Views on investing in Cairns

Personally I wouldn't touch Cairns at the moment. It is way too reliant on the tourism industry which obviously isn't going too great at the moment, And I believe there is an oversupply of units available there as well. Not too sure what the vacancy rate is like but that could be an issue? There are heaps of bargains there at the moment but it could be quite a while before you see any capital growth. Maybe your hard earned money is better else where?

In saying that I do have a soft spot for Cairns as I used to live in that area.

Just my opinion anyway

Cheers,

Nathan

How much were the management fees that you were experiencing in Cairns, Dark Knight?

I went to investigate the whole Cairns/Port Douglas/Palm Cove/Kewarrah Beach in April 2013.

As you might guess .. I also had seen the properties going for pennies in the dollar and wondered what it was all about.

How low? At one stage I could have picked up SIX apartments for a little over 130k

At one stage the apartements got as low as 15k

So you may ask WHY?

Well .. the first thing is the obvious one. Cairns has lost its tourist biz in a major way. Somewhere between alienating the local population through expensive schemes and building to incredible levels in an area which just didnt have that kind of demand .. has caused major issues with supply .. demand .. and profitability.

I ended up staying in Port Douglas. And my overall view as a tourist? Give it a week .. then you've done it all in Port Douglas.

The Cairns council has implemented restrictions on the local property apartments which restrict usage to holiday only, non residential. Result being .. instead of having a lot of places which you could have had surviving off local trade .. they are dying because they now RELY on the tourist dollar.

As business in the area has been declining .. the Cairns council has been supplementing the deficit by raising the rates for utilites and water in the area.

So because business is declining badly .. instead of stoking the fires with appropriate schemes and a relaxation of the legal status of the holiday units .. they have actually got TOUGHER on the people who are using holiday accomodation as living rental.

Cairns council is stuffing things up in a major way and blaming other people for the fact its doing NOTHING right to approach what is a crisis in value tourism with commonsense ideas.

As an investor .. i've been there and my gut is .. wait until you have someone in charge who knows how to run the joint.

With bad management in place .. even the best investment strategies can be turned into pulp.

To give you an idea of the difference in rates and management, my local 2BR units in melbourne average 2300-3000pa as rates/expenses. That jutts out to 7500-9000pa in rates/holiday management/expenses in Port Douglas and 6800-8500pa in Cairns.

As anyone who is trying to invest .. the basics are .. you want to get back a pieceable return with the possibility of capital gain at the end of it. And when the calculations dont add up and the properties become a major expense … you'll find everyone wanting to offload their properties and no-one willing to invest.

Its Cairn Council's fault. There is no-one else to blame and no-one else who has done nothing to set the situation right for years.

This happened before the 2008 crash and the current malaise just adds to the existing situation.

Stay away until things change.

Think i'm making this up? Check the businesses for sale sections and look at how many OWNER OPERATORS are selling their management rights and trying to flee the place.

And how many resorts have moved into receivership in the past 2 years.

Its not a pretty picture.

When things do pick up .. IF they pick up .. there will be a large amount of stock to soak up .. and probably a lot that will need repairs after being neglected for years.

There is a time to invest in Cairns .. and its not now.