Rockhampton Rises as Developers Bet Big on Regional Residential Growth

Rockhampton was dubbed the City of the Three S’s during the Gold Rush of the mid-1800s. And while the Capricorn Coast capital, about 650km north of Brisbane, has come a long way since those days of sin, sweat and sorrow, developers have been cautious about entering a market historically tied to the boom-and-bust cycle of mining. Altus Property Group is the latest to throw its hat in the ring, having launched Sienna 69-lot community at Gracemere, 9km west of Rockhampton which is nearly sold out and now under construction. The builder-developer says it is the first project of its scale in the area in more than 12 years and marks the start of its $280-million regional pipeline. Altus’s plans signal growing interest in the region, where Maas Group Holdings has begun work on Ellida, a 279ha, 2200-home greenfield project, GemLife launched an over-50s community and a Living Gems $360-million Parkhurst 505-home land lease project has begun work. Housing pressures Living Gems chief executive Anthony Puljich says there is a “critical” housing shortage in the region, fuelled by a $12-billion pipeline of major projects. “The region is dominated by older stand-alone homes on large lots, which are not ideal for the ageing population, with about a third of residents in Rockhampton over 50,” Puljich says. “There is a huge gap for housing that is purpose-designed for this market, particularly active older Australians wanting to right-size for lifestyle and financial reasons. “It’s appealing not only to those living in Rockhampton but surrounding areas across Central Queensland.” But while the market generally is booming at Rockhampton, that has not always been the case. Between 2013 and 2015, the housing market was oversupplied due to overdevelopment and a mining downturn. Today, the challenge is the opposite: a scarcity of land, Real Estate Institute of Queensland zone chair for Rockhampton Noel Livingston says. “We’re divided by the Fitzroy River and a lot of our major facilities like hospitals are on the south side, which is surrounded by a flood plain, so there’s only one way to go—we’re moving north,” Livingston says. ▲ REIQ zone chair for Rockhampton Noel Livingston: Land scarcity is the challenge for Rockhampton. New development and investment will be geared towards north Rockhampton suburbs such as Park Avenue (tipped as Rockhampton’s next property powerhouse) and Parkhurst (a recent recipient of a $17.3-million Residential Activation Fund injection to support residential infrastructure development). North Rockhampton is at a slightly more affordable price point, Livingston says, but this may not be for long. “A lot of buyers are people that can’t get into the Sydney market and are looking to get a foothold by investing in the country regions,” Livingston says. “Coupled with that, they can get the return that they’re after here at the moment, and the magic figure for those buyers’ agents is around a 6 per cent net return. ▲ Work has begun on Altus Property Group’s Sienna development at Gracemere. “Our price structure has enabled them to do that, but that won’t continue the way the market’s going.” There are developers, including retirement specialists GemLife, who have seen the potential of Rockhampton. The area presented a “rare opportunity” and “pent-up demand” for over-50s living, GemLife chief executive Adrian Puljich says. “[Rockhampton is] a major regional centre with strong local pride, lifestyle appeal, and a lack of purpose-designed downsizing options for over 50s. “What we saw was a gap between demand and supply … [and the] response to GemLife on Dean, our first infill development in an established suburb of Rockhampton, has absolutely validated that decision.” Further regional opportunities While GemLife struck gold with its north Rockhampton infill site, pressures on land availability have moved development further outward to other locations, including Gracemere, Altus Property founder and Central Queensland local David Young says. “Rocky has run out of development land—there’s not even land left to subdivide,” Young says. “The rapidly emerging town of Gracemere is one of only two towns in the region where there is future development for housing and rental supply, the other is the township of Parkhurst. “A common mistake is people often brand Gracemere and Parkhurst as Rockhampton, which are their own towns.” Puljich called Rockhampton planning authorities “proactive and supportive”, while Livingston says the Government is doing what it can to support development in Rockhampton and the wider region. ▲ Altus Property Group founder David Young: Rocky has run out of development land. “But the pace in which development is happening is not keeping up with the pace of the economy here, and that’s where we’ve fallen well behind,” Livingston says. This is causing issues, with median house prices rising 25 per cent at Rockhampton in the past 12 months, according to the REIQ. The annual median sale price for the Rockhampton local government area is $500,000, up 85.2 per cent in five years, while rental vacancy rates have been under 1 per cent for some time. Affordability and medium density This, however, means the lower end of the market is being forced further and further up. “The rental situation is quite critical at the bottom end because low income earners are now in the position where they can’t even afford to rent and public housing isn’t keeping pace with that either,” Livingston says. New supply is in the pipeline, but faces challenges. “Construction costs are very high, they’re much more expensive than, say, Brisbane,” Livingston says. ▲ GemLife chief executive Adrian Puljich: The area offers a “rare opportunity”. However, Young says that because of price growth, projects are stacking up. That is the case in suburbs including Gracemere, where Young estimates prices for house and land packages on 700sq m lots are $200,000 cheaper than the 300sq m lot sizes of packages in, for example, South-East Queensland. “Project feasibilities anywhere in regional Australia are now better than any capital city or suburbs with higher yields for investors and great capital growth for owner-occupiers,” he says. These challenges are prompting some to look to other options, such as medium density. Altus is developing townhouses and is considering higher-rise development. ▲ A rendering of GemLife’s Rockhampton over-50s community. But whether there’s an appetite for medium and even highrise density or not, in time it will become a necessity, Livingston says. “And if the argument is there for that and that will help solve our accommodation crisis, I am sure that the local authority will be open to it.” Growing economy Regardless, Rockhampton’s growth drivers remain robust. “Beef is strong, mining is strong—we’re fairly diverse in the sort of industry that we rely on,” Livingston says. Major infrastructure projects including the $2-billion Rockhampton Ring Road and companies such as Alliance Airlines moving to town will add several hundred employees and their families to the market. “The fundamentals of industry, infrastructure projects, agriculture, the military expansion into the area, renewable projects, health and education spending means that the region is no longer reliant on mining,” Young says. ▲ Altus Property is due to start construction on its 100-room Cattleman’s Tavern at Gracemere next year. “It has matured to be a burgeoning new destination ... and the forecast growth until 2041 is off the charts.” GemLife’s Puljich says that Rockhampton’s affordability, connectivity and lifestyle make it increasingly attractive, especially for downsizers. “If the demand continues as it has, we’d certainly consider further projects. The tailwinds are strong—forecast increase in the retirement-age cohort, regional migration, housing affordability pressures, and a generational shift in how over 50s want to live,” Puljich says. “We absolutely see Rockhampton as a long-term growth location.” While Rockhampton’s growth can’t continue at this pace, major opportunities for development remain. “I’ve been in real estate in Rockhampton for a long, long time, and I’ve never seen it like this before. There’s nothing locally to suggest that it’s going to slow down,” Livingston said.

Rockhampton Rises as Developers Bet Big on Regional Residential Growth

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