Property Portfolio
By Sally Pohio

The industry report cards are in and when it comes to lifestyle, leisure and investment, Tropical North Queensland is in a class of its own.

The launch pad to the Great Barrier Reef and the Daintree rainforest and with Cairns international airport at your doorstep, Tropical North Queensland’s allure is undeniable and from all accounts the region is attracting more visitors and investors than ever before.

In the 2006 National Visitors Survey, Tropical North Queensland outstripped the national and state growth rates for domestic tourism, attracting 18.1 per cent more domestic visitors compared to the previous year. Cheaper airfares and increased airline capacity making the region a viable and attractive long-weekend getaway for people in Melbourne and Sydney.

The region has also proven to be the best performing region in Australia for international holiday visitors outperforming Sydney, Melbourne, Brisbane and the Gold Coast. Not surprisingly the 2006 International Visitors Survey also revealed Europeans and Americans are flocking to Tropical North Queensland in numbers greater than ever before with international visitors in awe of the natural environment as well as the destination’s safety. European visitors in particular love Palm Cove’s cosmopolitan village atmosphere and casual elegance.

And as tourist numbers rise so does the outlook on the local property market with the increasing popularity of Tropical North Queensland underpinning increases in local property values.

Tropical North Queensland’s ‘total package’ of location, lifestyle and capital gain holds enormous appeal for property investors. However it is the sheer quality of new developments that has spearheaded recent sales in the area with both Palm Cove and Port Douglas recording sales in excess of $2million for villas and $975,000 for apartments.

In order to gain further understanding of the workings of the current local property market we spoke to LJ Hooker agent and property specialist in the region for the past 20 years, Tony McGrath.

“The quality of the stock in the luxury residential unit and home markets is phenomenal,” he said.

“In Port Douglas we have Juniper’s $200million Sea Temple Golf and Country Club and the million dollar plus villas and residences at Ray Group and MFS Limited’s Balé, while Palm Cove has gained the attention of the ever-astute investment bankers with the big boys getting in on the action with the $390million Novotel/ Oceans Edge and Drift projects by Indigo and Macquarie Bank, Thakral’s $450million Argentea project along with the boutique cultural precinct, The Village, all achieving high standards in design and quality and all confirming the prestige and premium associated with the Port Douglas and Palm Cove ‘brands’ which now hold enormous weight with purchasers.”

Major developers in the region agree. Developer Indigo CEO Mitch Nielsen recently said “Strong buyer interest in both of Indigo’s Palm Cove developments has reinforced the company’s enormous confidence in the village’s future as a global visitor destination.”

“We undertook extensive research before making such large-scale investments in Palm Cove and our sales to date prove that research was accurate.”

John Hudson, CEO of Thakral coined the term ‘reef change’ to describe the casual migration phenomenon to the area.

The arrival of Australia’s first seven star resort, The Royal Palm Cove on Palm Cove’s best and last absolute beachfront site, and promising features and services unlike anything seen before on our shores, will undoubtedly propel Palm Cove further in to the international arena.

“This push into the high end of the market has lead to a record number of sales over the million dollar mark with more buyers in the $1-2million purchase price category than ever before,” Tony McGrath said.

“Lifestyle buyers have and continue to be a driving force in the market with baby boomers purchasing a second home-away-from-home enabling them to spend months of each year enjoying the tropics and the company of like-minded neighbours and friends.”

“We have seen record numbers of sales to expatriates, based in places such as Dubai, with Aussies choosing to buy property at home as both a financial and lifestyle investment. Recent times have also seen the emergence of buyers from Western Australia who are capitalising on record prices in their own market to purchase a luxury tropical retreat.”

“While the property markets in Palm Cove and Port Douglas have performed consistently over the past 12 months, I believe we are on the threshold of a growth period in terms of number of sales and prices achieved with the apartment market the next in line to take off.”

“This year we will see the impact of superannuation on the market with retirees using their tax-free income to grow their assets and improve their lifestyles.”

“Right now the local building industry is also at an all time high with extended lead times that show no sign of shortening. This issue combined with the fact there is no further development sites available in Palm Cove and limited sites in Port Douglas means any built product or product you can buy off the plan for a fixed price in a quality location simply must increase in value. With every sign suggesting the growth will continue for many years to come”.

While the level of construction underway in Tropical North Queensland is extensive, the built environment will never evolve into the towering concrete jungles domestic and international visitors want to escape with strict development legislation firmly in place. One of the best things about Palm Cove is looking back to shore from the end of its famous jetty and barely seeing a hint of the luxury village nestled behind the trees. And this will never change with buildings restricted to four stories ensuring nothing will ever top the palm trees that give the cove its name. While its northern neighbour, Port Douglas is rumoured to be considering capping its population, in the same way Noosa Shire has to preserve infrastructure and the seaside town’s quality of life.

The fierce protection of both the natural and built environments only reinforces the region’s appeal with purchasers able to relax knowing the piece of paradise they have secured will not change.

Tony’s final piece of advice for those considering investing in the area: “Get in early. Do not wait for 12 months as the opportunities available today will be unheard of tomorrow.”

 

Riding the property wave
By Sue Tierney

Local property expert explains why TNQ is growing in popularity and why now is the time to invest.

When you’re hot, you’re hot… and in TNQ at the moment that’s got nothing to do with the temperature! It seems that no matter what statistic you choose as an indicator, TNQ is standing out as THE place to live, invest and holiday.

In the world of real estate, where sales have slowed in other places, the tropical beachfronts north of Cairns are reaching record prices with new quality developments.

In particular, it seems the recent spate of high quality developments in Palm Cove and Port Douglas, which have attracted sales in excess of $2 million for villas and $975,000 for apartments has sent developers’ hearts racing and investors snapping up newly released properties – making development here almost unable to keep up with demand.

To get an insight into TNQ property we asked local LJ Hooker agent and 20 year TNQ market specialist, Tony McGrath about the current trends.

“Domestic sales have been strong, with interest from Melbourne and Sydney investors who have stayed at the likes of Sheraton Mirage Port Douglas and are now finally deciding to buy and build here themselves,” Tony says.

This southern trend seems to be reflected in the recent Sea Temple Golf and Country Club sales. The Sea Temple is the $200 million development by Juniper and the second in the chain of Sea Temples to be rolled out by the group and located south on Four Mile Beach.

Another property in hot demand is The Outrigger Beach Club – located on one of the last blocks on Four Mile Beach and one minute walk to Macrossan Street, due to open in October 2006 – with almost all of the 50 or so units sold at an average of $950,000.

Balé is yet another quality development, with more than half of the home sites in the $130 million Ray Group and MFS Limited development already sold with villas costing around $2 million. In August, Balé Platinum Beach Homes will open at a location within the golf course of the Sheraton Mirage Country Club and Four Mile Beach. Prices have yet to be released but a $2 million plus price point for the villa apartments seems imminent.

Tony says the most encouraging sign that property in the north is still on the rise rather than at capacity is the recent $5 million sale of a Murphy Street Villa at Port Douglas’ most exclusive ‘Hill’.

“The Hill is the home to original residents of Port Douglas – people like Jim and Jo Wallace of Quicksliver fame, Don Morris who helped found legendary advertising agency Mojo and Craig Kimberly, the multimillionaire owner of Just Jeans – and still one of the most prestigious locations in the area,” he said.

Palm Cove is also undergoing a myriad of developments. Among them is the $80 million redevelopment of Drift on Williams Esplanade that will transform the 190-room Clarion Hotel into 123 apartments and six condominiums as well as eight retail outlets. The project is being developed by Indigo and the Rockford Hotel Group and will be a Grand Mercure property.

Recently, Thakral Holdings in conjunction with Babcock & Brown achieved $1.4 million each for two 600 square metre beachfront residential blocks of land at Argentea, their $450 million Palm Cove development – an achievement almost unheard of in many parts of Australia.

The other significant Indigo site is Oceans Edge. The existing hotel will be upgraded and the 36 hectare site, formed by networks of waterways and lakes, large pockets of bushland, and existing treelined golf holes, will become a low-rise community comprising 375 dwellings. These will include lake-edge villas, a range of executive attached and detached home and executive apartments.

Indigo’s project manager, Roman Galaska, describes the Palm Cove area as a hidden village many people pass by as they head north, not knowing what they missed. “Palm Cove is low-rise in terms of development… but high on sophistication, with a strip of restaurants second to none,” Galaska says.

The best absolute beachfront block snapped up lately will become Australia’s first seven star hotel resort. A classic Leigh Ratcliffe design, The Royal Palm Cove will be unveiled in 2008 and promises to be unlike anything seen on our shores before – think Raffles; think seven star hotels in Dubai. The Royal Palm Cove will feature 57 super luxury apartment residences and will offer a once in a lifetime investment opportunity right on the beachfront.

The other proposed Leigh Ratcliffe development, The Village will bring a new depth of culture and romance to the sometimes sleepy Palm Cove with an entertainment piazza and shopping precinct. Villas and apartments will be attached to this new hub enabling tourists to stay close to restaurants and the yearround entertainment.

Tony said over the past few years, Palm Cove has become tagged the ‘Noosa of the north’, strengthening its reputation as a trendy village and resort atmosphere along a pristine stretch of beachfront. ‘The’ prime beachfront lot of all will house The Royal Palm Cove which will be marketed shortly.

“Its natural attraction plus strong median house prices with an annual compounded growth rate of 14.5 per cent since December 2000, has attracted investors wanting to own their piece of paradise,” he said.

Although figures in TNQ are big, local real estate leaders say they demonstrate steady growth, but not a boom.

“In many respects, development activity is just beginning its season of prosperity in Tropical Far North Queensland,” Tony says. “You just have to look at what happened to Noosa 20 years ago and you’ll realise what is still to be achieved.”

So why are analysts optimistic about the future of this market?

Firstly, it seems the high quality of the major developments in the north have helped enormously in ensuring increases in property values, which has driven valuable returns. An example of this is the individuals who invested in the Beach Club Palm Cove off the plan and sold soon after making returns ranging between 30-100% as a result of the quality of the development.

The increasing popularity of TNQ as a holiday spot continues unabated, underpinning increases in local property values.

TNQ has become the second most popular international tourism spot in Australia, trailing only Sydney. It is also the launch pad to the Great Barrier Reef and the Daintree Rainforest as well it offers an international airport and casino.

International interest has also impacted on investment here. Although the largest group of tourists are still from the Asian inbound market, the second largest category from Europe and particularly from Germany have had a direct impact on investment.

Europeans love Palm Cove’s village atmosphere and laid back style and many have purchased local apartments, taking advantage of attractive exchange rates.

Safety in a destination is of course one of the key drivers... and in anyone’s book, TNQ is still a very safe place to be. With Europeans nervous about their own high profile hot spots, TNQ is getting the nod as somewhere to holiday away from the threat of terrorism.

But it’s not only overseas visitors who find TNQ irresistible. Of course, we’ve mentioned the significant local contingent. Within this group, the same phenomenon that’s driving the property market right along Australia’s East Coast is alive and well and influencing trends and prices in TNQ. Australian purchases fall into two types – so-called ‘sea changers’ and ‘second homers’. Sea changers are generally economic refugees from Sydney and Melbourne, who’ve either made their money young and are looking for a place to retire without losing touch with the world. It is this group that are driving the premium residential market.

Driving the high quality villa and apartments developments are the ‘second homers’ who feel that they can’t quite leave the cities but can afford to spend significant amounts of time away. They want comfort and familiarity from their surroundings but given land tax issues and the rising prices of beachfront properties are quite open to amortising the cost of their investment by having it available for rental management when they’re not in town.

Tony says property investment in the far north is also being driven by an increase in cheaper flights to the region.

“With Virgin, Qantas and Jetstar now flying into Cairns and offering direct mid-week fairs as low as $300 the result is more tourism opportunities,” he said.

The lack of built up area is also what’s driving property values. Fans of TNQ simply want to escape the crowds that are so endemic in other parts of the country. For people who spend their working lives enmeshed in the gridlocks of cities, the space and tranquillity of TNQ simply cannot be matched. For the Australian or European executive based in Singapore, Hong Kong, Tokyo or China it’s a lay down misere – only hours on a direct flight to freedom.

And the golden guarantee is none of this will change. Legislation prevents buildings from being constructed any higher than the 80 degree contour up the mountains and limits building heights to the tops of the palm trees in Palm Cove. To preserve infrastructure and quality of life, Port Douglas Shire is rumoured to be considering capping its population, in the same way Noosa Shire has.

And while opportunities are available at the moment in Palm Cove – its finite boundaries restrict its further growth and will have a large impact on future prices. The Royal Palm Cove will be the last ocean front property to be developed.

While there may be limited land available, Tony believes Palm Cove beachfront is a very safe investment for property owners.“With tourism numbers growing and Palm Cove now being marketed internationally, investors can be confident of very strong growth and good returns for at least another five to ten years.” So it’s easy to see why locals dismiss arguments about slumps in the market in the capital cities affecting property prices.

They know that what underpins the success of TNQ is the fact that here, as in so few places in the world, it’s possible for a dream to be a reality.