Sample Report Content — February 2003
Queensland Comment
Visitor Accommodation - Performance Trends
September Quarters 2001 to 2002 | ||||
| Queensland | Rooms Avail. | Nights Sold | Occup. % | Room Rate |
| Hotels | 0 | +1% | +0.9 | 0 |
| Motels | -1% | 0 | +1.1 | +2% |
| Serv. Apts | +1% | +6% | +3.2 | +7% |
| Total | 0 | +2% | +1.5 | +3% |
Takings from the accommodation sector were up 5% in September Quarter 2002 compared with one year earlier. This was due to a 2% increase in room night sales and a 3% increase in room rates.
The improvement came mainly from the northern parts of the State that had been badly disadvantaged by the collapse of Ansett in September 2001. However Sunshine Coast turned in a stunning performance with a 21% increase in takings following the trend towards Australians holidaying at home instead of flying overseas. Brisbane and Gold Coast had balancing losses from overseas visitors whereas Sunshine Coast is not yet strong in those markets.
This is the second consecutive year when there has been no increase in the supply of short term accommodation in Queensland. The current unit building boom will increase serviced apartment numbers for the next 2 to 3 years.
Population Growth is Soaring Again
Queensland's population is soaring again after a few slow years when Victorians were returning home. The latest ABS figures show that growth in the year to June 2002 reached 73,600 after being as low as 54,400 in 1999. The latest figure is a 13% increase on the 64,850 in the year to June 2001, with interstate migrants up 48%. Queensland accounted for 33% of total Australian growth whereas it is home to only 19% of Australia's population.
Comparable growth for other States was:
Permanent Resident Growth – Year Ending June 2002. | ||
| Qld. | 73,600 | +2.0% |
| NSW | 54,400 | +0.8% |
| Vic | 60,600 | +1.3% |
| WA | 23,100 | +1.2% |
| SA | 7,400 | +0.5% |
| Source: ABS 3101.0 | ||
Net interstate migration accounted for 29,028 of Queensland's 73,600 growth and overseas migration 20,236. This is the tip of the Baby Boomer "Sea Change" which is going to accelerate over the next 10 years.
Strong Rent Rises in 2002
Residential rents rose much faster in 2002 than in 2001 as indicated in our survey. Nowhere was this more evident than Gladstone where they rose 40% across the board in a single year. We have repeatedly pointed out the investment opportunities in Gladstone and now have the figures to prove it.
Gold Coast has cleared out ahead of Brisbane with the biggest rises and the highest rents in the State. These rises confirm the new record population growth levels of Gold Coast from Brisbane commuters and Baby Boomers migrating from interstate.
Despite the large numbers of renters recently seduced into buying their First Home, there were 1.2% more rental tenancies in Queensland in December 2002 than a year earlier. So there is good demand in both sectors in a State where the population is growing at 2.0% per annum.
Returns on Holiday-Let Units
On Page 7 we have set out to calculate the average returns investors can expect to receive from putting their units in a building manager's holiday letting pool. The answer is not much, but we go on to explain the reason for the popularity of this apparently unsound practice.
No Growth in Overseas Tourism
There has been no growth in overseas tourists coming to Australia for 6 years since 1996 (see page 8), and the Tourism Forecasting Council recently further downgraded its forecasts of future growth (see page 9).
This stark truth is hidden by a concentration on the numbers of total visitors. But most of the growth has been in categories other than tourists, such as student education, business and visiting friends and relatives.
This is stunningly bad news for properties and destinations catering for overseas tourists. Even the usually optimistic TFC has forecast the numbers of overseas visitor nights spent in commercial accommodation will grow by only 0.7% pa until 2012. A wonderful opportunity to help the Balance of Payments is being missed by a Federal government that is not prepared to invest in the seed capital necessary to promote Australia effectively overseas.
Interest Rate Pressure Eases
The weakening of the world economy has caused analysts to believe the next interest rate move could be down. Inflation is steady at 2.5% and the heat has gone out of the housing bubble, according to the Reserve Bank.
Queensland's GSP grew 4.5% in the year to September 2002 compared with 3.4% for the rest of Australia.
Buy Quality, not Bargain Investments
Our analysis of residential property price rises over the past 5 years has revealed an important rule that is a valuable guide to investors: "The more expensive the property, the faster its price will rise". See Page 11.
In an effort to "buy at the right price" there is often a tendency to go for the bargain instead of the more expensive property in a better location. The study shows that the scarcer properties are better investments in the long term.