Just came back from a holiday in Cairns and am now very interested in investing up there (not just because it would give me a great excuse to go back!
Looks like property has been on a down hill slide for a while – prices are pretty low but the market is showing some real strength (rental vacancies dropped by 1.3% from this time last year).I found an apartment for sale for $375K currently being rented out for $520pw. There seem to be some good holiday rental properties around as well.
Anyone here invested in Cairns? Thoughts?
Most of these units have excessively high holding costs, body corporate fees have risen dramatically after the recent natural disasters as insurers up premiums. The holiday rentals are even riskier.
Look for the small complexes of 4 or 6 basic units with no pools or on site managers and minimal holding costs.
I think there is a lot of panic selling happening in cairns at the moment so be sure to bring your negotiation skills to the table.
I haven't invested there but have spectated on their market over the years. If it was me and I wanted to go for FNQ, then I would go for Townsville over Cairns. Townsville has more going for it in terms of economics and demographics.
MosicLandscapes wrote:Just came back from a holiday in Cairns and am now very interested in investing up thereA recipe for disaster – holidays and investment decisions should be made a long way apart.
You indicated the Cairns rental vacancy rate has dropped by 1.3% – what is it now at?
I agree with Bardon – Cairns has a degree of 'one trick pony' about it. When the Japanese stopped visiting a few years ago the bottom fell out of the market.
There was a rumour floating around a couple of years ago about the US wanting to use Cairns as one of their preferred places of leave for servicemen and women in SE Asia, Not sure if this amounted to anything though.
Vacancy rate is now 2.5%. I agree about the holiday and investment thing! The reason we didn't buy on the spot (which we got very close to doing).
Body corporate is high in the resort buildings (as much as $10,000 per year) but your right about the smaller buildings being much more affordable.
The thing that appeals to me about Cairns specifically is the very fact that it seems to be at its bottom right now, good time to get in (IF there is growth on the horizon). Things like the relief, recovery and reform plan by the government and the significant increase in domestic and international flights to Cairns (with a 10% growth in direct (full) flights from China) suggests to me that it is.
To be honest I have never even looked at Townsville, I only just discovered there was an International airport! My interest has been officially piqued – thank you!
Doing some more DD I probably wouldn't touch the holiday apartment market just yet. I would look to buy one of the more tired apartment (one or two bedder) right on the esplanade and give it a quick facelift to up the value straight away and then keep it as a perminant rental for a while until the strength was back in the tourism. Just thinking out loud…
In my opinion Townsville is a far better investment spot than cairns. Cairns is too reliant on tourism and with the high Aussie dollar and troubles with overseas economies I can't see that picking up too soon. Apart from tourism there isn't really many other industries in cairns. Townsville on the other hand has a rapidly expanding military base, is a large regional government hub and benefits from the mining boom while not being reliant on it.
I am from a small town between these two cities so I spent a lot of time at both, personally I love Cairns but do not see it as a good place to invest at this point of time anyway.
Just my opinion anyway. Good luck with it all.
Cheers,
Nathan
If you have the view that this is a dip in a longer term uptrend or just can find something that makes sense on a cashflow only scenario then some of the coastal areas including Cairns offer particularly good hunting grounds at the moment. The multis such as blocks of flats that can be renovated and bought well look interesting.
I live in Cairns and work in the industry. I grew up in Townsville and although it is my home town and I love it, it has no beauty whatsoever except for the Strand, which is mainly mud. People in FNQ often refer to it as "Brownsville". Although it does have the army base there and a good university and the town is always expanding. If you want to buy in FNQ so that you can also use it as a holiday home, I would recommend you look at Port Douglas. It is a very tricky area with extremely high body corporate fees so it is very hard to get an average sales price per complex but like previously mentioned, look for smaller complexes or ones with low body corporate fees (which are tax deductible). Port is a boom bust cycle, buying now should see great capital growth and holidays in the years to come but not necessarily ROI depending on what you buy. Otherwise, vacancy rates are very tight at the moment and investing in Cairns should see capital growth, the market has hit the bottom and has been stable for quite a few months, which is a great sign. Only the most skilled investors seem to be buying at the moment and are snapping up absolute bargains. Watch the market closely though before investing in Cairns, buying in the wrong street (even in the top suburbs) can mean $10,000's difference in price.
Looks like property has been on a down hill slide for a while – prices are pretty low but the market is showing some real strength (rental vacancies dropped by 1.3% from this time last year).
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