Oa­sis Townsville a cat­e­gory 11 hotspot role model

The Weekend Australian - Review - - Prime Space -

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.

Sea

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.

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