The gold rush is over

The days of ‘build it and they will come’ for property investment are over. Developers face a competitive national and international market vying for investors’ attention and dollars. The three great deciders were the glossy brochure, the attachment of personal feelings, and finance. Glossy brochures are getting glossier with all the digital enhancements of the web, sales pitches more fevered, and finance is being driven out by institutions seeking to maintain and expand returns based on boom conditions.

How does a developer stand out in the crowd in this environment?

The unending quest for every property investor to have the perfect dinner party anecdote about how they identified the next hot spot area or hot development and got in early. The web has provided them with national and international access to opportunity. Many seem spoilt for choice.

However the fundamentals of good investing are available everyday, in unexpected places. Few investors know what they are, few developers pitch to this sector directly. Both sides of the Velcro are not ‘sticky’.

In these market conditions developers need to educate investors about key drivers of return and capital gain, then position their opportunity within this framework. Many have previously done this via the investment ‘seminar’ that fronts property sales. Investors are well educated about this style of presentation and have little trust in the quality of the information.

Property Investment Advice:

In an unregulated industry with no educational requirements for advice givers investors are left to their own devices to find suitable information.

Many turn to other trusted financial advisor:

Accountants: only some of which own investment property or recommend it

Financial Advisors: Whose professional indemnity insurance does not cover property investment advice and the regulation of their industry makes it difficult for them to give it

If this is unsuccessful they may go further and find

Business or social colleagues: They may appear to be successful but it is based on appearances rather than due diligence.

Solicitor: Who may do conveyancing and have connections into the real estate industry

Real Estate Professional: Real estate providers are not insured or advised to give property investment advice. Their access to information is generally limited to the area their business practices in. However they may have other connections with colleagues

None of these sources are likely to recommend investment property. If they do it will be related to their connections rather than investment credentials. Few will provide educational support for their clients to learn about it.

Lastly they may be connected with a property investment advisor who range from very professional with real estate licenses, financial planning qualifications, and transparency of transactions, to deal makers able to access property and on sell it at a profit with enough facts to support the investment.

Education:

What investors need to learn is the demographic growth of the area, infrastructure changes, both government and private, and historic capital growth rates. These all provide the foundation for sustained capital growth.

Then they can review an opportunity for its features, rental appeal, and on going management. From here they can review their personal circumstances and make their decision.

Manta in Bargara, an example:

Key Drivers in Bargara QLD

The boom in resources has driven the growth in QLD. Bundaberg based mining Company RIO has invested in a new Aluminum smelter. It will provide more jobs and a great boost to the local economy.

Put this together with Bundaberg’s: o proximity to the coast o the sea change trend o The Government’s support adding o New water resources to ensure supply o Medical infrastructure to support an aging population o High speed train services from Brisbane o Flights to the area from Virgin Blue and Qantas o High level of tourist activity especially ecotourism o Access to the great barrier Reef

And we have got all the conditions that create demand and is ripe for investors to participate.

‘Manta’, Bargara Fits the Bill

‘Manta’ in Bargara QLD is an oceanfront residential/resort type development built by award winning developers CABE and designed by Peter Conley and Associates honored by the Royal Institute of Architects for excellence in design.

Bargara is located 13KM northeast of Bundaberg and with a population growth of 4.8% per annum it is growing more than double the QLD average.

The median price of units in Bargara has risen by and average of approximately 1.7% per annum since 2001. this outpaces the average growth in the Bundaberg and Burnett shires by 15% and 19.8% respectively.

The development is structured as resort a facility managed by CABE. The locality and facilities attract tourists and retirees looking for sea change lifestyle. The area attracts 25,000 visitors from around the world during the nesting season of the Loggerhead turtles in Mon Repos Environment Park.

Occupancy rates consistently high in the area and the development stands out amongst those that already exist.

Features that occupants will enjoy include stunning ocean views from every apartment, high ceilings, extensive floor to ceiling glazing and open plan layouts that fuse effortlessly with the oversized timber decks. Not to mention that each unit extends from one side of the building to the other allowing sea breezes to flow right through.

A typical three bedroom unit is about $590,000 for a 144 sq mtr and another $27,000 required for a furniture package but the overall return is cash flow positive making it just what the doctor ordered.

Out this together with the potential projected capital growth and this could add to the pot of gold.

Conclusion Government policy and demographics play a key role in the final decision to invest and the resulting satisfactory outcome from and investors perspective.

The savvy investor is now looking at market factors more closely and well as quality from developers.

John Moore is president of the Propetry Investors Association of Australia Inc.