The Bargain Next Door

Sydney Morning Herald

Saturday August 16, 2008

Kate Farrelly

Can't afford the best? Then consider the ripple effect.

The best value on Queensland's coast is brought to you by the letter C. Think Coolangatta and Coolum, then throw in Cardwell for good measure.

It's all about the ripple effect and if you can jump in before it reaches you, you may find yourself carried on a wave of capital growth.

"Investing in property along the coastline is like buying into the blue-chip share market," says Jonathan Rivera, Colliers International Qld director of residential research.

"The price of entry is normally higher than inland properties but the rate of return is often better and the risk of a loss is minimised due to the scarce and unique nature of these properties."

But if you're looking for blue chip at reduced rates, Rivera says emerging coastal communities, which may not yet have all the infrastructure of their neighbours, are worth a look.

Many of Queensland's small coastal towns provide the opportunity for holiday or sea-change housing options, as well as a comparatively affordable entry point to the market.

Rivera says that since these properties are near the coast, they are likely to be in high demand in the future and should provide high capital growth over the long term. The rental yields, however, tend to be relatively low. He advises looking for proximity to big centres and airports, as these tend to indicate employment opportunities, essential services and transport options.

COOLANGATTA

It's a little like the kid brother to Surfers Paradise: not yet grown up but with the same strong genes designed to attract attention and a certain unsophisticated charm that wins repeat business. Coolangatta is a great example of the ripple effect, Rivera says, with its proximity to Surfers Paradise, where development continues to reach, quite literally, new heights.

"The southern end of the Gold Coast has always maintained a wider community feel. It hasn't gone through the same changes as Surfers Paradise," he says. "This is actually a positive because it's keeping its character."

The area is the focus for future development. "We've seen that market experience new unit development but not at the same level as Surfers," he says.

"With the upgrade to the Pacific motorway, the area has opened up, the airport is close and people are fast becoming aware of what Coolangatta has to offer."

The median unit price for the six months to March was $430,000 and unit stock varies from 1970s blocks to off-the-plan luxury apartments with views. Prices are from $270,000 to $5 million.

Rivera says two-bedroom apartments are the most popular rentals, while newer apartments are a better bet for capital growth.

COOLUM BEACH

In the Maroochy local government area, Coolum has long been a favourite family holiday spot but in recent years has been partly gentrified, thanks to an influx of new apartments, with more to come.

"It's a spectacular place and it's a market that still has a long way to go in terms of development," Rivera says. "The beach has been transformed quite significantly with new unit developments as well as retail offerings."

A population increase of 7.6 per cent during the past 12 months bodes well for continuing capital growth.

"Anything above 1.5 per cent is exceptional, so this is quite dramatic," Rivera says.

With Maroochydore touted as the coming central business district of the Sunshine Coast, Rivera says a lot of infrastructure will follow.

The median unit price for the six months to March this year was $370,000 and, as with Coolangatta, Coolum has many products, from 1960s stock to approved developments yet to be built.

Prices range from $235,000 to $2 million-plus and Rivera says for those who can't afford newer stock, buying and renovating an older unit can lead to a strong rental yield with low body corporate fees.

CARDWELL

Ray White Cardwell principal Colin Neate says Cardwell is the Queensland coast's No. 1 hot spot and he has good reason for backing his town, which is near Hinchinbrook Island, the Great Barrier Reef and the Wet Tropics Rainforest. It's two hours' drive north of Townsville; Cairns is two hours' drive further north.

Just 500 metres from the town centre is the Port Hinchinbrook Marina Resort, owned by developer Keith Williams, the brains behind Sea World and Hamilton Island.

Neate says Williams is negotiating the sale of the resort, which if successful would see property prices go "through the roof" following the construction of an $80 million spa resort.

"It's literally a blue-chip investment waiting to happen," Neate says.

"Meanwhile, you can still buy waterfront blocks for about $445,000 to $500,000 for a 1300-square-metre block."

Cardwell stands to benefit from the diverse and fast-growing community of Townsville.

Rivera says the small township could become the "Noosa of Townsville" - a holiday destination for the increasingly wealthy Townsville locals.

The median unit price for the six months to March is $565,000 but this figure is based on only five sales in new developments.

However, with growth over five years at an impressive 34 per cent a year and a population growth rate of 6.9 per cent during the past year, Cardwell looks set to boom.

Rivera suggests looking for units near the sea and/or with views. Prices for older stock range from $200,000 to $1.8 million.

FANCY A TRIP TO THE BAHAMAS?

The 10-storey beachfront Bahamas Resort in Coolangatta (pictured with the view above) is expected to fetch more than $10 million at auction on September 25. PRDnationwide Coolangatta managing director Gregg Taylor says the 860 sq m site was likely to appeal to motel operators, residential developers and mum-and-dad investors.

The family-owned and -run boutique resort includes 21 apartments, which are leased to short- and medium-stay visitors. The site at 144-146 Marine Parade includes 22 secure basement parking spaces, a manager's residence, pool, heated spa and barbecue pavilion. "We expect interest from all over Australia and from overseas," Taylor says. "It will be over $10 million but how much more than that nobody knows."

Phone (07) 5536 5526 for further details.

GOOD PROSPECTS

RP Data's analysis of the coastal areas with the lowest median unit prices in Queensland reveal four locales with good prospects for capital growth.

Bucasia may benefit from the ripple effect from Mackay, which has enjoyed strong price growth for units in waterfront areas. The current median unit price is $177,000.

Mission Beach is experiencing strong tourist demand for units and, with a median price of $221,925, RP Data sees room for growth. See our separate story on Mission Beach on page 14.

Yorkeys Knob is positioned as the most affordable ocean-front unit locality in Cairns and, over time, RP Data expects a price catch-up to match those elsewhere in the city. The median is $225,000.

Craiglie's median of $225,500 is $64,500 less than nearby Port Douglas. RP Data doesn't think the gap will close but it sees room for growth.

© 2008 Sydney Morning Herald

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