Gold Standard

Sydney Morning Herald

Saturday June 2, 2007

Peter Vincent

There's more to Queensland's apartment market than units at Surfers.

The natural factors that have made the Gold Coast appealing remain unchanged - its beaches, warm weather and handy mid-east coast position - but leading property analysts are questioning its suitability for investors.

On one hand, the indicators are that investment returns will remain strong. According to Australian Property Monitors, Gold Coast unit rental yields were 5 per cent last year, higher than Sydney's 4.82 per cent and Brisbane's 4.71 per cent. Property analyst Residex says capital growth for units was 11 per cent and has averaged 9 per cent a year for the past decade.

John Lindeman, a spokesman for Residex, points out apartments on the Gold Coast are no longer cheap. "It's got to the point where the median unit price is well above the median in Brisbane and getting very close to the Sydney median.

"The astute investors may start to look at other markets, because they want to invest where growth is going to occur, not where it has occurred."

Agents admit the phenomenal growth between 2001 and 2004, when Gold Coast unit prices doubled, may never return.

"The days of leaving your bucket and spade at the door and walking out with 50 grand in your pocket are gone," says Brinton Keith, director of new apartments for Colliers PRD. The major worry analysts have is the town's infrastructure. More than $66 billion is earmarked for a series of major projects, including new hospitals at Southport and Coomera, several new schools, an upgrade to the Pacific Highway between Nerang and Tugun and a new public transport system of either buses or light rail. But most projects are still in the planning stages and the new hospitals and light rail won't be finished before 2012.

Queensland premier, Peter Beattie, recently said slowing migration to the south-east of the state would take pressure off infrastructure and Gold Coast deputy mayor David Power recently said a recession might be needed to allow infrastructure projects to catch up.

Lindeman and analyst Michael Matusik told the Herald that, whether or not investors think there is growth left in the Gold Coast, they might walk away if the infrastructure can't cope.

The Gold Coast is not the only unit market in Queensland. According to Colliers PRD Research, the Brisbane unit market is set to outpace Sydney for the next five years, with price growth of 25 per cent compared with 19 per cent here. According to Residex, unit prices in regional Queensland grew at 10.8 per cent in 2006 and averaged 9.5 per cent a year over the past decade.

AT A GLANCE

* Median rent for Brisbane units in the March quarter was $295 (up 5.4 per cent in a year). Median house rent was $320 a week (up 14.3 per cent).

* Average gross yield for Brisbane units was 4.89 per cent; for houses it was 4.81 per cent.

PREDICTIONS

* The median Brisbane unit price will rise 25 per cent and median house prices by 28 per cent in five years.

Source: Australian Property Monitors

THE RIGHT FEEL

The popularity of the Gold Coast with sea-changers is part of the reason that Sydney financial adviser Gabriel Coates decided to invest in the Allisee project at Runaway Bay.

She bought a two-bedroom sub-penthouse with views of Stradbroke Island and a huge ground floor apartment for a total of $2.45 million.

"I work with retirees so I know how many are interested in the Gold Coast," she says.

"It sounds strange but it was also intuition. When you look at a property you get a good or bad feeling about it and it just felt right.

"The views are fantastic and it is right on the Broadwater, which is a protected beach."

She plans to rent out the apartments when they are completed in 2009. Having grown up in the area, she hopes to eventually move back there.

© 2007 Sydney Morning Herald

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