Tony….I think this is a timely reminder that this is just part of the commodity cycle. One could be forgiven for accepting the negativity in the market place at the moment. However, just like property investing the best time to invest is at the bottom of the cycle.
These companies are now moving into the next phase of this huge structural change in our economy…..high capacity and demand for our resources. Companies are moving to become more price competitive and more production driven. Quantities are going to increase to meet Asian demand and eventually global demand when this recession has sorted itself out.
Meantime BHP are looking to double coking coal production
http://www.smh.com.au/business/bhp-poised-to-double-coking-coal-capacity-20121030-28gej.html
Another sign of improved relations between BMA and the CFMEU
http://www.dailymercury.com.au/news/bhp-drops-compo-claim-against-cfmeu-after-dispute-/1606129/
Also an article about Kevin's Corner mine proposal in the Galilee Basin. Dubstep has posted more under Alpha heading.
http://www.cqnews.com.au/news/gina-pushes-on-despite-drop/1602991/
Gina is thirsty. Buying more water for her Galilee projects. I get the impression she expects something will happen there…
http://www.cqnews.com.au/news/farmers-11m-water-gamble-last-throw-of-the-dice-by/1605979/
Hi Josh, is emerald still a good place to invest. I remember you indicating that prices may go up in second half of 2012 whereas it has stabilised.. If alpha project is delayed what will be the impact? Already 150 properties for rent. Your insight will be valuable.
Hi PY,
Good comments, firstly i would recommend to have a read of this blog post of mine about the QLD coal industry http://www.ppiqldtour.blogspot.com.au/2012/10/whats-wrong-with-coal-industry.html . It is again my opinion however it highlights many of the fundamental issues facing the industry that were really all highlighted mid this year.
My opinion is that if a few of these issues can be overcome we will see more employment into these areas. The alpha project will be a big boost for Emerald, that is a certainty. The uncertainty is when. I have given up guessing as every deadline has been extended. It obviously wont be over night, the mine that will be built is huge!
From a property investors perspective, rents that were achieved in the first half of this year have subdued some what to more normal levels whilst vacancy rates are quite a bit higher than what they should be for the community. This is due to a lot of new stock as well as local redundancies. I am going to take a punt and say that by the middle of next year, most new houses/developments that have been sold this year will be completed. Investors are still active in the market however they are not hitting it as hard as the first half of the year. Historically this has meant that once all the stock is taken up and a new project/s come in to play, rental properties can be hard to find and therefor rents increase, investors come in again, and prices go up again like we just say. Hopefully next time they wont get as greedy and shoot themselves in the foot.
Personally, I am building in Emerald next year to hold for the long term and am happy to do so.
Portfolio PI wrote:Investors are still active in the market however they are not hitting it as hard as the first half of the year. Historically this has meant that once all the stock is taken up and a new project/s come in to play, rental properties can be hard to find and therefor rents increase, investors come in again, and prices go up again like we just say. Hopefully next time they wont get as greedy and shoot themselves in the foot.Personally, I am building in Emerald next year to hold for the long term and am happy to do so.
Hi Josh,
'Hopefully next time they wont get as greedy and shoot themselves in the foot.'
What the?
Just thought it a strange comment from you as you are very active in the market as a investor, developer and marketer. Power to you mate, that's business…but all participants drive the market including myself. We're all part of the problem and solution I would have thought……
Hi Jack,
Yes of course, all part of the problem and solution. My experience and understanding shows me that many people refused to listen to some advice (not from me but others) and purchase based purely on cash flow with conducting no risk analysis whatsoever. This caused many investors to pay well above the odds (which I or none of my clients did I would argue) and as a result artificially pushed the market up based on speculation, not current circumstances.
Unfortunately many factors caused the market to go a different way in a very short amount of time. However this was a risk factor that was seen as it reduced rents to levels seen before the boom in the end of 2011. From my perspective this is okay, in fact I have used this to my advantage to procure some pretty good deals in the later half of this year. However for those that paid 10% more than they should have and are relying on yield to see them through, this to me is greed and is shooting yourself in the foot.
Also, I'm not making that statement now that it is obvious that many overpaid, if you look back through this thread and my blog, i made that claim earlier on in the year and provided my personal opinion on what is a good price on different property types. Many people didn't take heed and rushed in and got burnt and now have a property that they couldn't sell for the same price.
In regards to your purchase Jack, I believe that those units were good market value at the time. Even though the market has really slowed, you could sell it for the same price if not a bit more. Unfortunately that's not the way many envisaged the market being at this point, even me, however when reducing our risk it is a good position to be in.
Jack, there were many investors with the attitude "I don't care what i pay, i want in and i want in now". That is the epitome of greed and i hope that it does not happen again in a place like Emerald that plays a great role as a hub in the middle of QLD. Maybe its a naive idea logy to have that the market wont be bastardized like that again, only time will tell.
Cheers
Hi Josh,
I appreciate your point of view and I do agree in principle with what you say.
Greed will always play a significant part in markets like Emerald on all sides of the equation from investors to developers. It's all part of the cycle, simple supply demand.
Also true, those who have entered the market without completing their due diligence have taken a hit and I have watched investors, as you quite rightly have stated, purchase at up to 10%-15% over market value. Similar units to mine in the same location were purchased at a 12% increase in price…….
Unfortunately due to external factors the rental market has softened considerably and at the present time securing a tenant is a challenge. Those who purchased at inflated prices are not going to get the returns they once thought they would until we see the market improve. Fortunately those who purchased well are going to be able to reduce rents to secure tenants.
What I don't agree with is people trying to benefit out of the market by pushing false facts and figures but this seems to be a phenomenon seen in all markets. Once a market ramps up developers jump in and aggressively try and drive sales. Statistics and figures that are published in magazines like API and YIP are trailing what is currently happening in Emerald. As a result I see many websites trumpeting house and land packages and OTP products using these statistics as marketing ploys…… I recently spoke to one developer in Emerald and he had to concede in the end the real facts of what was happening in the market. Your recent blog on the issues surrounding what has happened in the Emerald market was an accurate depiction of some of these challenging macro factors. However, developers are still pumping out new builds at inflated prices and demand just isn't there at the moment…..
Don't get me wrong, I have a lot of faith in the Emerald market my research tells me that. I feel your frustrations on what is happening out in the Galilee Basin however, you and I both know it will happen. My research tells me GVK should align its finance towards the end of 2013. As soon as these companies deal with the productivity issues, export coal volumes should increase significantly. GVK/Hancock Coal has gone too far now to turn back. Coal prices look to have found their bottom and are on the way back up so that is encouraging.
As you also have said, there are some opportunities out there for the savvy investor, but I would encourage anyone looking to purchase in Emerald at the moment to really investigate the market and get a handle on what is really happening at this present point in time.
Cheers,
Jack
Newman is in India, Alpha project well on its way.
Hi Josh, is Chinchilla a good place to invest now. I remember you indicating back pn 2011 that is not good to invest there. Could you please advise why you would not invest there? Thanks in advance
Hi Josh,
Do you have any current thoughts on Moranbah and where you think it might be heading? Interestingly there have been NO posts on Moranbah since before November last year. I know this tells a story in itself but there are still new mines being built in the area. Cheers!
CMS,
The newest mine being built near Moranbah (Caval Ridge) will have a 100% FIFO workforce. Vacancy rates are over 7% for the town. Rental prices have lowered dramatically to secure tenants, while purchase prices are still high. Unless you already have property there then I would be looking elsewhere.
Regards,
Cubez
BigCubez wrote:CMS,The newest mine being built near Moranbah (Caval Ridge) will have a 100% FIFO workforce. Vacancy rates are over 7% for the town. Rental prices have lowered dramatically to secure tenants, while purchase prices are still high. Unless you already have property there then I would be looking elsewhere.
Regards,
Cubez
If mining towns are your thing….I'd be looking at other towns than Moranbah. Why pay for someone else to realise their capital growth then struggle to find a tenant!
Hi everyone, I m interesting in investing a NRAS property in Emerald. As I live in Sydney and also a first homebuyer, could anyone give me advice regarding the investment?
looking forward to hear all your thoughts and suggestion.
thank you very much!
Ping
Jessicahsm wrote:Hi Josh, is Chinchilla a good place to invest now. I remember you indicating back pn 2011 that is not good to invest there. Could you please advise why you would not invest there? Thanks in advanceHi Jess
I can't answer your question as I am a novice but we do have 2 properties out in Chinchilla, both are doing well
There are 18 properties for rent at the moment mixed 2 bed to higher
There is still a lot of land being developed for both houses and units
Since we started our first house end of Sept 2009 there has been Woolworths, a New Motel older motels have been done up, There is also a McDonalds recently opened along side a new petrol station. At the end coming in from Dalby is another petrol station going up along with a KFC lots of other industry/business has moved to the area
There is still a lot of houses already built new and old for sale too though as well as all the new house and land/units packages being offered for sale
At the end of the day you have to do as much research as you can and decide if it is for you or not. Too get true rental I would look at realestate.com.au and not go by what you are told they will rent for or contact real estate agents send them the plans of what you are looking at and get a true rental amount that way. Its what we did when we first looked at Chinchilla.
Hope this helps a little
Jean
Hi
Are you able to provide advice and insight into the property outlook for Bowen (4805)?
There is so much talk about Abbott point it's hard to make sense of what the real situation is.
thanks in advance.
regards
Bowen,
I own an IP in Bowen. It has been performing okay. Originally bought in 2009 as PPOR, turned into an IP early last year. Median prices in Bowen tripled from 2002 to 2007 but have been pretty flat since (median house price has dropped 2.5%). Although my place has risen in value by $45000 since purchase.
With the large expansion planned for Abbott Point as well as a new railway line or 2 being built, I'm expecting some more growth possibly in 2014. The railway has been the largest employer in the area for some time, and with another rail operator rapidly expanding their workforce this should see some new highly paid residents in the town.
Bowen is also only 1 hour drive from the mining town of Collinsville. Which has seen some large growth over the last few years with a new mine opening and another 2 planned (along with the 3 mines already in the area). Being on the coast and having more amenities than Collinsville, Bowen is a more attractive town for miners to live while wanting to DIDO. Although Airlie Beach and Cannonvale are also proving popular.
While many believe the vacancy rate is quite high in Bowen, looking at the data, in reality it is around the 2% mark. It did take me a couple months to secure tenants, however after a phone call to the PM I had tenants within a week who have been there ever since.
Would love to hear others opinions on Bowen also.
A proposal for an integrated FIFO camp in Moranbah
http://www.cqnews.com.au/news/camp-a-good-compromise-mayor-affirms-need-for-stro/1756343/
Tony, this might interest you if you haven't seen it already.
http://www.cqnews.com.au/news/jobs-and-big-bucks-promise-springsure-creek-payday/1753114/
Bandana is also proposing a camp just to the south of Emerald…about 10 minutes outslde of town along with offering other housing options. Most likely rental properties in the general community. It's currently in the proposal state with the council.
http://www.cqnews.com.au/news/bandanna-fifo-camp-site-chosen-near-emerald-airpor/1753006/
Hi Josh,
I currently own a block in Gladstone City (Central Lane) and im caught between two ideas. One being to subdivide the block and build two town houses while continuing to live in one and renting the other or secondly, just sit on the current house and sell later on down the track making positive returns that way.
Im not to familiar with the council rules etc with submitting information for approval on developments nor the pricing involved. Im not to sure about the building prices locally as well compared to other areas in CQ.
So if you have any information regarding subdivisions in Gladstone or know of any builders that specialize in that field id be more than happy to follow up.
Look forward to hearing from you.
Dan
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