[+] Northern Australia: The Land of Opportunities

The Brisbane Line was a supposed proposal from a wartime government advocating the surrender of entire swathes of northern Australia in the event of an invasion. But the expendability of northern Australia seems to have been a premature idea in more ways than one, given the astronomical growth of cities and industry above ‘the Brisbane Line’ in recent years. As other areas of the nation suffer from house price declines and interest rate increases, a focus on onshoring and low house prices mean that northern Australia is becoming a hotspot for developers across the board. House prices have proven to be declining at a far slower rate, or not at all, in northern areas of Australia than the rest of the country. CoreLogic data for February found that regional Western Australia is at its peak in terms of house prices, and Port Douglas was named number one in regional Queensland with the highest 12-month house value growth of 15 per cent. ▲ Urbex’s residential development 7km from Cairns is a 58-lot “green oasis”. Urbex Realty general manager Craig Covacich says that while sales volumes in south-east Queensland and Victoria softened 70 per cent, the regions, including Townsville and Darwin, softened by only 20 per cent. “Prices have remained stable, and demand has remained constant in both Mackay and Townsville whereas we are experiencing a softening in our enquiry and sale rates and values in Brisbane,” he says. Urbex last year made plans for an 800-lot subdivision of 80.27ha site in Townsville , throwing its weight behind the region. “We are not experiencing a decline in values in Townsville and Mackay in the new housing market either. “At the moment our experience is that regional housing values are holding as the underlying demand is underpinned by a demand to live outside of the capital cities and remote working remaining a viable option across some sectors of the labour force.” Housing Cairns was particularly hard-hit during the pandemic as the tourism industry failed, with 9000 tourism jobs and billions lost to its economy. According to the Reserve Bank, a full recovery in tourism will not occur until at least mid-2023. But this has not stopped developers from investing in Far North Queensland. The 56ha Cutters Rise is a major development about 20km south of Cairns at Gordonvale, developed on land belonging to the family of real estate professional Renee Straguszi. “Oftentimes we’re the ones suffering up here,” says Straguszi. “We missed two property cycles over the last 10 years, so what Covid did for us was bring us up to where the prices should have been anyway. “But in comparison to the prices down south, they are still very affordable.” ▲ Casa Mia is the retirement living stage of the Cutters Rise development in Cairns's southern corridor. Seachange and treechange motivations were key drivers of sales for Cutters Rise during the pandemic and demand has not slowed, Straguszi says. “With higher buyer enquiry from locals and a lot of southern enquiries still it’s keeping the market steady. But listings are getting tighter and tighter so not as many people are selling.” With the local government spending billions on infrastructure around the southern corridor of Cairns, it’s ideally placed for residential growth. “Our smallest lot is 600sq m and we also offer quarter-acre blocks of flat useable land, in an area where there is so much infrastructure going up, new supermarkets, police stations, petrol stations, childcare and we have our retirement project Casa Mia being built as well. “The council is very behind Cutters Rise and Casa Mia because there hasn’t been a lot of major development in the southern corridor for many years.” ▲ Cutters Rise is on former farmland belonging to the Straguszi family, who acquired it for sugar cane in 1935. Straguszi says that at the launch of stage one of Cutters Rise in 2020-21, the sales team were “inundated” with enquiries. “I don’t think we’ll see much of a decline in sales prices here in Cairns, it will stay steady and it’s all dependent on the person buying the property and what situation they’re in. We’re seeing record sales in apartments in Cairns, extremely low vacancy rates, there is a housing shortage.” According to the data from CoreLogic, Cairns house prices have risen 0.5 per cent month on month, and 4.1 per cent over the past 12 months. This is in comparison to Brisbane inner-city’s 0.7 per cent monthly decline and 7 per cent decline over the same 12 months. General manager of Urbex Realty, the sales arm of BMD Group developer Urbex, Craig Covacich confirmed the trend. &ldquo;Demand has remained constant in both Mackay and Townsville whereas we are experiencing a softening in our enquiry and sales rates and values in Brisbane,&rdquo; he says. --> ▲ Cairns house prices have stayed consistent after a steady period of growth. But the strength of northern markets is not linked solely to housing. Sentinel Property Group has major assets in central and northern Queensland as well as Darwin and Port Hedland. Sentinel chief executive officer Warren Ebert said the north and central Queensland assets were some of the group’s best performers. “An average income in Mackay is about the same in Sydney but houses are a quarter of the price,” Ebert says. “In Queensland and Darwin, wages are very high in those mining industries and they have high disposable incomes. “They go and spend that extra on cars, boats, and shopping. Of our highest turnover centres, those in Townsville and Mackay are numbers one and two.” Industrial and defence Billions of dollars are flowing into northern Australia from the federal government through infrastructure projects plus energy and defence spending make it ‘a land of opportunity’ for developers. In Queensland, the Port of Townsville is spending $262 million widening its channel to accommodate larger vessels and the Lansdown Eco-Industrial Precinct is being supported by $74 million of infrastructure spending. In Cairns, $265 million has been allocated to the improvement of Captain Cook Highway links between the port and the city. Meanwhile in Western Australia, the federal government allocated nearly $500 million in funding to boost the output of critical minerals used in electric vehicles and batteries, and this month the government announced a $565 million investment in Port Hedland’s expansion, which it says will create hundreds of jobs. ▲ Darwin has bucked house price trends and will receive $2.2 billion in government infrastructure investment in the coming years. “Over the last few years the government has realised we have to be more self-reliant,” says Sentinel’s Ebert. Other sectors that aren’t necessarily as prevalent in other areas of the country are also proving a boon. “In addition, you have another [army] brigade moving to Townsville in the next three years, with 1500 personnel, multiply that by 3 or 4 as they will be bringing family members with them, that’s another 5000 permanent added to the population. “The defence base in Townsville is the largest in Australia. Defence isn’t going away—it’s only getting bigger and bigger.” Meanwhile, private industry continues to see value in northern Queensland. Queensland Pacific Metals (QPM) has chosen the Lansdown precinct as the future home of its proposed $2.1 billion Townsville Energy Chemicals Hub project. All these things add up, explained Ebert, to a major opportunity for developers, one which Sentinel has capitalised on. However, it is not without its challenges, including making places with an average annual temperature of 30 degrees and 60 per cent humidity attractive to southerners, as well as a dearth of construction workers. “Back in normal times, when things would slow down you could get tradies to move up north for work, but it’s not slowing down south so you’re not getting tradies up there,” Ebert said. Regardless, the wealth and spending annexed in the north of Australia makes it a major opportunity for developers after the grind of southern markets. “The wealth for Australia is being made in northern Australia,” says Ebert, “and that looks unlikely to change in the coming years.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Northern Australia: The Land of Opportunities

Want to read more?

Stockland Re-Enters Density in $5bn Apartment Play

Brisbane Developer in Cross River Rail Compensation Tussle

Touch, Taste, Theatre: What’s Driving Mondrian’s Success

Relevant or Redundant: Will Tech Kill Display Suites?

Missing Heart: Why The Gold Coast Needs a CBD

[+] Northern Australia: The Land of Opportunities

Want to read more?

Stockland Re-Enters Density in $5bn Apartment Play

Brisbane Developer in Cross River Rail Compensation Tussle

Touch, Taste, Theatre: What’s Driving Mondrian’s Success

Relevant or Redundant: Will Tech Kill Display Suites?

Missing Heart: Why The Gold Coast Needs a CBD

Queensland’s $2bn Push Opens New Housing Front

JQZ Plots 10-Storey Addition to Parramatta ‘Auto Alley’ Plans

South Melbourne Housing Precinct Revamp Takes Next Step

Queensland’s $2bn Push Opens New Housing Front

JQZ Plots 10-Storey Addition to Parramatta ‘Auto Alley’ Plans

South Melbourne Housing Precinct Revamp Takes Next Step

Stockland Re-Enters Density in $5bn Apartment Play