[+] Aussie Wave Pools: From Pipe Dreams to Reality

Every day, driving along the Captain Cook Highway skirting the picturesque coastline between Cairns and Port Douglas, he gazes across the turquoise abyss of the Coral Sea. “And every day I just look out there and go, ‘F***, I wish there was a wave’,” laments veteran surfer and developer David Imgraben. Of course, with the Great Barrier Reef living up to its name just offshore, the forces of nature have conspired against his endless pipe dream. But Imgraben is not letting a 2300km-long coral reef system put an end to his hopes of one day riding a barreling wave in the Far North Queensland surfing nirvana of his mind’s eye. In the development world, imagination and opportunity are indeed two of the most powerful forces of nature. And with the convergence of new wave pool technology, a pandemic-triggered surfing boom and surge in lifestyle-driven demand for housing there is now a rising tide of major projects with surf parks as their centrepiece. Imgraben’s $320-million NorthBreak proposal for a 40ha site near Port Douglas is among the fast-evolving new asset class, which has emerged from next-generation wave machines designed to mimic ocean swells. At last count, the number of surf park projects planned or under construction across Australia had already hit double digits. So far, however, only one—Urbnsurf Melbourne—is up and running. Built on a 5.4ha site owned by Melbourne Airport at Tullamarine, it is capable of generating up to 1000 waves an hour and has been attracting more than 100,000 visitors a year. ▲ A computer-generated image of the NorthBreak wave park planned for Far North Queensland. The planned NorthBreak Port Douglas surf park is part of a masterplanned resort earmarked for a cane farm property next to the Mowbray River and less than 10km from the tourist town. One of a handful of local proposals utilising Canada-based Whitewater’s pneumatic Endless Surf technology, it also comprises a freshwater swimming lagoon and aqua park, 4.5-star hotel with 160 guest rooms, waterfront “paddle-in, paddle-out” villas, 35-cabin tourist park as well as alfresco dining decks, cafes and retail shops. But despite being approved by the Douglas Shire Council in March, NorthBreak’s progress has been blocked by an appeal lodged with the Planning and Environment Court over claims of inappropriate land use and potential ecological impacts. “So, we’re still going through the process,” Imbragen says. Meanwhile, his daily commute beside the waveless wide blue yonder of the Coral Sea has become even more tortuous after a recent tour of surf park developments in Europe and the US. The itinerary included a session at Alaia Bay, a wave pool in Sion at the foot of the Swiss Alps that is open almost year-round except for a three-week shutdown for maintenance. “It blows me away,” Imgraben says. “It’s a country that doesn’t even have a coastline and there you are riding near perfect waves with this magnificent backdrop of the Swiss Alps behind you. It’s that sort of dream of being able to surf in the morning and ski in the afternoon—it’s quite do-able over there.” The similarities between the evolution of the ski resort industry with the invention of the chairlift in the late 1930s and the current rise of surf parks with recent advances in wave pool technology is not lost on Urbnsurf founder Andrew Ross. “From then until now there’s been about 5500 ski resorts developed around the world and 30,000 chairlifts installed,” he says. “You can see some definite parallels between what happened in snow sports and what could potentially happen in surf sports with manmade environments.” ▲ Slotted in the Swiss Alps: A surfer gets barrelled at the Alaia Bay wave park in Switzerland. Ross—a former lawyer and investment banker—stumbled upon a newspaper article about a patent dispute over a wave pool design in 2012 and, after some research and quite a few phone calls, he found himself paddling on to a wave in a prototype surfing lagoon built under the cover of darkness in the hills behind San Sebastian in Spain. “I paddled into my first wave, surfed along it, did five or six turns, kicked out and went ‘Holy s**t, this thing is real’,” he recalls. “The wave was only about thigh high but I could see right away where the potential for the technology could go. “I’d turned up to the session with my cynical investment banking hat on and came away having lunch with the Wavegarden guys and signing up the rights to Australia for their technology.” That was the easy part. Coming up with the equity for what he calls Australia’s first “church to surfing” in Melbourne was—as he puts it—“the single most difficult raise I’ve done in my career”. “We had this unproven prototype technology and there was no business model wrapped around it.” Eventually he says most of the capital came from “family office money and high-net-worth investors” many of whom have also supported Urbnsurf’s second wave pool project under construction at Sydney’s Olympic Park . ▲ Urbnsurf Melbourne is currently the only operational surf park in Australia. Now spearheading US-based Aventuur’s plans for the southern hemisphere’s largest surfing lagoon development on a 5.8ha site owned by the Western Australian government in Perth’s southern suburbs, Ross says the nascent asset class is on the precipice of securing “proper institutional grade capital”. “The interesting thing about this asset class is the lagoon itself is fantastic, it makes a tonne of money and it has got a great margin profile (40-50 per cent EBIDTA) but it’s really all about its destinational value. “It’s a massive attractor and what it does, because of that, is it then elevates all the surrounding property around the park, so having it as a centrepiece to a larger integrated property development makes a whole lot of sense.” Imbragen agrees and says there is an accelerating incorporation of surf parks in real estate projects, which is creating a lifestyle and “enabling people to participate in that lifestyle who normally wouldn't be able to”. “It’s only early days but already there’s probably hundreds of these wave pools in various stages of planning around the planet … and increasingly they are being used as a focal point to anchor real estate developments.” The race is on Ross says there is also now “a bit of a race to the finish line” occurring in the industry. “In the same way you’ve got a limited number of airports or maybe major sports stadiums or the like, if you can be the first in a market you can get monopolistic control of it,” he says. Much of the initial surf park development momentum came from 11-time world champion Kelly Slater’s unveiling of his Surf Ranch wave pool prototype at Lemoore in California in December 2015. ▲ The start of it all: Kelly Slater’s Surf Ranch put high-performance wave pools on the map. It remains surfing’s hottest and most expensive ticket to ride a manmade wave. Even at a reported cost of $10,000 a session or $50,000 to $100,000 a day to rent the entire facility, it is booked out up to 12 months in advance. “That validation with Kelly supporting this space gave people a lot of confidence—you know, that the world’s best ever surfer thought that this was an authentic experience, which was true to surfing. It kind of helped everyone really and absolutely broke through a lot of barriers,” Ross says. Avid surfer and one of Queensland’s most successful developers, Don O’Rorke, has not only ridden “the Kelly Wave” but also forged a partnership with the World Surf League—pro surfing’s governing body and a major stakeholder in the Kelly Slater Wave Company. Under a plan to bring Surf Ranch to Australia revealed back in 2019, O’Rorke’s Consolidated Properties Group has proposed a $1.1-billion multistage integrated resort with a surf stadium, eco-lodge, residential development, retail village as well as a food and beverage precinct on a 510ha site at Coolum on the Sunshine Coast. But with the project still awaiting support from the local council and Queensland government it has been left in limbo. “We remain in discussions with the state government and the Sunshine Coast Council in regard to what we can do with our Coolum land,” O’Rorke recently told The Urban Developer . Meanwhile, a legal stoush has unfolded between two other rival surf parks planned for the region. One of them is a 25ha integrated resort development by Sanad Capital that has recently begun works on what its chief executive Bradley Sutherland claims will be “the best surf pool in Australia” using American Wave Machine's PerfectSwell technology. North of Sydney, Wiseman’s Surf Lodge—a $120-million adaptive re-use of an existing hotel complex—has been approved for a freehold 18ha site on the banks of the Hawkesbury River. It is being developed by surf park creator and operator Balnce with funds raised through an unlisted property trust. It will be operated under a private membership and events model. ▲ A render of the planned Wiseman’s Surf Lodge, north of Sydney. Director John Du Vernet says the capital raise has reached its minimum target to start construction on the project, which has been designed by architect Kelvin Ho— also known for his work with pub tsar Justin Hemmes’s Merivale hospitality ventures. “It’s an asset class that is just ripe for growth,” he says. “And there’s more and more coming online globally … so, clearly, they’ve established themselves as investable and the future should be very exciting for valuations.” Referring to the development parallels drawn with the ski resort industry, Du Vernet says: “If you think about it, where’s the value created? It’s not on the mountain, it’s all around the mountain … it’s a total halo effect. “And that’s why we want to be the landlord, not the tenant, because all the value is in the ground. “We’ve always thought that when you’re spending this much money on ground improvements, you want to have freehold. So, we discounted leasehold opportunities and that allows you to look at these assets slightly differently, it allows you to really leverage the site.” Ripple effect The project’s ripple effect is already being felt with billionaire property mogul Sam Arnaout’s Iris Capital forking out about $10 million for nearby heritage pub the Wisemans Ferry Inn Hotel. On the central Queensland coast near Yeppoon, a development agreement was recently struck between Surf Lakes International—innovator of arguably one of the most unique prototype wave-making contraptions—and wave pool operations company Global Surf Parks. The facility’s Mad Max-like plunger technology has the capacity to create 2000 rides an hour with 200 surfers in its large 80-million-litre man-made lake at a time. Under the agreement, the existing research and development site will be rebuilt, expanded from a 6ha to 40ha footprint and developed in three stages—with the first priority being to establish its facilities so that it can be opened to the public. Approval was granted last year allowing for accommodation, a food and beverage precinct, camping and glamping facilities as well as an events and entertainment area. “We’re looking at this being a destination,” says Global Surf Parks business development manager Wayne Dart. “I mean, we’ve got 800m of waterfront land in a spectacular environment—so, obviously, from a residential, hotel, retail, commercial or food and beverage perspective you’re looking at prime land. “And we’ve already had discussions with quite a few developers who may take on the remaining acreage.” Aventuur’s Andrew Ross says the new asset class is filled with very passionate people who believe in it but he adds—without pointing his finger—that some of them suffer from an affliction he calls ‘surf park fever’. “The symptoms of surf park fever are a complete suspension of reality when it comes to commercial matters and thinking about property development and the like, and just an abiding passion and unrelenting desire to get the thing built in your hometown so you can actually surf it.” ▲ A render of Aventuur's planned Perth wave park. Ross says the fundamental way for a surf park business to make money is “a function of bums on boards multiplied by frequency of waves—that’s kind of essentially what it comes down to”. But he warns: “This is a very technical, in some respects very difficult space to develop in. These are incredibly complicated pieces of infrastructure that you need to build. And then they’re linked to a highly complicated operating model.” Limited opportunity In the Australian context, his research indicates the window of opportunity may be limited to as few as “probably 10 or 11” commercial surf parks across the whole country that will “perform well, do a decent return for their investors and provide good solid experiences for their guests”. “And you’re going to have to deliver an authentic experience for it to be successful,” Ross says. “These assets are not a soul-less space, they very much have to have a soul. “Success for me was when I heard people starting to refer to the surf park in Melbourne as their local break. “There’d be a bunch of people driving up from Torquay and Bells Beach to surf in the lagoon, which in itself was incredible to me—we’d turned the traffic around and all the cars with surfboards on their roof racks were heading towards Melbourne rather than down the coast. “But then you’d also have all of these locals surfing in the park referring to these ‘coastals’ coming into their lagoon … that’s just an illustration of culturally what success can be around these assets. “People have a great deal of ownership of these things and they can sniff out really quickly if you’re not authentic. But the opportunity is there and if you get it all right it’s a fantastic ride.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Aussie Wave Pools: From Pipe Dreams to Reality

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