Oasis Townsville a category 11 hotspot role model
ICAN’T think of anywhere better than Townsville for showcasing the fundamentals of identifying real estate ‘‘ outperformers’’. When I first researched the factors that generated hotspots, I distilled all the catalysts neatly into 10 ‘‘ creator categories’’ that included Sea Change, Transport Infrastructure, Boom Towns, Government Decisions, Lifestyle Features and The Stayers.
Recently I’ve added an 11th creator category, Oasis Change, because I believe water supply issues will become top of mind in people’s decisionmaking the longer this drought lingers and the more water restrictions bite into economic activity and lifestyles.
My method of identifying hotspots is finding locations with lots of the creator categories in play. The more of these factors you can find in a town or city, the more likely you are to see property values rising.
Townsville, Australia’s largest tropical city, is the quintessential case study because it’s a blend of six or seven creator categories. It has elements of Sea Change, The Stayers, Transport Infrastructure, Lifestyle Features, Boom Towns, Government Decisions and Oasis Change. I can’t think of another location with so many pistons driving its prosperity.
Townsville appeals because it’s a Boom Town ( it’s getting lots of rub- off from the resources boom) but its economy doesn’t rely on mining. It has the world’s largest non- ferrous metals port and the recent federal budget included funding for a new $ 190 million port access road.
There are three international- scale metal refineries in the city and many who work in the mines to the west live in Townsville and fly in, fly out.
The city has a strong manufacturing industry, is the commercial/ government/ education capital of north Queensland, has a major ( and expanding) military presence and also earns plenty from tourism ( there was a 30 per cent rise in domestic visitors to Townsville last year).
The key word here is diversity. If the resources boom withers and dies, Townsville will be fine because the other pistons will keep pumping.
Government decisions to expand military numbers in the city are significant because of the multiplier effect. The budget included $ 630 million to cement the city’s status as the nation’s No 1 defence hub, including relocation of Sydney’s 3rd Battalion, Royal Australian Regiment to the city, upgrading the Lavarack Barracks, building over 500 homes for defence personnel and deployment of a new helicopter squadron. Defence personnel numbers are expected to grow by more than 1500. Townsville Enterprise says such an increase generates 10,000 in general population growth to service the military expansion.
Townsville already has plenty of impetus from a rising population. Last year Greater Townsville was Queensland’s third- ranked growth area, after Brisbane and the Gold Coast. It has averaged 2.7 per cent a year growth over the past five years, well above the national average, and the city now has 165,000 residents. Not surprisingly, developers are targeting the region and spending big on land. One development site, sold for $ 2.2 million two years ago, has just resold for $ 7.35 million.
Many parts of the metropolitan area ( which is a blend of the Townsville and Thuringowa municipalities) are benefiting from construction of the $ 120 million Townsville- Thuringowa Ring Road project, being built in four stages to provide the future national highway route through Greater Townsville.
The first stage, the 5.3km Douglas Arterial including a bridge across the Ross River, was completed in 2005 and Dean Dederer of PRDnationwide Research says this has opened up new areas on the far side of the river, providing fast road links to Townsville’s university, hospital and military barracks. New residential estates have been developed as a result.
Now under way are sections two and three, which will connect with the existing Bruce Highway.
The Queensland Department of Main Roads hopes to complete the project by the end of 2008. Dederer says this is boosting emerging areas in Townsville’s western and northern corridors — and more new subdivisions are appearing. Federal Roads Minister Jim Lloyd hopes the project will reduce traffic and congestion in the suburbs of Vincent, Heatley, Cranbrook, Aitkenvale and Mount Louisa, and enable heavy vehicles to bypass the city.
This kind of Transport Infrastructure is one of the most powerful influences of hotspot creation.
The city also offers much in terms of Lifestyle Features, of which the most influential is water. Townsville sits beside the ocean, has a harbour precinct which is undergoing massive redevelopment ( including creation of exclusive waterfront homes) and also has the Ross River, which provides an alternative focus for homes and community facilities ( and a water supply).
Magnetic Island provides a Change alternative just offshore.
The scale of new development happening in the area is best demonstrated by the $ 1 billion Breakwater Quays development, where Consolidated Properties is the master developer and other companies such as Mirvac and City Pacific are undertaking individual elements.
Overall, there will be 1000 apartments, waterfront houses, marina berths, a retail precinct and a cruise ship terminal. There is also extensive new development to service Townsville’s growing visitor numbers. Oaks Hotels & Resorts is building three accommodation complexes in the city.
Townsville is the best example I can find of an Oasis Change hotspot, because it has such good infrastructure for capturing its tropical rainfall.
The Ross River Dam is being expanded at a cost of $ 115 million and the city also has a pipeline link to the Burdekin Falls Dam.
Townsville is also one of The Stayers — those areas where values continue to rise steadily when the market is stagnating or falling in other locations. The boom ran out of puff in southeast Queensland around 2004 but Townsville values have kept on keeping on.
Townsville house prices have shown a steady upward path since 2001 and there is no sign of abatement. The median house price has now topped $ 300,000, following growth averaging 17 per cent a year for the past five years. The city remains affordable, compared with Cairns ($ 322,000) and Mackay ($ 377,000). There has been remarkable consistency in sales volumes: data from PRD shows that Greater Townsville has made 2000 or more sales every half year since 2002.
Unit prices continue to rise but the steepest climb has been in residential land prices, which have averaged growth of almost 20 per cent a year over the past five years.
I’m not suggesting everybody should dash out and buy in Townsville. I’m suggesting the city is a role model for people seeking future hotspots.
Here are the factors that have made Townsville hot — where else can you find a location that exhibits some of those qualities but hasn’t had the same degree of growth?
One place that springs easily to mind is Gladstone, another coastal city of strategic importance in Queensland, where values haven’t risen nearly as much — but which has many of the desired qualities.
And if you think Gladstone doesn’t appeal because of its daggy industrial image, consider that for much of its life Townsville has been considered the much less sexy poor cousin of Cairns and often referred to as Brownsville.
No one is making jokes about Townsville any more.