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Why Sunshine Coast (Research Summary)


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Research report on the Sunshine Coast, Australia

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Why Sunshine Coast (Research Summary)

  1. 1. Research Summary Why the Sunshine Coast Helping people secure great properties
  2. 2. Disclaimer: This material is provided to you to summarize source information on the development and infrastructure currently underway and planned for the Sunshine Coast. The information presented is provided purely as information and should not be construed as specific investment recommendations. No predictions of the effect on the growth or otherwise of property values are made or implied. The laws relating to property, investment, taxation, benefits, and the handling of money are constantly changing and are often subject to changes in government policy, and while every care has been taken to ensure the accuracy of the material contained herein at the time of publication and presentation, neither the author, promoters nor the publishers will bear any responsibility or liability for any action taken by any person, persons or organisations on the purported basis of information contained in the material. Without limiting the generality of the foregoing, no person, persons or organisations should invest monies or take other action on reliance of the material contained in this material;, rather you should seek independent advice (whether by expert advice or otherwise) of the appropriateness of any such action and take into account your personal circumstances.
  3. 3. Introduction If you have dealt with us before (or at least read our Welcome to Investor Property brochure) you will know that one of our core convictions is to ensure the properties we offer are in well researched areas. We were always excited about what is happening in South East Queensland, particularly the Sunshine Coast, and decided to put together this summary to help you understand the strong property investing fundamentals the region offers. Fundamentals that cause us to believe the Sunshine Coast provides outstanding opportunities over the next 10 – 20 years. There’s an old adage in property that “all property doubles over time” and the statistics support this (if you do some research – the common comment about property doubling every 7 to 10 years works right back to the early 1900’s). We don’t see any reason for this to change in the next 100 years, however we also believe that there are other drivers that help property grow in value. We look for these drivers when we conduct our research in order to maximise the potential returns. Our aim is to do better than just ‘flow with the tide’ (albeit a tide that’s made many people wealthy over time). Our hope is this summary will not only provide you a good understanding of the fundamentals you should be looking at in your own research as you grow your portfolio, but also give you the confidence to invest on the Sunshine Coast (if not, at least you’ve got some knew ‘stats’ for your next BBQ!) Population Growth The first factor to understand is that from 2001 to 2031 forecasts suggest we are going to see the population of the Sunshine Coast double! In the 2001 Census figures, 247,200 people live on the coast; projections issued by the State Government have the Sunshine Coast breaking through the 500,000 people barrier by 2031 and more than 1,000,000 between 2040 and 2050 if current trends continue unabated. As can be seen by the chart, this growth speeds up from approximately 2007 to 2026, which is now. This population growth comes from two key areas: southern states migration and people moving from overseas (mainly the United Kingdom and South Africa). Interestingly, reports in September 2009 suggest Australia’s growth could have been underestimated by 25%! Keep in mind that every time a new family moves from Brisbane, Melbourne, London, Johannesburg, etc, the first thing they need is somewhere to live. A large number arrive, rent for the first 6-12 months then buy. There is also a significant percentage who arrive and look for readily established housing straight away. Many investors on the Coast have a second income called ‘building speccy’s’ for those new arrivals that are so happy to be in their new piece of heaven and they don’t want to wait 6 months to build. We often see an up lift in valuation on properties being built for this reason (but be cautioned, the term ‘speccy’ is short for speculation; this strategy and, importantly, the type of house, location and number of other people using the same strategy can have a large bearing on its effectiveness). Recent and Forecast Population Growth - Sunshine Coast 501,200 473,300 383,300 Forecast 295,100 247,200 2001 2006 2011 2026 2031 2279
  4. 4. Changing Household size As can be seen in the graph below, over the next 13 years the average number of people living in each home across Australia is forecast to reduce from 2.6 people per home to 2.25 people. This is one of the key drivers being placed on developers for smaller lots. For some of us, we need to reset the mind that smaller homes are back in vogue. There’s always a market for large homes but the population dynamics are changing. Forecast 2.60 2.36 2.31 2.25 2008 2011 2016 2021 Weekly Growth Perhaps one of the greatest drivers on the Coast is this one: every week we need 77 new homes (based on current household sizes) yet only 65 new homes are being built - that’s 624 homes this year alone that we’re short! At present this shortfall is being covered by reducing the number of rental vacancies; but that ‘band aid’ can only stretch so far. Population Housing Arrivals 333 Requirement 77 Departures 132 Completions 65 Net Weekly Increase 201 Net Weekly Short fall 12 The State Government forecasts we will need approximately 98,500 new dwellings built on the Sunshine Coast by 2031. Based on our current rate of supply, the shortfall could increase to over 1,100 properties per year fueling the already, pent up demand! Impact of population growth With fast population growth opportunity arise. The ‘magical’ self sustaining number of 500,000 brings with it better motorways, public transport, an airport that provides variety of flight times and destinations, theme parks, diversified employment opportunities and the list goes on. The downside of building a population on the run is we get use to road works as areas are expanded (next time you are stuck in road works, keep your eye out for why that work is happening, this might just be the next area that’s about to take a capital growth upswing). As a property investor it is important to note that this growth, the low level of required completions and the decreasing average household size suggests the underlying demand on property will increase for some time. Thereby placing upward pressure on prices and rents and downward pressure on vacancy rates. Very good news indeed. 2279
  5. 5. Infrastructure and Development The old catch cry in property has always been ”location, location”. As property investors however, we believe it should be “infrastructure, infrastructure” (which is not really that different to location, just with some further long term analysis attached). People are seeking easy access to parts of the Coast via motorways, public transport (will become so much more important in 10-15 years) and sound road systems. We’re looking to live in communities where the kids have easy access to great schools, where there’s a Supermarket with the 10-15 convenience shops on the outside (the baker, cafes, chemist, pizza shop, etc). People want to know that where they live has a sense of belonging and local councils seek to maintain the cultural integrity of the area (parks, beaches, building height, etc). This encourages developers to strike a balance between urban jungles and open spaces. People want to live in a community where they can take their kids to a park, perhaps overlook a lake and enjoy a BBQ. Today, the infrastructure has the responsibility of allowing families to live in such a community, seemingly their own little village, whilst being able to step out of that community and within a few minutes be on a motorway to the office or to visit a friend in another community. The Sunshine Coast, particularly in the southern reaches, is seeing an explosion of growth including: • New University Hospital SunshineCBD inMulti-Modal Transport Corridor • New Coast Kawana, Caloundra and Maroochydore • The 2008 Novemberdevelopment of a multi-modal transport corridor • Several large estates being brought forward by up to nine years SIPPY DOWNS Some of these infrastructure projects are discussed below. INTERCHANGE PALMVIEW M New University Hospital BUDERIM SIPPY DOWNS Nestled in the heart of Kawana is a site that will represent the Sunshine Coast’s new University Hospital. This site is torway scheduled to open in 2016. This University Hospital will employ 3,500 people and as a training facility, we’ll see a significant Sunshine Mo number of students and post-graduates completing their studies in this hospital. Part of the plan of development is a ad road and rail network (discussed in the ‘CAMCOS’ section) joining the hospital with communities around the Coast. This MAROOCHY BO dra Ro INTE location will also drive a significant need for housing close by. There are some impressive land communities around this oun Cal oun Cal location and we’ve watched many of our astute buyers invest in these locations before the anticipated ‘upswing’. LITTLE MOUNTAIN KAWANA WAY dra - INTERCHANGE Mo olo M ola b oolool The Urban Development Institute of Australia (UDIA) states that a typically large new hospital generates an increase in aR oa aba housing in the vicinity of approximately 20% within the first 2-3 year period. MOOLOOLAH RIVER MOUNTAIN CREEK BUDERIM-MOOLOOLABA d Road NATIONAL PARK INTERCHANGE ard Sun y shin Kawana Wa ulev e Mot or w s Bo P ay land d Woo CREEKSIDE INTERCHANGE P va rd Mo MOOLOOLAH RIVER ol ule KAWANA TOWN CENTRE INTERCHANGE Bo  INTERCHANGE oo e sid lah AROONA et ek Kawana Way Brisbane re Riv re Roa St d ard Under Construction er C um lev Beerburr Erang Street Bou MOOLOOLABA KAWANA TOWN PARREARRA Lake Kawana ay lin W CENTRE Main Drive Nick Kawa levard Bou na Is KAWANA WATERS NORTH et Stre land Nicklin Way MINYAMA CURRIMUNDI rim WURTULLA BOKARINA e WARANA ud B BUDDINA Main Roads – Connecting Queensland 2279