Property Investment Strategy – Impressions Cairns & Townsville Onsite Research January 2022

In over 18 years of providing solutions for people aspiring to financial independence, choices in retirement or leaving a legacy, what we have discovered is that one of the most difficult things to identify in real estate investment is what is the right level between capital growth and rental yield for each individual investor. 

Finding the right balance between the capital growth and the rental yield where the real wealth is generated. As the founding owner and Property Investment Strategist from Property Friends, I am providing my impressions on both Cairns & Townsville with regard to investment opportunities.

There is further information in the live video recordings done from the locations. The full live recordings are referenced after each of the four summaries.

Cairns: 10-01-2020 First Impressions, Statistics and Info

The pandemic has kept us away from inspecting real estate far too long. Now that we can travel I am enjoying looking around for property opportunities in Far North Queensland and other places.  This time in Cairns to check out the property market.

The joy of being a property strategist means that I get to inspect properties, so that I am only introducing the good ones to prospective and existing clients.

I have checked out Cairns and the Tablelands. Quite a few new estates up on the Tablelands.
In Cairns, there’s very little doubt that the southern side investment property is growing very very strongly down to Gordonvale, this will provide tremendous growth.

Vacancy rates in this area is currently running at 0.4%, the asking price in the last quarter has gone up by 10.6%, to $492 000, the rent median rent now is at $541 has gone up 11.36 per cent in the last quarter.

The builders in the area advised that they have their order books full and advise that they are unable to start construction before typically eight to 12 months

The market is showing tremendous increase and providing great capital growth in investment properties. Cairns and Gordonvale presents as vibrant, the injection of capital through the extension of the Bruce Highway down to Gordonvale and the relatively large shopping centre going into the corner of Drapers Road and Bruce Highway provides impetus to investing in Gordonvale.

In line with other centers in the country, people are moving their capital from the major cities such as Melbourne, Sydney to these quickly growing country centers.  This provides for a great opportunity to invest into such, which is reflected in our property investment strategy especially since the vacancy rate that is so tight.

The Live Recording can be accessed here: 

Second Day 11-01-21 Cairns 

After a couple of days in Cairns checking around – a very interesting picture appears, especially after checking up from the Atherton tablelands, to Cairns and Gordonvale.  The place is going ahead. Prices are reasonable, rental yields are very strong and Cairns, especially the southern side to Gordonvale is the growth corridor. With a vacancy rate in Gordonvale is 0.4%  the rental market is tight as a drum. It’s amazing how low the rental vacancy actually is. The asking price in the last quarter for properties has gone up by 10.6%. This is excellent growth, especially for just one quarter.  Now that’s the asking price, but the asking price, of course, is a lead in to the sales prices. Median rent is now $501 a rise of 11.3% for the quarter.

So definitely great indicators there, no question also about positive cash flow.

But there is more to a property investment strategy, such as the other influencing factors and what is the sentiment in the market?
Of course, the Bruce Highway extension to the tune of 250 million dollars, at the moment being built is a big plus,which will mean that the travelling time from Gordonvale to Cairns City centre is going to be 9 to 12 minutes according to the council. Which is a very short travelling time. Especially compared to coming from the back blocks of say Edmonton, were due to the congestion of Mill Road, there are huge traffic jams every day.  There is just one lane road in and out!

So Gordonvale is looking good, the town itself is rocking and bobbing. Rental yield of 5+% are in the medium, hence there is great cash flow available. Builders are extremely busy unable to start any new before ieghtto 12 months..

We expect Cairns to be reflected in the upcoming statistics with at least 10% capital growth in the next 6 to 8 months.

Additionally great cash flow is assured, certainly with interest rates at all-time lows.

The Live Recording can be accessed here:

For information on opportunities in the Cairns Property Investment Market. Click here to book a Discovery Call

Townsville: Very interesting market for property investors.

The strategic situation is very similar to Cairns, again the ripples are going out from the main city.

A very tight market rental vacancy under 0.8 per cent, not quite as tight as Cairns, but depending on which agency, even under 0.5%. This will provide a great rental income and positive cash flow for investors. The interesting part, is capital gains or an increase in prices.

The average block of land that a property developer brings to market has gone up $20,000 to $25,000 and the average cost of saying a 200 square meter build has gone up about 30,000 dollars rough….that is a great asset growth and wealth.

It follows that anybody who has locked in a good House & Land Package, is up about $50 000 or say about 10% which is a great property price increase in the last 12 months.

Seasoned investors know that the statistics are lagging behind, we will see substantial capital growth coming through, being reflected in the stats within the next three months, which will verify the great value in property investing.

All in all, an excellent market to invest in, with there is more capital growth and value to come, on top of the extremely tight rental vacancy rate. This is where the property value will come from. The builders again tied up for eight to 12 months.
There is a bit of concern according to anecdotal evidence, that some of the builders may have taken on too much under the first homeowners grand, put slabs down and then couldn’t work through the work that they had on their plate .

That meant delays and at the same time they are caught in this vicious spiral increasing cost and not being able to finish their projects in time. On the other hand they are being locked up into a firm price, so there may be a bit of smoke on the horizon for certain builders.

It is very important that the projects and the builders that one is working with are safe and secure . That is one of the things that needs to be part of good due diligence, what have they got in the pipeline, where are they at, what is their commitment level and can they reasonably work through this.

So this is a very interesting situation, certainly a market that we will do more work in and certainly a market that is a lot of fun to participate in which is always providing some great investment opportunities.

A number of builders are participating in the NDIS (National Disability Insurance Scheme) Specialist Disability Accommodation (SDA) market.  For the right players there is good opportunity there.

Property Friends will do some more projects in this area and of course we have projects under construction in that regard. So the market is looking pretty rosy.

The Live Recording can be accessed here

Summary of the Far North Qld Trip

In the last eight days of the field trip to Far North Queensland, essentially Cairns & Townsville I checked over Bowen as well, from offsite, which provides opportunity as well..

Summary of Townsville

The short summary, the indicators are looking great.   There is very hefty infrastructure and other investment happening including an 80 million dollars new luxury hotel casino,.

The rental vacancy is the very low, in fact it is a drum,  prize growth is definitely happening.

The rental yield is going up and the builders are completely booked out.

Expectation is that there is a 10% capital gain in the market already. That is not yet reflected in the statistics as the figures are lagging behind and that will take another two or three months to come through.  is also more capital gains in the market. The new market house and land are pulling up dramatically at this point in time. There is an expectation of more to come.

It is very interesting to compare the land developments There are massive differences in regards to value and asking price when comparing the various developments from Alligator Creek to Bushland Beach.

Rocky Springs, the Delphin development can be compared to what used to be the Sunland development in Bushland Beach. However some of the difference is very stark.  Out of all of the developments Property Friends will only invest in the two top ones.

And that in summary means that we will continue our property investment in into Townsville.
We like the market, since  it’s very stable, a market that is on the way up no doubt.

We suggest to be careful tough when you invest in Townsville, there are some builders that may be a bit shaky.

Simply by having taken on too much work in the times where the home building bonus grand was on and the big race that was on to put down slabs. There are quite a few slabs sitting around in developments that still have not progressed further. The big issue with that is that the building prices have gone up dramatically at the same time, further tightening the squeeze on profit.

Those builders are now sitting there with little / no margin or even losses. And there is talk on the street that some builders are trying to extricate money from clients that ostensibly have Fixed Price Contacts or are actually offering money to walk away from contracts.

Summary of Townsville, it’s a great spot for investment and just be careful where you go and who you work with.

Summary of Cairns

As to Cairns, looking even better, just check out the previous Musings of a Property Investor or Road Warrior Musings, you’ll find it on Facebook and on Youtube.

All in all a very successful trip. A very fun trip, the first trip in a long time.

The borders are opening now dramatically When flying home from Queensland into Victoria no entry pass is required anymore.

Queensland is now completely open, so it’ll be interesting to see how it all develops further. Obviously, the sentiment has now changed from “Let’s keep the virus out” to “We just have to learn to live with it” which seems to be the general sentiment

I am happy to be able to travel again and that’s a good thing

I’m having a lot of fun getting back into the swing of things. I trust you as well.

There are excellent opportunities out there,  also on the NDIS side of things.

We’ve made further inroads into that so watch out for further reports on that.

I trust you’re having fun. I had a lot of fun on this trip.

I trust this report was helpful and remember that you can book a discovery call if you’ve got any questions/issues in regards to how to get started or how to advance your portfolio

The Live Recording can be accessed here: 

For information on opportunities in the Cairns Property Investment Market. Click here to book a Discovery Call

Property Friends is a specialist Property Investment Strategist that provides solutions for people aspiring to financial independence, choices in retirement, or leaving a legacy. www.propertyfriends.com.au  (03) 9758 533

 

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