 36 lot residential subdivision	Tipalea Partners	$38			Not started
Mt Pleasant shopping centre	Expansion to mount pleasan shopping centre	Colonial First State	$50			Not started
Northern beaches central expansion	Stage 2. Woolworths, McDonalds, 17 specialty stores, 3 commercial suites. Bilo will change to coles.	Stockwell Building and Development	$250			In Progress
Orchid valey commercial	Retail convenience centre in Marian	Equitrust	$20			Not Started
The Avenue	Mixed use development	Woollam	$10			In Progress
TOTAL RETAIL			$683
ROADS	Mackay Regional Council & dept. main roads		$407.3
Tourism
Aus south sea islander cultural centre	Diversified tourism attractions including visitor info centre	Mackay Tourism	$6.9			Not Started
Clarion Hotel extension	50 rooms	Clarion hotel Mackay				Not started
Eungalla EDGE Project	Eco resort	Mackay Tourism	$13.2			Not started
Harrup Park country club	70-100 room proposed accomodation	HPCC	$10			Not started
The Beacon	12 story development with 23 x 3 bed apartments	Port Binnli	$30			Not started
TOTAL TOURISM			$60.1
MINING – Incorporating Mackay, Isaac & Whitsunday Regional Councils
Anthony Molybdenum Open Cut mine	Isaac regional Council (IRC)	Zamia metals	$200		2015	Not started
Broadmeadow Underground expansion	IRC	BMA	$850		2013	Not Started
Byerwen Open Cut	IRC – 10mtpa coking coal	Qcoal	$1,500		2013	Not started
Charmichael coal mine – Rail line	IRC – From Charmichle mine to Moranbah to join Goonyella rail system to Hay point.	Adani Mining	$6,900		11-14	Not started
Charmichael Open Cut mine	IRC – up to 60M thermal coal	Adani Mining	$4,100		2014	Not started
Caval ridge mine	IRC – Open cut coal mine (5.5mtpa)	BMA	$4,000		2014	Not started
Codrilla Open Cut mine	IRC - 3.2mtpa PCI & thermal coal	Macarthur Coal	$250			Not started
Daunia Coal Project	IRC – new open cut coking coal and PCI. (4.5mtpa)	BMA	$1,600			Not started
Drake Mine	WRC - Open cut coal mine, 17km south Collinsville	Qcoal	$350			Not started
Eagle downs underground	IRC - New underground mine producing 4.6mtpa coking and PCI coal	Aquilla resources/Vale	$988			Not started
Dysart east open cut & underground mine	4mtpa coking coal mine	Bengal coal Ltd	$450			Not started
Eaglefield downs underground – stage 1	New underground mine producing 6.8mtpa	Peabody	$1,400			Not started
Ellensfield underground coal project	IRC - New underground mine for coking and thermal coal. 4.7mtpa	Vale Australia	$640			Not started
Foxleigh Plains	IRC - Expansion to 3.3mtpa	Anglo American	$620			Not started
Goonyella riverside expansion	IRC - Expansion project to  21mtpa	BMA	$1,000			Not started
Grosvener underground coal	IRC – Construction and operation of new longwall mines. 6.5mtpa coking coal	Anglo American	$1,300			Not started
Isaac Plains Coal	IRC – increase production from 1.9 mtpa to 2.8mtpa	Aquilla	$118			In Progress
Jax open cut mine	WRC - 1.8mt coking coal	Qcoal				Not started
Jellinbah east open cut	IRC – mine expansion/extension to 2mt	Jellingah group	$100			Not started
Lake Vermont	IRC – expansion of lake Vermont mine to 6mt capacity	Lake Vermont resources	$220			Not started
Lenton Open cut	IRC - New mine producing 1.5mtpa coking/thermal	New hope coal	$120			Not started
Middlemount Coal Project	IRC - New open cut mine. 3mtpa	Macarthur	$500			In progress
Millenium open cut expansion	IRC - Expansion of current mine	Peabody	$276			Not started
Moorvale underground expansion	IRC - 2mt coking and PCI	Macarthur	$180			Not started
Moranbah south project	IRC - New underground mine producing 3.5mtpa coking coal	Anglo American	$1,300		Finish 2017	Not started
Mt Carlton open cut	WRC - Copper-Gold-silver mine	Conquest mining	$127			Not started
Newlands Northern underground	IRC - 7.5mtpa thermal coal	NCA JV (Xstrata coal ltd 55%)	$140			In progress
Olive Downs Nth Open cut coal project	IRC - New open cut mine to produce 1mtpa	Macarthur coal	$20			In Progress
Peak downs open cut expansion	IRC - Expansion from 9mtpa to 11.5mtpa	BMA	$1,000			Not started
Saraji East open cut	IRC - New underground mine to produce 5mtpa	BMA	$1,000			Not started
Sarum open cut and underground	WRC - New project to produce 5mtpa	Xstrata	$700			Not started
Talwood	IRC - New mine to produce 2mt PCI & thermal	Aquilla resources				Not started
Twin hills gold-silver	IRC – redevelopment trial mining planned	Conquest	$6			Not started
Wilunga Open cut	IRC – pre-feasability underway	Macarthur				Not started
Winchester sth open cut	IRC – 4mtpa coking and thermal	Rio Tinto				Not started
TOTAL MINING			$30,855
TOTAL INVESTMENT IN MACKAY REGIONAL COUNCIL			$17,118,37

References: REDC & Mackay Regional Council

apples with apples and oranges with oranges

I want to take this opportunity to respond to what appears to be the view of some investors and advisors when it comes to investing in regional areas that have a large economic reliance on the mining industry. I want to address the view that having the foresight to look outside the box and evaluate trends and shifting demographics makes one a “speculator”.

I have been prompted by reading many peoples posts, blogs and general advice to do this. I was having a discussion with a large developer in Noosa Heads only yesterday, and he laughed at the idea of investing in regional QLD. A direct quote from him which I encounter all the time is “what happen when the mine closes or lays people off?”. Is it ironic that I was having this conversation with a developer developing in Noosa? One of Australia’s worst performing markets in the past few years. In case you are wondering, I did not miss the “s” on the end of “mine”. It is quite a common view that there are just one or two mines driving this and our past “mining boom”. Call me arrogant if you wish, but when people give me their opinion on regional markets without ever doing any research or even having visited the topical area, I simply do not have the time in my day to listen. Why, Well I am that busy dealing with businesses and investments in these areas that I just don’t have time to listen to naysayers without any factual grounds to their argument.

I also would like pose the question; to what level do people accept responsibility for their “predictions” or “speculations”? I recently had two potential clients conduct their own due diligence on investing in regional QLD. One came back and said “my mortgage broker said I couldn’t get the finance as I wouldn’t get $600 per week rent, he thinks it would be more like $400 per week” Since this buyer received this advice, the capital value of the property he was looking at has increased by $20,000 in just 8 weeks. This is judged on direct comparative sales. Not to mention that the rent was guaranteed by a secure lease. The other situation was a prospective client had a Melbourne property advisor (don’t ask me what qualifications you need to be have that role) assess what they were looking at.  The response was… “I don’t see any economic drivers to increase capital value unless something happened in the mining sector” & “this is what my realestate.com.au and bismark search showed”. Realestate.com.au whilst conducting a professional due-diligence! Are you serious!  Whilst this “advisor” is living under a rock, there are people out there pro-actively seeking opportunities to provide security and wealth for their family both now and in the future, and you’re advising them on an area that you have never been to, so you base your research on realestate.com.au!

I have many problems with what I am going to label, uneducated views. Firstly, is that if you are not educated about an area in full, don’t pass a “comment” as “advice”. Whilst I, in all honesty, wouldn’t know much about the Sydney or Adelaide property markets for instance, I would not comment on them, let alone provide “advice” on them. Even with access to RPDATA (a bit up from realestate.com.au) you must understand that the information provided should be taken in full context. Not on its own. If you understand a local market, than you will most likely make sense of data and statistics available to you. However, if you don’t, than it is almost guaranteed that you will misconstrue the information you are looking at. This is fine if it is how you are going to handle your own investments, but surely not somebody else’s?

The view of these naysayers is that mining is not a secure industry to base a property investment on. However, it really isn’t as clear cut as this in reality. This statement is neither true nor false if you ask me. They teach that buying in or very close to a capital city is the best way to build a portfolio with good capital growth and security.

The idea that anyone who wishes to or does invest in a mining town is a “speculator” is actually quite offensive to me. For years I have been successfully investing in mining regions. Along with other people I know very well, we have all developed solid, long term, secure portfolios built on education, wisdom & professional due-diligence. I would in no manner, consider myself a speculator.

One view is that these areas are bad judgements for investment because it is majority investors who buy in mining towns. For my comparisons I am going to use Lane Cove in Sydney as my example, and to compare apples with apples I will use raw data from the 2006 census report and RP DATA.

In the 2006 census, in Lane cove NSW, 62.6% of properties were owner occupied. In Emerald, Central QLD, 56.2% of properties were owner occupied. Only 6.4 basis points difference in the owner occupied V investment property ratios. Whilst I agree that investing in regional areas minimises your exposure to an array of industries to drive employment, does this always directly relate to minimised capital growth? Of course it doesn’t. What drives capital growth is supply and demand along with increasing disposable income so the population can afford to spend more on accommodation. Does this minimised exposure to industries also mean a higher level of volatility? To answer this effectively, you cannot put apples in the same bag as oranges. There are many different regional areas and all need to be assessed on their own merits/pit falls as does any other area in Australia.

By using the census in 2006 to find the ratio of owner occupiers to Investors in a town, many in regional QLD are around the 50:50 ranges. 5 years have since passed so I am sure that the new census result next year will shine a new light on everything, we would be silly to assuming that the Australian economic landscape has not changed in the last 5 years. So let’s assume that in some areas the investor ratios is a little bit higher. Let’s ask why this is? Does it mean that investors are “speculative” and trying to get in on a boom? I don’t believe so. With a little bit of education, you will find that the average lifespan of a mining employee remaining with one company is 2.5 years. This is due to the fact that there are more than 2 mines currently operating in Australia contrary to popular belief. There is a severe skilled labour shortage in the mining sector and has been for some time. This is poised to get worse as time goes on. These employees generally stay in the mining industry, they are, in most cases, poached and offered better pay. Thus increasing the amount of times they move house, whilst at the same time, increasing their pay. This is the reason why you may find many investors active in a niche market where there are sometimes reduced owner occupier ratios. It does not mean that accommodation demands are in any way short lived, it purely means that the person living there may not be there forever as they have other opportunities presented to them. As part of any due-diligence that I do, I assess this as good thing, it means that the average wage of owner occupiers and my tenants are increasing, thus increasing potential rents and capital value.

Secondly, to say that “our mining towns” were fled by investors is a most uneducated point of view. As I mentioned earlier, we need to ensure that we are not comparing apples with oranges. There are, the odd towns in QLD let’s say, where a town has been impacted by just one mine. This has meant that the property market in that particular town has become very volatile. I will use Capella for example; it is only 30 minutes north of Emerald QLD. The small coal mine that was operating there decided to hold all operations in the wake of the GFC. This caused detrimental effects on investors as their houses were left empty at the end of their tenancies. Prices plummeted and investors were affected. However it would only take a 5 minute google search to assess the volatility of this “one mine” town compared to others. Production has resumed and houses are in demand again in this town. However, I personally wouldn’t invest there due to the volatility. 30 minutes away is Emerald, heavily reliant on the mining industry for its buoyant property market, accentuated by a very strong agricultural industry in the region. Prices in this town did not fall, the median sales price did as units and smaller houses became more popular. Rents were not impacted (if at all, only by 5%) and investors had no need to rush out and sell as they nearly all had the benefits of a positively geared property that was still in demand by tenants. This is because the town is supported by not just one mine, but numerous mines owned by some of the world largest companies. Not only is it supported by the mines directly, but by its underlying infrastructure of companies that contract to and outsource to the mines all throughout the Bowen Basin. As a so called “speculator” my investments were very, very good in the good economic times, and still good when everything apparently went bad in the world. Pretty good “speculation” on my behalf I believe! In fact, as many of you would consider me to be young, I am happy to say that I made more money in the GFC than any other 18 month period to that date. Here’s some good reading by Terry Ryder to re-iterate my opinion http://www.theaustralian.com.au/news/executive-lifestyle/lets-not-leave-out-the-good-bits/story-fn6njxlr-1226113942257 .

To assume that everyone wants to live within a short drive of a capital city is a far cry from reality. Believe it or not, there is a large amount of our 23 million population that actually enjoy living outside of the city and also in rural/regional areas. In fact this trend is becoming more popular as urban and regional sprawling occurs, not to mention or population projects of 40m people by 2050.  Governments are spending a lot of money to provide infrastructure to many regional areas including government offices as living in a regional city/town becomes quite often a more financially viable option. Not to mention that there are lifestyle opportunities to be had which are completely different to that of the city life. People enjoy these areas and establish their families in these regions. I particularly like this video by key demographer Bernard Salt on regional areas http://video.theaustralian.com.au/1987201416/Regional-towns-are-Australias-muscle .

Fly in and Fly out miners are becoming more and more popular and let me tell you why, because if there’s not enough housing near a mine, you have to fly them in and out. I challenge you to drive around regional QLD and find enough vacant houses in one area to support an entire mine site. Mines actually prefer to have their staff living local. In Emerald, some mining companies pay incentives if you buy a house and sign a 5 year contract. The reason the companies are asking to have higher fly in fly out ratios is because a little bit of foresight will show you that we have only just seen the beginning of this mining boom and they have to make preparations for the very near future to man a mine site properly when there are already 0 – 0.5% vacancy rates in all mining towns.

In regards to mining, it is here for your generation, and the generations to come. I want to put it into perspective for you, In Gina Reinhardt’s mine in Alpha, whilst they have only explored in depth a portion of their tenement, they have discovered enough coal to supply our current export demand for the next 150 years. This is one part of just one tenement in one basin in QLD.

In every major town throughout QLD, some major retail companies are investing billions of dollars in retail. In Mackay, there are new Woolworth’s shopping centres opening, the Canelands shopping centre in the CBD by Stock land is undergoing an extension to double its size including a new Myer store. A $120m development in Emerald is seeing a second Woolworths, a 2 hectare big W store and 40 other specialty shops. Townsville is undergoing massive retail development with Myers also. These key regions have been turned from country towns to thriving regional centres over the past 10 years. And now, we are seeing them change into mini cities with diverse economic impacts including mining which is only getting stronger as we see some of the largest corporate investments take place in Australia’s history right in our own backyard. These companies are not spending nearly $400 billion dollars for an overnight investment.

If you are scared of what impact a mining “bust” may have on your portfolio should you be exposed, then you need to understand that our whole economy is exposed to our mining sector. The misconception that by being in a capital city you would be immune to such an incident is just pure ignorance I believe. I would suggest some in detail research in to our key mining companies, where there employees are, and what indirect jobs have been created throughout Australia as a result of the mining industry. If you don’t want your property to be exposed to the potential impacts of something dramatically happening to our mining industry then sell your house now. And for those wondering why I didn’t ask where your house is, it’s because it doesn’t matter. There will be severe consequences for many people throughout our country if our mining industries bailed.

I am not saying that buying in any mining town will be a good investment; any person can clearly identify the risks involved in “speculating”. However I think it is important that people begin to compare apples with apples and oranges with oranges.

Whatever you do, do your own research, don’t let someone tell you that something won’t be a good investment or even that it will be. Come to the conclusion yourself, take in all the “opinions” you want and form your own due-diligence. There are many opportunities in all areas of this country for people, don’t ever let someone tell you what is good or not. I know that if I had listened to all the naysayers I would not be a successful businessman and property investor; in fact, I would still be at my high school desk waiting for the teacher to tell me I would actually do something worthwhile and successful. Lucky I didn’t listen when all the people told me I wouldn’t get anywhere. 

Gladstone update

It seems the Gladstone council and QLD State government have come to terms with the social and economic impact of the LNG boom and have accepted the fact that GLNG will house 48% of its total workforce in Gladstone itself, not on Curtis Island as originally planned. I would assume that other companies will follow suit here.

This advancement significantly reduces the risk that was apparent in the local property market with the initial EIS proposal for accommodation.

I thought I would update my findings for you all. I am in negotiations with a few builders here so I will let you know of my outcome to see what investment opportunities come up. Rents are going strong here. For a 4 x 2 x 2 house fully furnished you will achieve $1000 per week easily, with increases every 6 months! That's a good 10% return pretty much with some strong capital growth in the coming years. None the less, I still believe it is a market that should be watched closely should you decide to invest there.

Josh 

SURAT BASIN

Historically founded on rich, fertile farming land and extensive flood plains, the Surat Basin has significant reserves of Thermal Coal (used for creating electricity). From this, extensive commercially viable Coal Seam Gas deposits have recently been explored and now, began to efficiently be drilled and mined.

As we found in the Gladstone review it is clear that this level of mining activity in the LNG (liquefied Natural Gas) industry is unprecedented. In Australia, we have been drilling for gas for centuries and using it locally in, however this new wave of investment comes from record international prices being paid along with demand. This has made our Coal Seam Gas fields in Rural Queensland commercially viable to mine.

In the Surat Basin we find many regional centres:

1.       Roma

2.       Chinchilla

3.       Dalby

4.       Miles

5.       Wandoan

These are just a few notable towns when it comes to being positioned to potentially benefit from this mining activity. Situated around a number of Coal Seam Gas wells is Chinchilla. So far this year the Median sales price is $100,000 up from last year, this would be due to capital growth and a large amount of new home being built, however mainly due to capital growth. A major player in the CSG field development being GLNG project, they predict a peak workforce of 580 people for their well constructions which will be completed in 2014 where the workforce will drop to 200 for the same area. They also predict that due to skills shortages in areas like chinchilla and surrounds that the Fly in Fly out work force will be 90%. Now they may still choose to base themselves in residential properties however my view is once again that the construction workforce is significantly greater than the long term workforce which will cause massive inflationary pressures on the housing market, causing rents to go well along with capital growth, however I see a significant drop in these numbers once construction has finished. It is estimated to be approximately 90% reduction.

This is only one company out of the three CSG projects with financial decisions made, and one potentially very close, I think Chinchilla will go well in the coming years. A good 4 bed house and land package sits around $420,000. From my investigations, building with a few bathrooms (just like Gladstone) and furnishing is the way to go if you really want to maximise your return. My advice is to watch the market as I believe it is even more volatile than Gladstone was said to be (of which I have some news to update about later). Builders and marketing firms seem to be developing some of the estates and selling the house and lands themselves which is great, just make sure that street scape is developed & maintained if you choose to go down this track.

There are a lot of residential lots currently going through council to cater for this, it is expected that Chinchilla will see significantly higher levels of land available next year. However there is still a small level of coal mining activity in the area. Cameby downs mine, owned by Syntech resources have developed their first coal mine just north west of Chinchilla. First mass coal production for export is expected in 2013 once the Surat Basin Railway and the Wiggins Island Port expansion project in Gladstone are completed. It is expected that employees will rise from 100 to 600 for the expansion and long term contracts. Many of these people will reside in chinchilla.

Moving north is a small town of approximately 300 people called Wandoan. This to me is an area to watch over the coming 18 months as the Wandoan Group (an Xstrata company) are at an advanced stage of planning and hold significant deposits around the township. With potential output of approximately 20mtpa (million tonnes per annum). This once again will rely on the Surat Basin Railway construction as well as the Gladstone port expansion.

Most of the undeveloped land around Wandoan is crown land, with some parcel privately owned, I am told that land will be released next year maybe. In my enquiries to this town it seems almost impossible to get a builder, so any new build would have to be a transportable to be viable in my opinion. On that note, from a property investment point of view, if you purchased an older property you would need to furnish it (nothing fancy trust me!) to get approximately $200 per room. However, maintenance is going to be a real issue with this little town! None the less, I have identified this town similarly to Dysart in the northern end of the Bowen basin. An old 3 bedroom house will go for $330,000+. However do remember that Dysart has a more than just one mining company around it, whereas Wandoan will only have the 1 company. Quite a risk but the prospects I don’t think look to bad.

I haven't travelled to south to Roma as time restricts me at present and my focus is on the Bowen Basin region now.

Happy investing everyone!