property known as “clarke’s cove” lot 20 on …eprints.qut.edu.au/7231/1/7231.pdf · county...

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P R I V A T E & C O N F I D E N T I A L Ms Kerrie Guy Elliott & Harvey Solicitors & Attorneys PO Box 942 Nerang Qld 4211

F E A S I B I L I T Y S T U D Y & V A L U A T I O N : PROPERTY KNOWN AS “CLARKE’S COVE”

Lot 20 on Registered Plan 748499, County of Herbert, Parish of Gloucester,

Earlando via Proserpine, (Whitsunday Region, Queensland).

1. INSTRUCTIONS We are acting on written instructions from Elliott & Harvey (Solicitors & Attorneys,

Nerang Qld, acting on behalf of Lawloan Mortgages Pty Ltd) dated 08 October 20011, requesting certain valuations and other related information with regard to the above property. These instructions, strongly related to mortgage security matters, specify requirements for valuations and opinions as follows:

(a) Fair Market Valuation of the property as at 5 February 1999, 13 February 1999, 15 April 1999 and 20 April 1999

(b) Forced sale Valuation as set out in the date in (a)

(c) Comments / critique of the Stanton Hillier Parker (Qld) Pty Ltd Valuation with a particular view to commenting on the accuracy and reliability of the valuation of Stanton Hillier Parker and identifying any shortfall or defects in the valuation

(d) Comments / critique of the Conroy & Associates Valuation with a particular view to commenting on the accuracy and reliability of the

1 Reference: Re: Lawloan Mortgages Pty Ltd – Oceanbend Pty Ltd & Cove Resort Pty Ltd – Stanton

Hillier Parker (Qld) Pty Ltd and Conroy & Associates Valuers (Negligence Claim). Lot 20 on RP748499 Parish of Gloucester

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valuation of Conroy & Associates and identifying any shortfall or defects in the valuation

(e) The current fair market value

(f) Any other relevant issues

This Report will restrict itself to addressing items (a), (b), (e), and in part (f) only. Matters (c), (d) and (f) are contained in a report provided to the client under separate cover. This Report is also supplemental to our earlier preliminary Report dated 14 November 2001 addressed to Elliott & Harvey entitled “Re: Property Known as Clarke’s Cove - Lot 20 on RP748499 Parish of Gloucester”. 2

I advise that I have had the opportunity to inspect the subject property for the

purpose of assessing the current fair open market value of that property for mortgage security and other related purposes on 2nd and 3rd November 2001 by land and air (separately), and now have pleasure in reporting as follows:

This valuation may only be relied upon by Elliott & Harvey (Solicitors & Attorneys,

Nerang Qld), acting on behalf of Lawloan Mortgages Pty Ltd.

2. GENERAL DESCRIPTION & EXECUTIVE SUMMARY The property, known as “Clarke’s Cove”, whose address is Earlando via

Proserpine, is a partly arable and limited improved, 387.9 hectare (958.52 acres) rural grazing (pastoral) property, upon which is erected a set of stockyards and dam. Only partially fenced, remnants of an avocado plantation exist on what is now a vacant, beef cattle grazing property.

The property generally is contained within a very scenic, “natural amphitheatre” topography with the land boundary generally steeply sided and mountainous, containing a large relatively flat area in the centre, with a small white sandy beach located on the southern tip of the bays promontory (pensinsula). The Dryander National Park backdrop features the 820m above SL Mt. Dryander. The property features a very wide variety of landscapes, from the white beach shoreline, to saltwater mangroves in the bay proper and mountainous terrain / rocky outcrops on the northern, western, and southern boundaries.

The property and its bay is “technically” un-named, however has been known as Clarke’s Cove by previous developers. A small island, known as Grassy Island (and another smaller one known as Little Grassy Island), is located just immediately north-west from the mouth of the bay - approximately 1.2 nautical miles from the nearest point on Clarke’s Cove. This island adds generally to the natural beauty of the environment and outlook from the subject.

2 Where a conflict in information or advice occurs between the earlier preliminary Report 14 November

2001 and this Report (if any), the contents of this Report should be relied upon and the contents of the earlier Report disregarded..

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The property is situated in the northern part of the Whitsunday region3, which is generally a visually stunning and varied natural environment containing various rainforest, reef, cane plantations and cattle country. There are also a large number of national parks in the region. It is adjacent to the World Heritage listed Great Barrier Reef Marine Park, generally regarded as one of the wonders of the world and often quoted as the richest marine habitat on earth due to the biological and geological complexity. Located approximately three kilometres south of an established “low key” resort known as Earlando, and immediately north of Double Bay (western bay), the property is fringed by the Dryander National Park on the southern / western sides, and the South Pacific Ocean (Coral Sea) to the east / north-east. It is It is approximately 18 kilometres from the mainland resort township of Airlie Beach, and 25 kilometres from the port of Schute Harbour.

In recent years, the property has been targeted for development as a large scale tourist facility. This is not surprising as the property has considerable natural beauty including it’s own peninsula and white sandy beach, with a large expanse of flat to gently undulating areas in the centre of the property bounded by steep mountain ridges on all sides except for its ocean frontage. This presents as a large, natural amphitheatre topography with expansive views of the bay region and offshore Whitsunday Islands. Seclusion and privacy is maintained by the presence of the Dryander National Park which envelopes the property on nearly all sides. The Clarke's Cove development originally planned for a major International Tourist Resort facility with 12 “precincts” allowing various inclusions such as:

• Three Resort Hotels – a total of 810 rooms including restaurant and retail facilities

• Condominiums & Resort Apartments – a total of 2,160 strata title residential units including Resort Apartments, Resort Condominiums, and Residential / Retirement Condominiums

• Single Unit Residential Allotments – a total of 674 Lots ranging from 1,000 sq.m. to 2,500 sq.m.

• “Neighbourhood” Retail - Commercial space (3,500 m2) and “Boardwalk Retail (Resort) Speciality Shopping (1200 m2)

• Community facilities including a Medical Centre - Private Hospital 10 - 15 bed

• Recreational facilities including: o Marina – 250 berth marina births with full facilities including ferry

terminal and boat ramp etc and 24 hour access o Championship Golf Course (18 holes)

• Various other community and recreational support facilities such as Police, Ambulance, Fire, Library, School, Post Office etc, as well as Swimming Lagoon, Tennis Courts, lawn bowls, and others.

The above development, planned for staging over some 22 years, would have seen an estimated gross realisation of approximately $528m. A feasibility study prepared by Sinclair Knight Mertz calculates total construction and development costs to be in the order of $340m (ex land) which includes interest

3 Clarke’s Cove is approximately 30 kilometres north (direct line) of the major Whitsunday township of

Proserpine.

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/ financing costs, infrastructure development costs of $59m, and building costs of $177m. This suggests a net return (realisation) before cost of land acquisition of $188m.

Our own analysis suggests gross realisation of $485m (after selling costs are deducted), providing a net realisation of $193.4m after interest and cost of land at our valuation amount. This would provide an acceptable internal rate of return (IRR) of 35%.

In order to facilitate such a development, in 1988 the property was approved for rezoning by the local Whitsunday Council for large scale “Tourist facilities”, however due to concerns expressed by the State Government (and formally advised in September 1999), the rezoning application was eventually refused in May 2000. Prior to this formal refusal (in early 1998) an application was lodged by developers to rezone the property to Special facilities (Integrated Tourist Development). However, this second application was later withdrawn at around the time of sale to new owners (i.e. April / May 1999) whom, despite their stated intentions to do so, never lodged a third rezoning application under the Integrated Planning Act. The property has now subsequently reverted to rural zoning under the town plan, with approved designation as “rural landscape (scenic management zones B & C)”. Any provision for tourist facility development has accordingly been removed from the Council’s current Planning Scheme which came into force in June 2000. Notwithstanding their former approval, Council in general terms are not currently in support of a large scale tourism development. Concerned at the required provision of supporting services such as fire brigade, education, water and other infrastructure, they believe it would be an “out-of-sequence development”. Council are also quite dubious as to the possibilities of a large scale development succeeding in the short / medium term based on the failures experienced elsewhere in the Whitsunday vicinity. Despite this, discussions held recently by the Valuer with Council confirm that there are good prospects for the property to be approved for development as a Tourist facility, albeit their preference being on a much smaller scale compared to that mooted by previous developers. Council are generally supportive – and do see merit – in a low scale, low impact development such as eco-tourism development. For these reasons, the current land usage as a vacant rural grazing property is not indicative of “highest and best use”. Some difficulty is presented in relation to deciding at what relevant date which zoning or development approvals were place in a form likely to continue indefinitely, and further at what relevant date(s) could it be confidently and without qualification be stated that at some future date the subject land might have such rezoning or development approvals in place. On the basis of material before the valuer, and on discussions with authorities, it would seem that the only point of contention is at the duration of time that might elapse before such an event would occur. Our valuation has therefore been prepared on the basis of:

1. Retrospectively (February / April 1999), on the basis of Council’s then existing approval for rezoning to Tourist facilities, with a reasonable expectation that the property would either be formally gazetted, or alternatively with reasonable expectation that the property would be

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approved for “Special Facilities (integrated Tourist Development” under the Integrated Planning Act 1997.

2. Current valuation has been prepared on the basis that the “highest and best use” for the property takes into account the certainty that the property has potential for tourism development and approval, the high probability that some form of tourist development approval would be fairly immediately be forthcoming, and that large scale tourism development remains a distinct possibility / inevitability at some future, longer term time. Accordingly, a prudent, prospective purchaser would be taking into account both precise, and imprecise factors.

Our valuations have been prepared with reference to the best available comparable sales data and analysis. However, due to difficulties in drawing meaningful comparisons between this evidence and the subject, we have relied heavily upon the land residual analysis or residual valuation technique calculated via Discounted Cash Flow (DCF) Analysis, utilising independently prepared costing data. The Valuer has processed a series of gross and net income yields from hypothetical buildings of various types and sizes in order to derive a use and program of future utilisation producing the highest present land value. The general equation for the residual value is L(Land) = V(Value) minus [ (B(Building Cost) + F(Finance Cost) + P(Profit or developers margin) ]. Thus, the “discounting” process, in examining cumulative cash flow, takes into account the magnitude and timing of the project’s cash flow – the “time value of money”. The resultant IRR is the rate of interest which results from the recovery of initial outlays plus a return on the unrecovered investment balances during the life of the project. It should be noted that this process involves many assumptions to be made including (and in particular) the period of development, costs of development, and market realisations for the differing classes of property to be offered. Nonetheless we believe our approach has been rigorously prepared and tested, including the conduction of various sensitivity analysis. The Valuer therefore has a high level of confidence in the outcome. We have also taken into account the somewhat limited market size (primarily, tourism developers) in addition to current and past target market conditions for the industry, all of which has been in a state of considerable change particularly over recent months. It should be stated that some of these conditions are considered to have had a relatively severe, but only short tem impact (e.g. September 11 bombings in the United States and its impact on international travel to tourist destinations, and the demise of the Ansett airline group). The evidence available to the Valuer suggests a more buoyant longer term scenario. In addition, it is recognised that any large scale development would most likely necessitate the involvement of a large, international investor or investors, the majority of whom reside outside Australia and may well be influenced by the economic situation in their own country as well as Australia. For these reasons marketing of the property represents a special challenge since such foreign investors disappear from the market as quickly as they might appear for reasons that might lie entirely outside the scope of this particular development or Australian economic conditions generally. Alternatively, an investment consortium derived primarily from Australian interests also represents a possible, but unique scenario, and one that is subject to the vagaries of its growth and support to the level required. A third possibility exists for speculative investors whom may be prepared to acquire the land, possibly even for limited

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development, with a view to on-sell the whole or residual to a larger operator capable of developing the property to its capacity.

An inspection of all readily accessible parts of the improvements/property has

been carried out by the Valuer, with no obvious serious defects or no apparent obvious defects. However, the Valuer is not a building construction and/or structural expert and this report is not a building construction or structural survey report. The Valuer is therefore unable to certify as to structural soundness of the improvements, albeit limited as they are. It is recommended that advice be sought from such other expert(s) in respect of building construction/structural issues4.

3. VALUATION SUMMARY

3.1. OPEN MARKET VALUATION (CURRENT) I assign a current open market value to the above property, today, subject to

comments and conditions contained herein, of $2,090,000 (Two Million and Ninety Thousand Dollars).

3.2. OPEN MARKET VALUATIONS (RETROSPECTIVE) I assign an open market value to the above property, subject to comments and

conditions contained herein, of:

5 February 1999 2,980,000 Two Million, Nine Hundred and Eighty Thousand Dollars

13 February 1999 2,980,000 Two Million, Nine Hundred and Eighty Thousand Dollars

15 April 1999 2,980,000 Two Million, Nine Hundred and Eighty Thousand Dollars

20 April 1999 2,980,000 Two Million, Nine Hundred and Eighty Thousand Dollars

The above valuation amounts calculate to an IRR (Internal Rate of Return) of 35.00%. No differences have been calculated between the stated dates since the Valuer has determined that:

• There were no significant changes in the market over this time

• The basis of assumptions used in the IRR analysis held true for the period

• There were no material changes in relation to rezoning or development approvals having taken place over this time, despite an application to rezone the land from Rural A (Pastoral) Zone to the Special Facilities (Integrated Tourist Development) being withdrawn by the existing developer prior to determination being made by Council, on 19 April 1999. (It should be noted that it was not until 13 September 1999 that

4 A prospective purchaser or mortgagee would need to make their own enquiries in this regard.

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concerns were first formally raised by State Government about rezoning the land from Rural A (Pastoral) zone, to Tourist Facilities Zone5).

3.3. “FORCED SALE” VALUATIONS (RETROSPECTIVE) Under “forced sale” conditions where adequate marketing of the property may

not be possible (e.g. a marketing period of 18 months or greater), in the past market a significant discount to the property would be incurred. The Valuer estimates this discount to be in the order of 13.5%, based on the opportunity cost of a foregoing a suitable marketing period equivalent to the likely holding costs to effect a sale (consistent with the best available comparable data), with the “market” value in this case being:

5 February 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars 13 February 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars 15 April 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars 20 April 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars

As for the same reasons stated in the comments concerning the retrospective open market valuations (above), no differences have been calculated between the stated dates.

5 Formal refusal was not advised until 04 May 2000.

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4. TABLE OF CONTENTS

1. INSTRUCTIONS ...........................................................................................1

2. GENERAL DESCRIPTION & EXECUTIVE SUMMARY ...................................2

3. VALUATION SUMMARY .............................................................................63.1. OPEN MARKET VALUATION (CURRENT)..................................................................63.2. OPEN MARKET VALUATIONS (RETROSPECTIVE).....................................................63.3. “FORCED SALE” VALUATIONS (RETROSPECTIVE)..................................................7

4. TABLE OF CONTENTS .................................................................................8

5. BASIS OF VALUATION .............................................................................125.1. OPEN MARKET VALUE............................................................................................. 125.2. FORCED SALE VALUE.............................................................................................. 12

6. LOCATION ...............................................................................................12

7. TITLE PARTICULARS ..................................................................................14

8. ZONING / TOWN PLANNING ..................................................................148.1. PREVIOUS ZONING.................................................................................................. 148.2. CURRENT ZONING................................................................................................... 16

8.2.1. Planning & Development Certification........................................................168.2.2. The Rural Zone.................................................................................................178.2.3. Rural Landscape Designation.......................................................................188.2.4. The Scenic Management Zones ...................................................................19

8.3. SEQUENCE OF MAJOR EVENTS IN RELATION TO REZONING APPLICATIONS / PLANNING & DEVELOPMENT APPROVALS ........................... 20

8.4. DEVELOPMENT CODES, DEVELOPMENT GUIDELINES & REZONING POTENTIAL ................................................................................................................ 218.4.1. The Whitsunday Planning Scheme & Likely Options for Future

Development..................................................................................................218.4.2. Development Approval Process...................................................................238.4.3. Possible Tourist facility Focus Land Use Designation....................................238.4.4. Conclusions .....................................................................................................25

8.5. CURRENT DEVELOPMENT CONSENTS / CONDITIONS AFFECTING THE PROPERTY ................................................................................................................. 26

9. LAND USE .................................................................................................26

10. SITE DETAILS .............................................................................................27

11. SERVICES..................................................................................................29

12. DESCRIPTION OF IMPROVEMENTS..........................................................3012.1. SUMMARY................................................................................................................. 3012.2. STOCKYARDS COMPLEX........................................................................................ 3112.3. FENCING................................................................................................................... 31

12.3.1. Boundary Fencing ..........................................................................................3112.3.2. Internal Subdivision Fence Lines....................................................................31

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13. PROPERTY SKETCH & LOCATION OF IMPROVEMENTS ...........................32

14. SOILS AND TOPOLOGY...........................................................................33

15. RAINFALL AND WATER SUPPLIES .............................................................34

16. PASTURES AND VEGETATION..................................................................35

17. DEVELOPMENT PROPOSAL......................................................................3617.1. PROPOSAL OVERVIEW - CLARKE'S COVE INTEGRATED RESORT

DEVELOPMENT......................................................................................................... 3617.2. DESIGN AND DEVELOPMENT PARAMETERS........................................................ 3717.3. DEVELOPMENT PRECINCTS.................................................................................... 37

17.3.1. Precinct 1 - The Peninsula Resort...................................................................3817.3.2. Precinct 2 - Hillside Resort ..............................................................................3817.3.3. Precinct 3 – The Golf Resort ...........................................................................3817.3.4. Precinct 4 – Resort Apartments .....................................................................3817.3.5. Precinct 5 - Resort Condominiums................................................................3817.3.6. Precinct 6 – Residential / Retirement Condominiums.................................3917.3.7. Precinct 7 - Singe Unit Residential.................................................................3917.3.8. Precinct 8 - Commercial, Retail and Boardwalk Precinct..........................3917.3.9. Precinct 9 – Community Facilities Precinct ..................................................3917.3.10. Precinct 10 – Golf Course Precinct ...............................................................4017.3.11. Precinct 11 – Recreational Facilities Precinct ..............................................4017.3.12. Precinct 12 - Marina Precinct ........................................................................40

17.4. GENERAL .................................................................................................................. 40

18. RESORTS IN THE WHITSUNDAY REGION..................................................4118.1. EXISTING MAINLAND RESORTS .............................................................................. 41

18.1.1. Laguna Quays & Turtle Point Tournament Golf Course..............................4118.1.2. Mediterranean Village...................................................................................4118.1.3. Club Crocodile Resort....................................................................................4118.1.4. Coral Sea Resort .............................................................................................4218.1.5. Mango House Resort ......................................................................................42

18.2. PROPOSED MAINLAND RESORTS.......................................................................... 4218.2.1. Support for Mainland Resort & Island Development ..................................4218.2.2. Royal Orchid Resort........................................................................................4318.2.3. Laguna Beach Resort (also known as “Cable Bay” Resort).......................4318.2.4. Castaway Bay Integrated Resort Development and Wave Surf

Pool ..................................................................................................................4318.2.5. Whitsunday Vista Quest Resort......................................................................4318.2.6. Whitsunday Vista Quest Apartments............................................................4418.2.7. Airlie Beach International Resort ...................................................................4418.2.8. Whitsunday Sailing Club Marina ...................................................................4418.2.9. Australian Bareboat Charters Marina...........................................................44

18.3. ISLAND RESORTS ...................................................................................................... 4418.3.1. Hayman Island................................................................................................4518.3.2. Hamilton Island ...............................................................................................4518.3.3. South Molle......................................................................................................4618.3.4. Daydream Island ............................................................................................4618.3.5. Club Crocodile Long Island Resort ...............................................................4718.3.6. Palm Bay Hideaway, Long Island .................................................................4718.3.7. Paradise Bay, Long Island..............................................................................4718.3.8. Hook Island Wilderness Resort and Underwater Observatory....................4718.3.9. Lindeman Island .............................................................................................4718.3.10. Brampton Island..............................................................................................48

19. OUTLOOK FOR THE TOURISM INDUSTRY .................................................4919.1. THE ECONOMIC CONTEXT OF TOURISM ............................................................. 49

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19.2. THE NEED TO ADOPT A LONG TERM VIEW.......................................................... 4919.3. PROJECT’S RELATIONSHIP TO TOURISM............................................................... 5019.4. INTERNATIONAL & DOMESTIC TOURISM, AND THEIR RELATIVE

IMPORTANCE........................................................................................................... 5119.4.1. The Relative Importance of the Domestic Market Despite an

Increasing International Market ....................................................................5119.4.2. Potential Markets (International) ..................................................................5119.4.3. The Growth of International Tourism in Australia .........................................5319.4.4. International Visitors to Queensland.............................................................5419.4.5. International Market Barometer (December 2001) ....................................5519.4.6. The Growth of Domestic Tourism...................................................................5819.4.7. Tourist Accommodation ................................................................................6019.4.8. Queensland – An Overview ..........................................................................6219.4.9. Tourist Accommodation in Queensland / Mackay Statistical

Division & The Whitsundays............................................................................6319.4.10. Accommodation Trends in Queensland......................................................65

19.5. CONCLUSIONS ........................................................................................................ 67

20. IRR (INTERNAL RATE OF RETURN) & DCF (DISCOUNTED CASH FLOW) ANALYSIS .....................................................................................7020.1. THE USE OF DCF AND IRR....................................................................................... 7020.2. BASE ASSUMPTIONS ................................................................................................ 70

20.2.1. Gross Realisations ...........................................................................................7020.2.2. Timing of Sales / Milestones ...........................................................................7320.2.3. Development & Construction Costs / Net Realisation................................7520.2.4. Interest Rates / Cost of Finance....................................................................77

20.3. DCF (DISCOUNTED CASH FLOW) & IRR SUMMARY........................................... 7820.3.1. Explanation of Methodology Utilised in Analysis .........................................7820.3.2. Clarke's Cove Development Cash Flow & IRR Summary ...........................7920.3.3. Acceptability of Chosen IRR (Internal Rate of Return) ...............................81

20.4. SENSITIVITY ANALYSIS.............................................................................................. 8120.4.1. Sensitivity Analysis Based on Cost of Land ...................................................8120.4.2. Sensitivity Analysis Based on Cost of Interest (Finance)..............................8220.4.3. Sensitivity Analysis Based on Gross Price Realisation...................................83

20.5. CONCLUSIONS & RESULTS ..................................................................................... 85

21. PROPERTY MARKET COMMENTARY........................................................86

22. VALUATION RATIONALE..........................................................................89

23. VALUATION..............................................................................................9323.1. OPEN MARKET VALUATION (CURRENT)............................................................... 9323.2. OPEN MARKET VALUATIONS (RETROSPECTIVE).................................................. 9323.3. “FORCED SALE” VALUATIONS (RETROSPECTIVE)............................................... 94

24. QUALIFICATIONS & DISCLAIMERS..........................................................95

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25. APPENDICES ............................................................................................9625.1. COPY OF CERTIFICATE OF TITLE ............................................................................ 9625.2. COPY OF SURVEY PLAN......................................................................................... 9725.3. LOCALITY PLAN ....................................................................................................... 9925.4. DISTRICT MAP......................................................................................................... 10025.5. CADASTRAL PLAN................................................................................................. 10125.6. CLARKES COVE – OVERVIEW MAP .................................................................... 10225.7. ANCHORAGES ...................................................................................................... 10325.8. WHITSUNDAY PLANNING SCHEME (EXTRACT) ................................................. 10425.9. WHITSUNDAY STRATEGIC PLAN (EXTRACT)....................................................... 10525.10. MARKETING BROCHURE: CLARKE’S COVE....................................................... 10625.11. SALES EVIDENCE.................................................................................................... 11125.12. PHOTOGRAPHS ..................................................................................................... 116

26. ATTACHMENTS.......................................................................................12226.1. CERTIFICATE OF TITLE (FEBRUARY 1999)............................................................. 12226.2. CONTRACT OF SALE 29/1/1999: EARLE & OTHERS TO COVE RESORT

PTY LTD .................................................................................................................... 12226.3. IRR & DCF ANALYSIS, CASH FLOWS ................................................................... 12226.4. NEEDS STUDY: L.S. FAIR & ASSOCIATES (DECEMBER 1998)............................. 12226.5. EXTRACT FROM SINCLAIR KNIGHT MERTZ FEASIBILITY & EIS............................ 12226.6. FULL PLANNING & DEVELOPMENT CERTIFICATE (WHITSUNDAY SHIRE

COUNCIL ................................................................................................................ 12226.7. COPIES OF CORRESPONDENCE RECEIVED FROM WHITSUNDAY

SHIRE COUNCIL, INCLUDING RE-ZONING APPLICATIONS, APPROVALS & REFUSALS ..................................................................................... 122

26.8. WHITSUNDAY SHIRE COUNCIL PLANNING SCHEME........................................ 122

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5. BASIS OF VALUATION

5.1. OPEN MARKET VALUE The value given is that of the Open Market Value of the property which by

definition is the estimated amount for which an asset6 should exchange on the date of valuation between a willing buyer and a willing seller in an arms' length transaction after proper marketing wherein the parties each had acted knowledgeably, prudently, and without compulsion, assuming:

(a) a willing but not anxious seller;

(b) a reasonable period within which to negotiate the sale taking into account the nature of the property and the state of the market;

(c) values will remain static during the period;

(d) the property will be freely exposed to the market with reasonable publicity;

(e) no account will be taken of any higher price that might be paid by a purchaser with a special interest;

(f) no account is taken of the value of livestock, plant or equipment; and

(g) no account is taken of the value of growing crops (if any)

5.2. FORCED SALE VALUE The forced sale value given is that Value of the property being the estimated

amount for the property would exchange without time allowed for adequate marketing wherein at least one of the parties acts with compulsion, i.e. assuming:

(a) an anxious seller; (b) a short period within which to negotiate the sale taking into account the

nature of the property and the state of the market;

A typical scenario where a “forced sale” might occur is in the event of a mortgagee sale or similar circumstances.

6. LOCATION The subject property is situated in the northern part of the Whitsunday region in

the Whitsunday Shire. The Whitsundays, located between latitude 20° and 21° south, is generally a visually stunning and varied natural environment containing various rainforest and reef areas, in addition to areas used for agriculture. It is a renowned international and domestic tourist destination especially in the context of offshore tropical island resorts, and, to a lesser extent, mainland resorts. Indeed, the Whitsundays contain the largest offshore island chain on the

6 "Asset" includes property

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east coast of Australia, consisting of over one hundred continental islands and islets with fringing coral reefs.

Well known resorts such as that found on Lindeman, South Molle, Long and Daydream and Hayman Islands have been operating in the area since the 1930’s. It is also home to more recent developments such as Hamilton island which is both an island resort and a resort town, and a major transhipment area for all the islands – containing a jet airport with flights every day to/from most major Australian capital cities. Other major island resort locations in the Whitsundays include Hook Island and Brampton Island, as well as the mainland resort of Laguna Quays. Smaller mainland resorts exist at various locations such as Earlando, Dingo Beach, Palm Bay, Cape Gloucester, and Airlie Beach.

Existing holiday resorts in the Whitsundays cater for an enormous range of international standard tourism experiences and activities which range very widely in style and situation from five star resorts to modest camping areas. It is in an otherwise varied agricultural zone where the predominant activity is sugar cane plantations and beef cattle grazing.

There are also a large number of national parks in the region, the largest being Dryander (surrounding the subject property) and Conway National Parks (on the mainland), in addition to Hook island and Whitsunday Island. It is adjacent to the World Heritage listed Great Barrier Reef Marine Park, generally regarded as one of the wonders of the world and often quoted as the richest marine habitat on earth due to the biological and geological complexity

The subject property and its bay is located on the coastline, approximately 30

kilometres north (direct line) of the major Whitsunday township of Proserpine, or 18 kilometres from the mainland resort township of Airlie Beach, and 25 kilometres from the port of Schute Harbour. Technically un-named, the subject property has been known as Clarke’s Cove by previous developers. A small island, known as Grassy Island (and another smaller one known as Little Grassy Island), is located just immediately north-west from mouth of the bay - approximately 1.2 nautical miles from the nearest point on Clarke’s Cove. This island adds generally to the natural beauty of the environment and outlook from the subject.

Primary existing access routes are:

• By Land – 4WD track from Earlando Resort: from turn-off at Bruce Highway north of Proserpine, proceed along bitumen road along Dingo Beach Road, with last 7 kilometres unsealed gravel road. (Public Bus and train services also run to Proserpine). Currently, this access necessitates traversing alongside the private residence of the Earlando Resort operator (Mr Ron Earle) who is “unofficially” utilising the subject property for the occasional grazing of beef cattle. The Valuer is unable to determine how closely this access road is representative of the boundary applicable to the surveyed road.

• By Sea – proceed north / north-west by sea from Airlie Beach or Schute Harbour. There is no permanent mooring site on subject property, however good anchorage available at various places alongside Clarke’s Cove. (Airlie Beach – “the heart” of the Whitsundays - is the closest point on the Australian mainland to the Great barrier Reef).

• By Air – nearest major port is located on Hamilton Island (approx. 45 kilometres) which serves as an international gateway. Major airlines fly into both Hamilton Island, and Proserpine. There are no landing facilities on

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Clarke’s Cove, however it is possible to land a helicopter on various parts of the subject, including on the beach – head peninsula, and on various flatter portions in the centre of the property. Flight time is approximately 25 minutes by helicopter and less by light fixed wing aircraft.

Other than the undeveloped and adjacent Dryander National Park, the only

adjoining development consists of Earlando Resort, a small-scale tourist development run in conjunction with a modest beef cattle grazing enterprise.

7. TITLE PARTICULARS The property is an estate in fee simple, known as Lot 20 on Registered Plan

748499, County of Herbert, Parish of Gloucester, located within the Whitsunday Shire, as contained on Certificate of Title identifier (title reference) 50266401 (Previously Volume N1429 Folio 134). The property has an area of 958.5218 acres or 387.9 hectares. This area is net of a reserved exclusion of 17.3900 hectares (42.9716 acres).7

As at date of our search being 24 December 2001, the registered proprietor is

COVE RESORT PTY LTD A.C.N. 085 958 925. Other than rights and interests reserved to the Crown by Deed of Grant No.

21328049 (POR 20), and a registered mortgage No 703334136 (lodged 13/05/1999) in favour of LAWLOAN MORTGAGES PTY LTD A.C.N. 066 587 068, the aforementioned Certificate of Title indicates that the property is free of encumbrances, restrictions, caveats, encroachments, or other impediments of an onerous nature that would affect value. However, we have not fully searched the Title. Therefore, our valuation is made on the basis that the property is free of such impediments in addition to mortgages, charges, and other financial liens, factors which should be confirmed by the appropriate title searches and legal advice before reliance is placed on this Valuation report.

There are no leases registered on the title. As at date of our search, there were no administrative advices or unregistered

dealings registered on the title.

8. ZONING / TOWN PLANNING

8.1. PREVIOUS ZONING Until October 1988, the property was zoned Rural A (Pastoral) zone. On 07 October 1988, Whitsunday Shire Council approved a rezoning application from Rural A (Pastoral) zone, to Tourist Facilities zone, subject to various conditions (to be complied with inside a period of two years) including those related to:

7 Together with the exclusion the total land area is 405.2900 ha or 1,001.4935 acres

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• Roadwork (construction of a 7m wide all weather bitumen tide road from Dingo Beach Road, to the subject property, designed to accommodate a speed of 100 km per hour)

• Water supply (quantity required: 600 litres per equivalent person per day for a population of 1,000)

• Sewerage / effluent control (sufficient for a population of 1,000 persons)

• Electricity supply (agreement to be reached with the Mackay Electricity Board)

The approval was also subject compliance of the above conditions within a period of two years, and also subject to: • Detailed assessment and the right of any objectors • Geotechnical reports for land sloping in excess of 25% • Submission and review of an Environmental Impact Statement • Consideration of proposals for handling stormwater drainage • Agreement to pay Council contributions for the upgrading of Dingo

Beach Road • Local Government Act provisions (this includes the requirement for final

approval executed upon formal gazettal by the State Government).

Full details of the original rezoning application and approval are attached to this Report. The development approval paved the way forward for a proposed development of a major International Tourist Resort facility which would have allowed the following inclusions:

• Resort – 810 room resort hotels and condominiums including restaurant and retail facilities

• Marina – 300 berth marina with full facilities and 24 hour access

• Championship Golf Course (27 holes)

• Various other accommodation types, including 2,737 strata title residential units and single family lots including retirement village and private hospital, 200 bay caravan park and neighbourhood retail shopping complex.

In September 1999, concerns were raised by State Government (Dept. Local Government & Planning) about the rezoning, with advice that gazettal would not proceed based on:

(a) Length of time elapsed since Council approval

(b) Outstanding matters of “State and regional significance” not adequately addressed

(c) Preparation underway of a new development application under the Integrated Planning Act 1997 providing for a modified form of development

04 May 2000, Council application to rezone the land from Rural A (Pastoral) zone, to Tourist Facilities Zone, was formally refused.

In the intervening period, several other applications for rezoning have been pursued. The first of these was an application lodged on 27 March 1998 by developer (Pearl Acre Pty Ltd) to rezone the land from Rural A (Pastoral) Zone

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to the Special Facilities (Integrated Tourist Development). This application was later withdrawn by the developer prior to determination being made by Council, with advice given that they were preparing a new (third) rezoning application under the Integrated Planning Act – this was never lodged. Finally, and subsequent to settlement of contract in early May 1999, new owners of the site retained C & B Consulting Group who advised in July 1999 that they were preparing for lodgement of a new rezoning application – this application was also never lodged. According to the developer, they lacked sufficient funding to progress this latest application.

8.2. CURRENT ZONING 8.2.1. Planning & Development Certification

Whitsunday Shire Council advises that the property is zoned “Rural” / “Rural Landscape” (dominant land use), contained within a designated “Scenic Management Zone” B and C, and noted as “Rural” on the Town Plan. This zoning came into effect on 16 June 2000 – the date on which provisions of the current Planning Scheme for the Whitsunday Shire Council were gazetted. This provides for the following designations (Planning & Development Certification) for the property: Land Use: Rural Landscape Other Designation: Scenic Management Zones B & C Town Plan: Rural

Accordingly, the appended Full Planning & Development Certificate confirms Rural Landscape designation (Scenic Management Zones B & C) zoned rural under the Town Plan.

The property’s current use therefore conforms with purposes for which buildings

or other structures may be erected or used or for which land may be used without consent of the council (i.e. agriculture, animal husbandry, forestry, dwelling house, relative’s accommodation, etc.), subject to the following comments.

Circumstances under which development may be carried out without Council’s consent but subject to notification of conditions include bed and breakfast accommodation, home based business, and host farm accommodation – subject to compliance with the Whitsunday Shire Council Planning Scheme (Strategic Plan) provisions. Development for dual occupancy or aquaculture requires town planning consent.

It should be noted that the tourism development options have now been removed from Council’s Strategic Plan. A detailed explanation concerning possibilities that may exist for the site is provided in a later sub-section in this Report.

Council has advised that there are no immediate planned changes to the land

zoning. We provide this valuation on the assumption that all necessary approvals have

been obtained (including the issue of a satisfactory certification under any

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Local Government Acts, and any Environmental Planning legislation including the Environmental Protection Act (Qld) 1994 [as amended].

We suggest that this is an aspect that should be clarified before any reliance is

placed upon conformity with current zoning requirements by Council. The Valuer has not made enquiries with the Department of Main Roads, nor

obtained documentation on permissive occupancies, licenses or environmental impact statements. We suggest that this is an aspect that should be clarified before any reliance is placed upon conformity with relevant authorities. If such information does come to hand, the Valuer should be contacted to determine what effect, if any, such information has on value.

8.2.2. The Rural Zone

Under the Whitsunday Shire Planning Scheme, the Shire is divided into zones. The zones are shown on the planning scheme map appended to this Report which includes the Rural zoning (as per the subject property) coloured Brown The Rural zone applies to land which is not classified as valuable agricultural land pursuant to the intent of State Planning Policy 1/92 and which is outside the Shire's towns, villages and low density residential areas. The preferred dominant land use intents and performance criteria of the Strategic Plan should be read in conjunction with this zone intent. Specifically, preferred dominant land use intents and performance criteria relating to Rural Landscape, Catchment Protection and Bushland Sensitive Development are relevant to this zone. The zone is intended to provide for:

(a) viable primary production and rural activities on land suitable for primary industry,

lb) the conservation of land considered unsuited to development because of physical constraints and/or scenic importance, and

(c) rural industries in association with other rural uses.

Necessary public utility and municipal undertakings may be permissible on land within this zone. However, the zone is not intended to provide for Commerce, Industry and Recreation land uses. With the exception of dwelling houses, bed and breakfast accommodation, host farm accommodation, and Relatives' Accommodation, uses other than non-agricultural uses are not intended. Subdivision of land in this zone is intended only where proposals can be undertaken in accordance with circumstances referred to in the Planning Scheme. Requirements for Development

According to the Planning Scheme, Council may subject to consent, permit a second dwelling house to be erected on any one allotment where an applicant can establish to Council's satisfaction that an additional dwelling house is required in connection with the operation of the rural property as a viable farm. Any site to be developed in the Rural Zone shall be provided with an adequate water supply, provided also with an environmentally acceptable means of

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sewage and other wastewater disposal, and where readily available connected to an electricity supply, all to Council's satisfaction.

8.2.3. Rural Landscape Designation

The Rural Landscape designation includes rural areas that are not Good Quality Agricultural Land. Designated lands are intended to remain largely in their current state with emphasis on preserving significant remnant vegetation. Low intensity rural uses are intended to predominate in a manner that has regard for the capability of the land and avoids land degradation. The designation provides for a limited range of other uses suited to non-urban areas. Such uses need to have limited impacts on the environmental and landscape qualities of the site and surrounding area and compatibility with the preferred rural character and amenity as outlined above. Further, they need to demonstrate as appropriate, that they support the Shire economy, provide essential services to rural areas, satisfy community needs and could not be better located in other designations. In deciding such matters, Council will consider the agricultural significance of the land in terms of its outright quality or its contribution to the productivity of nearby good quality agricultural land.

Closer settlement, particularly Urban and Low Density Residential development and facilities and services are not intended in this designation.

The designation has five major objectives under the Planning Scheme as follows:

1. Ensure land uses are consistent with the designations rural character and natural and visual landscape qualities (this includes Non-rural purposes which are of a low intensity nature, could not be better located in another designation, involve uses and structures located and designed to be subordinate to the landscape, do not accommodate a significant number of people or demand urban services and are more significant to the Shire's well being than the rural use to which the land may otherwise be put8. Council may require land resource studies when assessing such matters.

2. Prevent closer settlement and fragmentation of holdings

3. Ensure that land use accounts for the environmental capability of the land and prevents adverse effects upon the natural and built environments.

4. Protect and manage those elements of the natural environment which contribute to high visual landscape quality. (Applies to lands designated Scenic Management Zone B or C on the Strategic Plan map, where compliance with the relevant criteria of the Integrated Neighbourhood designation is required; and also applies to protection of lands designated Scenic Management Zone A on the Strategic Plan in a manner reflecting that described for Zone A land in the Bushland Sensitive Development designation).

8 Could apply to physically constrained lands and degraded lands that are held in a natural state or

subject to development that respects and rehabilitates values.

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5. Ensure that development is provided with a level of services that effectively meets development requirements in an environmentally acceptable manner

8.2.4. The Scenic Management Zones

The subject property is included in Scenic Management Zone B and C. These areas are subject to various provisions intended to achieve development that does not diminish the visual or ecological integrity of the Shire's main coastal landscape' features. Any proposed development must include a visual impact assessment and comprehensive landscape plan, prepared by suitably qualified and experienced professionals, showing existing vegetation and areas of proposed planting, will be required. This is particularly relevant where development:

• incorporates or adjoins ridgelines, foreshores, bushland, steep slopes or other significant landscape features; or is within the viewshed of popular viewpoints/transport routes; or

• which as a result of its scale, bulk, height and/or site characteristics may have an adverse effect on the visual landscape character of the area.

Development incorporating or adjoining major drainage lines, ridgelines, foreshore areas, significant vegetation/faunal habitats or other sensitive environments are intended to address likely environmental impacts and measures to mitigate such in accordance with Strategic Development Principles. Council will not favour development that does not demonstrate that a sensitive environment or habitat can sustain the proposed development.

� in Scenic Management Zone B on the Strategic Plan, the dominance of the natural character of ridgelines, hillsides over 20% slope gradient, forested knolls and the foreshore, are protected;

� in Scenic Management Zone C on the Strategic Plan, the dominance of the ridgelines, shorelines and hili slopes at 20% or greater gradient are maintained, whilst allowing some form of modification of existing conditions where visual impact is minimal; and development on the coastal plains does not undermine the visual integrity of the Shire's prominent landscapes.

For non-rural development under Rural landscape objectives, any proposed development is to include:

(i) submission of an assessment of the impact of the proposal on visual landscape character;

(ii) siting and design of buildings in a manner sub-ordinate to, or otherwise respecting, the natural surroundings; and

(iii) in lands designated Scenic Management Zone B or C on the Strategic Plan map, compliance with the relevant criteria of the Integrated Neighbourhood designation; and

(iv) protection of lands designated Scenic Management Zone A on the Strategic Plan in a manner reflecting that described for Zone A land in the Bushland Sensitive Development designation.

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8.3. SEQUENCE OF MAJOR EVENTS IN RELATION TO REZONING APPLICATIONS / PLANNING & DEVELOPMENT APPROVALS

03 October 1988

Rezoning application lodged by developers (Hearstbrook Pty Ltd) from Rural A (Pastoral) zone, to Tourist facilities zone approved by Council, subject to various conditions (to be complied with inside a period of two years) including those related to: • Roadwork • Water supply • Sewerage / effluent control • Electricity supply

The approval was also subject to • Detailed assessment and the right of any objectors • Geotechnical reports for land sloping in excess of 25% • Submission and review of an Environmental Impact

Statement • Consideration of proposals for handling stormwater

drainage • Agreement to pay Council contributions for the upgrading

of Dingo Beach Road • Local Government Act provisions

07 October 1988

Whitsunday Shire Council advise in writing of their approval of Rezoning application from Rural A (Pastoral) zone, to Tourist facilities zone

27 March 1998 Application to rezone the land from Rural A (Pastoral) Zone to the Special Facilities (Integrated Tourist Development) lodged by developer (Pearl Acre Pty Ltd) with Council. This is the “second” rezoning application.

29 January 1999

Contract of Sale executed - $15m for purchase of site, between Ron Earle and others (seller), and Cove Resort Pty Ltd (buyer)

19 April 1999 Application to rezone the land from Rural A (Pastoral) Zone to the Special Facilities (Integrated Tourist Development) lodged with Council, withdrawn by developer (Pearl Acre Pty Ltd) prior to determination being made by Council. Developer advises that Mason & Associates are preparing a new (third) rezoning application under the Integrated Planning Act.

04 May 1999 Council confirm withdrawal of second rezoning application subsequent to receiving request by developer 19 April 1999.

23 July 1999 C & B Consulting Group advise that they act for the new owner and are preparing for lodgement of a new rezoning application which was never lodged.

13 September 1999

Concerns raised by State Government (Dept. Local Government & Planning) about rezoning the land from Rural A (Pastoral) zone, to Tourist Facilities Zone, with advice that gazettal would not proceed based on: (d) Length of time elapsed since Council approval (e) Outstanding matters of “State and regional significance”

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not adequately addressed (f) Preparation underway of a new development

application under the Integrated Planning Act 1997 providing for a modified form of development

04 May 2000 Council application to State Government (Dept. Communication, Local Government, Planning & Sport) to rezone the land from Rural A (Pastoral) zone, to Tourist Facilities Zone, refused.

16 June 2000 Provisions of the current Planning Scheme for the Whitsunday Shire Council gazetted, providing for the following designations (Planning & Development Certification) for the property:

Land Use: Rural Landscape Other Designation: Scenic Management Zones B & C Town Plan: Rural

14 November 2000

Council provide mortgagees in possession (c/- Elliott & Harvey) Full Planning & Development Certificate confirming Rural Landscape designation (Scenic Management Zones B & C) zoned rural under the Town Plan.

8.4. DEVELOPMENT CODES, DEVELOPMENT GUIDELINES & REZONING POTENTIAL

8.4.1. The Whitsunday Planning Scheme & Likely Options for Future Development

Under the Whitsunday Shire Planning Scheme, development principles were generated by Council, community and State Government during the planning study investigations. The principles express publicly agreed best practice planning and is supported by provisions, which describe general criteria, which Council will use to assess development proposals and to determine appropriate development conditions. Incorporated within the Planning Scheme is the Strategic Plan containing a map showing the location and extent of preferred dominant land uses and major infrastructure. An extract of this map, together with the location and designation of the subject property, is appended to this Report. These designations describe the intended nature and character of development at each locality within Whitsunday Shire. They also express Council's intent for the mix of uses within each locality. Development proposals shall meet the stated intent and objectives for the applicable designations. Land within the Planning Scheme is included in various zones, in accordance with the provisions of the planning scheme. The zoning of land is shown on the planning scheme Map, an extract of which is also appended to this Report, identifying the subject property and its relevant designations.

Performance standards by which Council will determine a proposal's ability to meet the intent and objectives of the applicable Strategic Plan designation and its ability to achieve Council's desired strategic development principles and vision are contained within Land Use and Character Performance Criteria.

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A proponent must demonstrate to Council's satisfaction that the relevant performance standards can be met.

The planning scheme is based on a performance approach to development control. This approach recognises that there are a number of ways in which land use and development can meet desired environmental, social and economic standards. In this approach, presenting what desired standards need to be met is considered more important than prescribing how such standards should be met. Suffice to say, the current Whitsunday Shire Council Planning Scheme precludes large scale tourism resort development such as that mooted by the previous developers. However, the Valuer has discussions with the Council Planning Department whereby it was indicated that whilst Council would not generally be in support of a large scale tourism development, they would however be generally supportive – and do see merit – in a low scale, low impact development such as eco-tourism development. Council apparently hold the view that a large scale tourism development would be an “out-of-sequence development”. They are concerned at their provision of supporting services such as fire brigade, education, water and other infrastructure. Further, Council are projecting a moderating growth for the region into the future between 2 – 3%, compared to growth of 5% + in the past. As a consequence they are quite dubious as to the possibilities of a large scale development succeeding in the short / medium term based on this slowing of growth in the region, and taking into account the failures experienced elsewhere in the Whitsunday vicinity (Luguna Quays is one such outstanding example, along with a chequered history on some of the other island developments in the area). Council were also of the view that a low impact development may well be suitable for the area located around the southern pensinsula where a white sandy beach is located. This location backs onto a moderately rising hillside where eco-developent (cabins etc.) could be constructed provided that suitable infrastructure could be provided. This would minimise infrastructure impacts (particularly water supply, which would need to be reticulated into the area), in addition to marine access / waterways etc.

The current Whitsunday Planning Scheme is essentially designed to serve community expectations and needs until 2011. Just what kind of development may well be accepted in the future – 10 to 15 years “down the track” - is probably not currently in the minds of local government strategic planners whom have removed the prior tourism development options planned for this site from the current scheme. Aside from the potential for rezoning even under the current Scheme, an opportunity might exist to develop only a small portion of the property, and “land-bank” the balance pending a longer term plan for larger scale tourism development. Such an investor could on-sell the whole or residual to a larger operator capable of developing the property to its capacity.

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8.4.2. Development Approval Process

Development for any other purpose not described as permitted development or requiring a Consent Approval from Council, will require a rezoning approval. Applications for 'permitted development" must be accompanied by supporting information (prepared, if appropriate, by a suitably qualified persons), which adequately addresses relevant issues including, but not limited to, any or all of the following: (i) environmental impact; (ii) economic impact; (iii) social impact; (iv) visual impact; (v) traffic impact; (vi) assessment of heritage or character significance; (vii) drainage and flooding; (viii) infrastructure servicing.

8.4.3. Possible Tourist facility Focus Land Use Designation

The Whitsunday Shire Planning Scheme provides for a “Possible Tourist Facility Focus” designation. This identifies tourist facility opportunities. In conjunction with the provisions for tourism in the other designations, it is intended that lands designated Possible Tourist Facility Focus highlight opportunities for tourist facilities in locations likely to be attractive to visitors which are relatively accessible, serviceable and which promote economic viability. There are three categories of land currently designated for this purpose under the Scheme:

1. Mainland urban 2. Mainland “low key” 3. Island

Mainland Urban

This category highlights existing, approved development or possible tourist facilities nodes that are of an urban nature within Town of Whitsunday. These include:

1. Shingley Hill and Abel Point (indicative of tourist development occurring as part of or adjacent to the Whitsunday Harbour site. The designation covers the adjacent Abel Point Marina and land along the Shingley Hill foreshore that may be suitable for associated tourist oriented development proposals).

2. Boathaven Bay (covers that part of Boathaven Bay adjacent the Whitsunday Sailing Club site.

3. Shute Harbour (covers the area of land situated between Shute Harbour Road and the sea identified as a potential marina site and subject of a former marina investigation lease.

4. Nodes are intended to provide for a range of tourist accommodation and visitor and recreation experiences. It is intended that these nodes be provided with full urban services and designed to be sympathetic to their

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waterfront and/or National Park setting and prominent positions at the main road and sea entries to the Town. Development is intended to be encouraged where it meets a demonstrated community need.

Development is intended to be in accordance with an approved Plan of Development that reflects the following design philosophies:

• built forms which remain low rise and subordinate to the landscape of foreshores, hili slopes and knolls, as viewed from the ocean and major coastal vantage points, landscaping and built forms which integrate with and reflect the natural landform and reinforce the tropical, heavily treed nature inherent in the coastal village character, as reflected in forested hili slopes, mangroves and foreshores, layouts that maximise public access to the ocean front, open spaces and commercial facilities, development themes, scales and character compatible with or complimentary to surrounding designations, direct property access to Shute Harbour Road is minimised through use of design measures such as service roads and property amalgamation.

• Development at Shute Harbour is intended to be by way of infill or redevelopment on the mainland, use of unallocated state lands in accordance with the ‘Whitsunday Mainland Open Space Strategy" or development of the various foreshore development leases in a manner demonstrated as sustainable through detailed environmental appraisal.

Mainland Low Key

Future mainland tourism development outside established areas is intended to take advantage of more remote locations along the Shire's coastline including Earlando and Monties.

It is not intended to encourage major concentrations of tourism facilities in these nodes as such may create disadvantages associated with dislocation from urban centres and undermine opportunities for a "whole-of-Shire" tourism network,

The intensity of development, its built form, servicing and standard of access is intended to exhibit environmentally sensitive measures appropriate for the site, its proximity to important terrestrial and marine habitats and demonstrated community need. Development is intended to be in accordance with a detailed Plan of Development and Environmental Management Plan.

Island

Island designations relate to existing island resorts at Hook, Hayman, Hamilton, Long, Daydream and South Molle Islands. It is intended to consolidate urban style tourist facilities into these established nodes.

Any future redevelopment, and any proposals for harbours or marinas, are intended to be demonstrated as:

• meeting a public need,

• not likely to create or increase significant adverse social and economic impacts on the host community. Where such is likely, appropriate services, facilities or programs will need to be put in place as reasonable to mitigate the proposals impacts and provide adequate community benefit, sustainable relative to the environmental capacities of the

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location and the surrounding Marine and National Parks as established through a detailed environmental appraisal, visually unobtrusive relative to the prominent natural landscape features of the island and its geographic setting, established through a detailed Visual Impact Assessment, and appropriate to the cultural heritage values of the island and in accordance with Strategic Development Principles.

• Development for island tourist facilities outside designated nodes (and which are not proposed within National Parks) are intended to be low key, non-urban and nature-rural based in character, as appropriate relative to fulfilment of the above intent provisions and the performance criteria outlined in the Planning Scheme. These objectives include:

1. Ensure tourist facilities are of a scale, nature and character compatible with the natural and scenic features and desired character and amenity of the area

2. Ensure development does not prejudice existing resort or ongoing attraction (development which is compatible in form and character with the existing or desirable character of development in the designated node).

3. Encourage sustainable land management practices that protect water, soil and the natural resources.

8.4.4. Conclusions

Any provision for tourist facility development for the Clarke’s Cove site has been removed from the Council’s current Planning Scheme, with the property currently zoned rural under the town plan, and approved designation as “rural landscape (scenic management zones B & C)”. Development for any other purpose not described as permitted development or requiring a Consent Approval from Council, will require a rezoning approval. Nonetheless, Council have verbally confirmed that there are good prospects for the property to be approved for development as a Tourist facility, albeit their preference being on a much smaller scale compared to that mooted by previous developers. This would require reversion to “Possible Tourist Facility Focus” designation, possibly under the category Mainland “low key”. In the shorter term, a real negative for any prospective large tourism resort developer is the fact that under the current Planning Scheme, it is not intended to encourage major concentrations of tourism facilities in the Earlando region as such may create disadvantages associated with dislocation from urban centres and undermine opportunities for a "whole-of-Shire" tourism network, In addition, Council are understandably concerned at the required provision of supporting infrastructure services to the point where any large development such as the one presented in 1998/99 is considered “out-of-sequence”. The current Planning Scheme basically provides for community expectations and needs until 2011, however the acceptability of very long term development of the kind originally suggested (i.e. one that spans over 20 years) is probably not the focus of government strategic planners. Given the current stated attitude of Council, and quite apart from the potential for rezoning even under the current Scheme, an opportunity does exist to push through a limited development proposal pending a longer term plan for larger scale tourism development. Such a strategy might eventually result in the on-selling of the

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whole or residual to a larger operator capable of developing the property to its capacity. In this way, the necessity to involve a large corporate tourism developer is avoided in the short term. Other alternatives also exist that “mix and match” these and other options for property development. For these reasons, from a valuation perspective, the current land usage as a vacant rural grazing property is not indicative of “highest and best use”. However, from a development perspective, and in the context of providing a valuation of the property, some difficulty is presented in relation to deciding at what relevant date which zoning or development approvals were place in a form likely to continue indefinitely, and further at what relevant date(s) could it be confidently and without qualification be stated that at some future date the subject land might have such rezoning or development approvals in place. On the basis of material before the Valuer it would seem that the only point of contention is at the duration of time that might elapse before such an rezoning event would occur. Our valuation has therefore been prepared on the basis of:

1. Retrospectively (February / April 1999), on the basis of Council’s then existing approval for rezoning to Tourist facilities, with a reasonable expectation that the property would either be formally gazetted, or alternatively with reasonable expectation that the property would be approved for “Special Facilities (integrated Tourist Development” under the Integrated Planning Act 1997.

2. Current valuation has been prepared on the basis that the “highest and best use” for the property takes into account the certainty that the property has potential for tourism development and approval, the high probability that some form of tourist development approval would be fairly immediately be forthcoming, and that large scale tourism development remains a distinct possibility / inevitability at some future, longer term time. Accordingly, a prudent, prospective purchaser would be taking into account both precise, and imprecise factors.

8.5. CURRENT DEVELOPMENT CONSENTS / CONDITIONS AFFECTING THE PROPERTY

There are no known special development consents or other conditions currently

affecting the title.

9. LAND USE

Clarke’s Cove is essentially a rural grazing property, currently vacant, used for the purpose of grazing beef cattle albeit in an unauthorised way by the neighbour (Earlando Resort) for occasional grazing of Brahman cattle. There are reportedly several hundred cattle grazed on the allotment from time to time, but was vacant as at inspoection date.

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The property has limited carrying capacity for livestock since pastures are generally unimproved, with large areas of coastal rainforest, wetlands in the bay region, and scrublands. The subject property has limited potential as a beef cattle grazing operation. Not only are the pastures generally poor, but there are only very modest capital development and improvements on the site to facilitate the running of such an enterprise. There are also remnants of an avocado plantation, but this has no current economic value or use. The property is more suited for redevelopment as a tourist destination even though there is currently no infrastructure provided for this purpose.

As a tourist destination, Clarke’s Cove land use would be very conducive to the

area since neighbouring properties include a modest caravan park / cabin resort and limited beef cattle grazing enterprise, with the balance being recreational via the presence of an undeveloped national park.

The property's main activity, agricultural / horticultural activities9, is listed by the

Australian & New Zealand Environment Council (ANZECC) as an activity posing significant environmental risk in relation to past, present, or future use. However, the Valuer could not readily detect any obvious detrimental effect of contamination upon the property even though the property is potentially contaminated. The Valuer therefore recommends that more detailed advice should be sought in this regard from a specialist environmental consultant before any reliance is placed upon this aspect. Any adverse report from such a specialist should be referred to the Valuer for comment and further determination as to what effect, if any, such information has on value.

Our enquiries at the Whitsunday Shire Council indicate that the site has not

previously been utilised for any industrial or manufacturing use, or for the storage (either above ground, or underground) of any chemical substance. Our verbal enquiries at EPA indicate that the Authority is unaware of the existence of any site contamination. Whilst our inspection of the site surface confirms the results of these enquiries, we have not investigated the site beneath the surface or undertaken vegetation or soil sampling. This valuation is therefore subject to a satisfactory contaminated site assessment report from environmental consultants.

10. SITE DETAILS The site is irregular in shape, having a shoreline frontage of approximately 3

kilometres to the Coral Sea (South Pacific Ocean). Whilst the bay of Clarke’s Cove contains mangroves and mud flats, located on the south-eastern side of the peninsula is a white sandy beach extending several hundred metres to the boundary, extending further into the adjoining Dryander National Park where (as at date of inspection) it’s colour becomes gradually darker with the protrusion of a coral reef.

The site contains a total area of approximately 3.88 million square metres or

958.5218 acres. This is equivalent to 387.9 hectares. There is also a 17.39 hectare

9 The historical use of chemicals in many agricultural / horticultural activities gives rise to the possibility

of environmental risks.

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(42.97 acre) reserved exclusion which calculates a gross land area of 405.29 hectares or 1,001.49 acres.

The property features:

1. Containment within a very scenic, “natural amphitheatre” topography with the boundary generally steeply sided and mountainous, containing a large relatively flat area in the centre. The Dryander National Park backdrop features the 820m Mt. Dryander.

2. The property features a very wide variety of landscapes, from the white beach shoreline, to saltwater mangroves in the bay proper, densely forested woodlands alongside creek lines which traverse open grazing areas in the centre of the property, various patches of rainforest, and mountainous terrain / rocky outcrops on the northern, western, and southern boundaries.

3. Excellent proximity (adjacent)10 to the 77,000 sq. km. Great Barrier Reef Marine Park – an area renowned for turtles, sea birds, coral, and various other marine animals including the largest remaining herds of dugong. The fragility of the Reef is maintained by the Queensland Department of Environment and the Great Barrier Reef Marine park Authority.

4. Edwin Rock, located less than 1.0 nautical mile from Grassy island (in turn, located just to the east of the Clarke’s Cove bay area), is a significant seabird nesting site. This site has a total environmental protection.

5. A major Dugong site exists within close proximity to the subject, located in shallow waters just north of Grassy Island.

6. Excellent proximity to the various well known tropical Whitsunday Islands, including the major island resorts of Hayman, South Molle, Hook, Daydream, Long, Whitsunday, Hamilton and also the nearby Lindeman Island group. There are 74 islands in the Whitsunday Group. It is a major Australian tourist destination for both national, and international visitors.

7. The Whitsunday Coast generally is an area of numerous sandy beaches, unspoiled wetlands and rainforests. The subject property typifies this general description, and provides the environment within a natural “amphitheatre” of steep walled boundaries surrounding generally level to gently undulating area in the centre of the property, opening onto a wetlands bay area, and by virtue of the southern promontory, sharing a white sand beach with the adjacent Dryander national park.

8. The Clarke’s Cove bay area offers good anchorage (depth 3 – 5 metres). The area is not frequently occupied and offers privacy and solitude. Colfelt11 reports good fishing and crabs. The tidal flow tends to keep one pointing north or south which is useful because of the depth and it also makes any swell less annoying. The more exposed promontory area located at the south / eastern end of the property has even deeper anchorage offshore @ 5 – 9 metres, quiet and secure even in fresh south-east winds – as with many of the northern mainland bays, there is a rich food supply for fishing, and fishing generally is reported as being an area that can be very good.

9. The anchorage is such that significant dredging and other preparation is likely to be kept to a minimum to form suitable harbourage.

10 The Great Barrier Reef is located 39 nautical miles from the Whitsunday coast 11 Colfelt, D., 100 Magic Miles of the Great Barrier Reef – the Whitsunday Islands, (6th Edition) Windward

Publications, 2000.

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10. The nearby (adjacent) Earlando Resort offers anchorage for sea visitors (as well as those travelling by land), and monitors 27MHz channel 91. The resort is small and low key, with campsites and cabins for hire, with a fully licensed restaurant and grocery store.

11. As the property is situated in the Whitsundays (the largest offshore island chain on the east coast of Australia), the region generally caters for an enormous range of international standard tourism experiences and activities, primarily through its resorts located on the Islands (primarily), and the mainland.

12. The relatively small white sand beach located on the peninsula, which continues onto the adjacent Dryander National Park, is ideally situated for development as a key resort facility. This also offers a number of options for development, including a staged approach allowing for initial low key development prior to a more expansive project.

13. The subject property is one of, and arguably the only area suitable on the whole of the Whitsunday’s, for large scale tourism resort development. Apart from several other major existing tourism developments in the vicinity (e.g. Laguna Quays, 65 km from Airlie Beach), all other areas are either already developed with housing subdivisions, or are national parks.

14. A number of creeks traverse the property, which, although dry as at inspection (end of the “dry season, as one would expect), offer attractive “topography break-ups” that are full of more unusual tropical palms (pandanus and others) and other native vegetative species. The creek crossings themselves offer pebbled pathways for the more adventurous through rich, often dense, secluded bushland.

11. SERVICES

Electricity and telephone services, whilst not available on the subject, are available on the nearby Earlando Resort.

Clarke’s Cove is conveniently located near (within 38 kilometres direct line) the

major provincial township of Prosperpine which provides personal and rural services including banking, a wide range of retail shopping, educational facilities up to and including secondary level, stock sale yards, rural supplies, farm machinery sales and repairs, and other services and facilities.

The closer township of Airlie Beach (approximately 18 kilometres) is a small rural

resort township providing a less extensive range of services and supplies and secondary educational facilities only. Schute Harbour is located approximately 25 kilometres direct line, offering a comprehensive range of mooring / marine / harbourside and associated commercial facilities, as well as a petrol service station and limited retail shopping.

Currently, access to the property is provided via a four wheel drive track

accessed via the unsealed but formed, gravel Earlando Road at the commencement of the adjoining Earlando Resort. Access is poor since it necessitates travelling through a private road owned by Mr Ron Earle (proprietor of Earlando Resort), however whether or not this road follows the survey (and therefore “public”) is unable to be determined by the Valuer. Any redevelopment proposal for the site would almost certainly need to correct this situation either by upgrading the existing access, or as in the original rezoning

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application approval conditions, providing a new road directly from the bituminised Dingo Beach Road (approximately 7 kilometres in distance). Another less expensive, but less likely alternative could be the construction of a new access road from Earlando Road prior to its entry to the Earlando Resort.

Dingo Beach Road also connects to the Gregory – Cannon Valley road which is the main thoroughfare to Airlie Beach.

The property is located approximately 13 kilometres (direct line) from the Bruce Highway which is a major bituminised highway stretching from Prosperpine to Cairns and beyond. It is also the major access route south to the capital city of Brisbane.

12. DESCRIPTION OF IMPROVEMENTS

12.1. SUMMARY

The property’s only development consists of:

• Part boundary fencing

• Some internal fencing of dubious holding capacity

• Set of cattle stockyards

• 4WD track leading to the centre of the property, leading then across to the peninsula in the north-eastern section (un-trafficable for the last 1 km due to trees over road / disrepair). Some tracks also traverse the property in the flatter, centre portion.

• Remnants of a now disused, non-functional avocado plantation to which no commercial value is attributed.

• Dam (dry as at date of inspection). Fresh water is generally absent. Whilst the dam is centrally located on the property it is incapable of providing

adequate stock watering requirements, and is probably one of the main reasons for the property being left vacant (un-grazed) as at date of inspection. The availability of fresh water supplies is therefore a detraction from the property as a grazing allotment.

The property is only partially boundary fenced and has been previously

subdivided. However, aside from a “cattle catch” near the stock yards, the containment areas are considered to be by and large ineffective.

It should be borne in mind that many boundary areas are largely inaccessible due to the terrain. Therefore, a close inspection of all parts of the property is not for all practical purposes, possible. The Valuer has however conducted an otherwise thorough inspection on the ground and, together with visual inspection from the air, assisted by topographical maps and other references, is confident that the comments contained herein are an accurate representative of the situation.

Most improvements, including fencing have been poorly maintained.

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12.2. STOCKYARDS COMPLEX

The Stockyards complex is a modest structure, which would be suitable for breeding and management of beef cattle . Containment areas consist of a mixture of either 4 wooden rails or 4 steel rails supported by wooden posts approximately 2.5 to 3.0 metres apart, and includes a loading ramp and drafting facilities.

12.3. FENCING 12.3.1. Boundary Fencing The boundary fences are largely of steel (some wooden) post construction, with

3 or 4 barbs. Whilst the boundaries are largely unfenced, what is present is mainly in fair to good condition. Whilst the Valuer cannot provide any warranties, the boundary fences all appear to be off-line, a comment supported by the neighbour Mr Ron Earle.

The Valuer believes that fencing has, by and large, been constructed to suit topographic features rather than actual boundary lines. This would be an inexpensive way of containing cattle in an area that has a large “natural” boundary, with less mountainous areas fenced off along the ridges and roadways to prevent trafficking. Discussions held with the neighbour confirm that this may be general principle adopted, however the valuer was also informed that the property is not stock-proof and that typically there is a need to muster cattle from outlying areas whenever the property is utilised for occasional grazing.

12.3.2. Internal Subdivision Fence Lines The majority of the “sporadic” internal subdivision fencing consists of 3 barb wire

with steel (some wooden) posts. Most of this fencing is in poor repair and condition, and is not considered stock proof.

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13. PROPERTY SKETCH & LOCATION OF IMPROVEMENTS The following sketch is a diagrammatic representation of Clarke’s Cove,

depicting major features and improvements and their approximate location.

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14. SOILS AND TOPOLOGY

Clarke’s Cove contains a wide variety of topographic features, but in general terms is represented by a natural amphitheatre by virtue of it steely sided boundaries on nearly all sides which lead onto flatter areas in the centre of the property and low-lying swamp lands / mangroves on the coastal fringe. This provides a considerable degree of privacy and seclusion from neighbouring properties – a unique characteristic for such a larger sized land parcel. The setting is further visually enhanced by the presence of a backdrop provided by the Dryander National Park including the 820m Mt. Dryander, and offshore islands within sight from the mainland (in particular, Grassy Island located just outside the mouth of Clarke’s Cove bay). Under a foregoing section of this Report (“Site Details”), commentary was made that the property features a very wide variety of landscapes. This is a significant feature of the property particularly from a tourist development point of view where rapidly changing landscapes are most likely to be of interest. These landscapes include: • white beach shoreline on the pensinsula • saltwater mangroves and mudflats in the bay proper • densely forested woodlands alongside creek lines which traverse open

grazing areas in the centre of the property • expansive flat / gently undulating areas – ranging from fully cleared, to

lightly timbered, to dense forest • various patches of rainforest • mountainous terrain / rocky outcrops on the northern, western, and

southern boundaries • various ridge lines, mainly on the boundary, providing spectacular views

across the bay and other areas of the property. The north-eastern section of the property is dominated by a peninsula extending north-east into the Coral Sea. On one (north-western) side of the pensinsula, scrublands basically run straight into the sea except for the more southerly part of that side which becomes mangrove swamp. On the other (south-eastern) side the rocky tip quickly transforms into a white sandy beach running into the adjoining Dryander National Park boundary, where it continues until becoming a coral reef. The peninsula itself is quite hilly and traversed by various semi-perennial creek lines dominated by relatively thick scrub. At all points the land slopes downwards from the high set centre, to the shore line on either side.

There is no one primary soil type12 found on the subject property. As for the landscapes, there are also a very wide variety of soils to be found. This ranges from mud clays and silts in the low lying swampy areas, grey to brown clay earths in the flatter central portion, deep clays with shallow topsoils in steep areas and shallow stony infertile duplex outcrops on hilly areas. Small areas of more fertile, sandy loams are present in areas alongside creeks and tributaries.

12 A formal soil test has not been conducted. This report is based on observations as at date of

inspection. Reliance on advice or comments should not be made without formal testing of soils or plant analysis.

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These soils are largely infertile, but variations do exist especially where there is heavier virgin rainforest where soil fertility may be expected to be higher than on the slopes and flatter areas. The level of pasture growth, where it exists, as at date of inspection, is more representative of vacancy, rather than fertility.

There would appear to be no site problems in relation to:

• Apparent contamination • Drainage problems • Obvious encroachments (other than, in relation to fencing, boundary mis-

alignments) • Filled ground.

The site does not exhibit any apparent signs of contamination, nor apparent

potential contamination from surrounding properties. However, please note that the Valuer has not undertaken a search of the State Contaminated Sites Register, nor is the Valuer able to provide expert advice on site contamination. Should information become available indicating site contamination, the Valuer should be consulted to reassess any effect on the value stated in this valuation report.

15. RAINFALL AND WATER SUPPLIES

The local climate, situated around 20° south of the Equator, is tropical, with an estimated daily average of 8.25 hours sunshine and mean annual temperatures of 27.24°C (max.) and 21° (min).

The annual average rainfall at Prosperpine is approximately 1,498 mm (around

60 inches). The average at Earlando (location of the subject property) would be about the same or perhaps slightly higher than this amount, as the region experiences a progressive westward decline. Rainfall is predominantly summer (the wettest months are usually February and March) which is obtained from cyclonic influences, with the driest period being spring (August and September) where rain is obtained mostly from South-east trade winds and the more unreliable thunderstorms from frontal activity.

Monthly rainfall averages range from a high of 314 mm in March, to a low of 15mm in September. Summer dominance is maintained December (114mm) to April / May (around 150mm each month).

There is no naturally occurring permanent water supply. However, the property

is supplied with water from a dam, which was not holding as at date of inspection. Because of this water supply can be regarded as non-permanent.

Flooding is unlikely to effect much of the property since Clarke’s Cove is a well-

drained property because of its undulations, and any flooding should be retained on a small portion of the property only to a relatively shallow depth. There are many high set areas – including those in the central flatter portion - suitable for building and other development that would obviate the need for concern over flooding.

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16. PASTURES AND VEGETATION

The area generally is one of native coastal rainforest, with areas having been cleared for grazing. The native pasture of rainforest is sparse or absent, with species appearing only as a result following clearing. The valuer could not detect the presence of any improved pasture species,

Native pasture is almost solely located on the flatter areas of the property, and

is dominated by spear grasses (Heteropogon triticeus), blady grass (Imperta cylindrica), paspalum (paspalum dilatatum) and narrow leaf carpet grass (Axonopus affinus). A few small areas contain Kikuyu (Pennisetum clandestinum) but are not significant. There are a large variety of other, unidentified native species.

There is an enormous variety of rainforest and other types of native trees on the

property. The ones most easily identifiable to the Valuer include a wide variety of eucalypts such as spotted gum (Eucalyptus maculata), Carbeen or Moreton Bay Ash (Eucalyptus tessellaris) narrow leaved ironbark (Eucalyptus crebra), red bloodwood (Eucalyptus gummifera), stringybarks (Eucalyptus obliqua) and poplar gum / bimble box (Eucalyptus populnea) . A range of tea tree (e.g. Leptospermum laevigatum or Coastal Tea Tree) and mangrove (e.g. river mangrove Aegiceras cornicalatum, and grey or white mangrove Avicennia marina) species are present in the low lying areas. There are also a large variety of wattle (Acacia spp.) species incorporated in the understorey growth thickets as well as present in the form of “stand alone” scrubland. Typically, the understorey growth is heavily entangled with vines, particularly along the thicker parts of the peninsula bushland.

There are also species related to Coast banksia (Banksia integrifolia), the palm-like zamia (Cycas spp.), and serrated leaf pandanus, carpentaria and other native palms, as well as a volume of rainforest species.

However, the above description is by no means representative of the general vegetation types which are hard to classify due to the large diversity.

The available cleared areas for beef cattle could be generally described as “open forest grazing” despite the medium to strong density in the more steeply sloped areas.

A variety of weed species were also present but not considered significant or

problematical. The Valuer also estimates that the property has been kept free of noxious weeds and animals.

No cropping was conducted on the property as at date of inspection.

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17. DEVELOPMENT PROPOSAL

17.1. PROPOSAL OVERVIEW - CLARKE'S COVE INTEGRATED RESORT DEVELOPMENT

The development proposal suggested in this Report follows the concept design and costings provided by Sinclair Knight Mertz as part of their feasibility study dated February / May 1996. Reference has also been made to the Environmental Impact Assessment for the proposed development (May 1996).

The proposed development is for an integrated resort community contained within 12 identifiable precincts. This will include resort hotels, tourist accommodation, single and multiple unit accommodation for permanent residents, retail and commercial facilities, recreational facilities including an 18 hole golf course and a 250 berth marina, and community facilities. This development may be summarised as follows:

• 810 rooms in three Resort Hotels, including restaurants, retail facilities and support infrastructure as follows:

o 300 units - Peninsula Resort (4-5 star) o 210 units - Hillside Resort (3-4 star) o 300 units - Golf Resort (3-4 star)

• 2,160 Condominiums & Resort Apartments

• 674 Single Unit Residential Allotments, including 562 Small Lots (1,000 - 1,700 sqm) and 112 Large Lots (2,500 sqm)

• Gross Leasable Area of 4,700 square metres being Commercial / Boardwalk Retail space, including Neighbourhood Retail - Commercial (3,500 m2), and Boardwalk Retail (Resort) Speciality Shopping (1,200 m2).

• Community Facilities including a Medical Centre - Private Hospital 10 - 15 beds, in addition to services such as Police, Ambulance, Fire, Library, School, Post Office etc

• Recreational facilities including an 18 Hole championship Golf Course Site, a 250 berth Marina Site (incorporating ferry terminal and boat ramp and associated facilities), in addition to supporting facilities such as Swimming Lagoon, Tennis Courts, lawn bowls

Since the marina development is subject to separate applications and approvals, for the purposes of our analysis this has been noted, but excluded from our analysis as detailed in the next major section of our Report.

The above infrastructure would provide for an integrated resort community with a population of approximately 8,000 people, including 6,434 permanent residents, and 1,672 transient residents. Permanent employment of 950 people is anticipated as a result of the tourist and associated commercial development, with an additional 350 construction jobs created annually during the 12 to 15 year construction phase.

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17.2. DESIGN AND DEVELOPMENT PARAMETERS

The building forms are to reflect Australian architecture with an emphasis upon the local sub-tropical climatic conditions.

The development concept has been formulated on the following design and development parameters.

• All buildings will be subordinate to the existing with building lines blending

in and not dominating the Skyline.

• Structural development will take maximum advantage of scenic backdrops, water and land forms; the buildings will be non-massive and constructed of materials which blend with the natural settings.

• The resort hotels and accommodation will be built in close proximity to recreational activities and beach front, so these facilities may be used to maximum effect.

• Strip development will not occur, but rather the natural greenbelts and open space will be used to 'break-up' solid building areas.

• Permanent residential precincts will be removed from the resort precinct and again the open space concept will apply.

• All residential allotments will be of reasonable area to prevent the emergence of "slum suburbs".

Clarke's Cove has been designed as an integrated resort community which will offer a unique lifestyle for its permanent residents and a spectacular experience for visitors. The development will provide them with the opportunity to take advantage of the attractions provided by the ocean, the Great Barrier Reef, Dryander National park which adjoins the property on three of its boundaries; and the regions existing tourism infrastructure and development. It is one of the few sites Australia that is totally surrounded by National Park and ocean.

The development will offer a range of accommodation and recreational activities for the tourist, while facilities for permanent residents will include a retirement village, a private hospital and community facilities. It will be a totally integrated development in which all necessary facilities will be available.

The development concept and design is in response to two distinct topographical zones - the Peninsula and the amphitheatre shaped Valley. The Peninsula is in the south eastern part of the site and is formed by two ridges of high ground flanking a short valley and ocean beach, which juts into the permanent deep water bay. The Valley is a long wide well-drained inclined plain ringed by spurs and ranges of Dryander National Park and protected on its ocean frontage by dense mangroves.

17.3. DEVELOPMENT PRECINCTS

The development will be staged over fifteen years, and can be described in the following precincts, although these precincts are for ease of description and do not reflect the staging of the development.

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17.3.1. Precinct 1 - The Peninsula Resort

To be constructed on the point of the peninsula, this resort will be 4 to 5 star, containing 300 accommodation units, licensed restaurant and central resort complex. The buildings will be of Australian architecture, low-rise (no greater than three level), materials and colour designed to blend in with the surrounding environs, of open plan design with open verandas and courtyards to “bring the outdoors in”' and softened by dense, colourful landscaping. The units will feature uninterrupted ocean and island views, and direct access to deserted beaches and National Park mountain and forest. They will be appointed and furnished to a very high standard. At the foot of the Peninsula will be a large saltwater recreational lagoon.

17.3.2. Precinct 2 - Hillside Resort

This resort will be situated on the rim of the main spur on the Peninsula and will contain 210 rooms of 3 to 4 star standard, licensed restaurant and central resort complex. Buildings will be of similar design and materials as the Peninsula Resort and the units will be appointed and to a very high standard. The accommodation rooms will feature ocean and island views of a higher elevation than the Peninsula Resort, and access to the same natural attractions and safe all year lagoon.

17.3.3. Precinct 3 — The Golf Resort

To be constructed midway along the northern boundary overlooking the proposed golf course, the Golf Resort will contain 300 rooms of 3 to 4 star standard, licensed restaurant, golf pro shop, clubhouse, and central resort complex. Building design and construction will be similar to the Peninsula Resort, and the rooms will be appointed and furnished to a high standard. The Golf Resort will offer direct access to the Golf Course and the nearby National Park.

17.3.4. Precinct 4 — Resort Apartments

395 strata title apartments will be constructed in clusters around the resort hotels, at a density of approximately 30 per hectare. Building construction, design and materials will be similar to the resort hotels, and the apartments will be appointed and furnished to a high standard. They will have a floor area of 92 square metres. The apartments will feature a range of views, from ocean and island to golf course views, depending on their location within Clarke's Cove. The apartments will offer direct access to all recreational facilities within the development and all natural attractions of the National Park. The strata title apartments will be sold to investors and leased back by the respective resort hotel operators.

17.3.5. Precinct 5 - Resort Condominiums

755 resort condominiums, being 115 one bedroom/one bathroom units (70 to 75 square metres), 453 two, bedroom/two bathroom units (I10 square metres), and 187 three bedroom/two bathroom units (120 to 140 square metres), will be constructed around the golf course and along the Valley beach front. The

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common construction and design concepts will be continued throughout the condominium development. Appointments and furnishings will be of high standard. Included in the Resort Condominium Precinct will be a number of swimming pools, spas and gymnasiums. The condominiums will be strata titled and sold to investors to be leased back by the respective resort operators.

17.3.6. Precinct 6 — Residential / Retirement Condominiums

1,010 condominiums, being 236 one bedroom/one bathroom units (70 to 75 square metres), 707 two bedroom/two units (100 to 105 square metres) and 67 three bedroom / two bathroom (110 to 120 square metres), will be constructed in close proximity to the lakes and waterways, and Commercial precinct and hospital. These condominiums, at a density of 30 to 40 per hectare, will be used for permanent residents and retirees and will be single level or terraced with wheel chair access- They will feature ocean and island views or views over the recreational waterways and will provide direct access to the commercial, retail and community facilities.

17.3.7. Precinct 7 - Singe Unit Residential

674 single unit residential lots will be created throughout the golf course and in the higher country below the crest of the surrounding ranges. Smaller lots (562) will range from 1,000 to 1,700 square metres, while larger lots (I12) will be about 2,500 square metres. The lots will feature uninterrupted ocean and island views or golf course views. Whilst the style of dwellings to be constructed on the residential lots will be determined by the individual owners, it is envisaged the dwellings will be of substantial size, modern design and style, attractive appointment and finish, and completed with pools, landscaping and site improvements.

17.3.8. Precinct 8 - Commercial, Retail and Boardwalk Precinct

A small (500 square metres) complex of convenience shops to service the local community and a larger (3,000 square metres) complex of neighbourhood retail, specialty shopping and commercial development will be constructed along the Valley beach front. A boardwalk resort retail facility consisting of specialty shops catering to the tourist market will be developed in association with the Peninsula Resort. Design and construction will be in keeping with that of the overall project. Development in this Precinct will be sold either to a large developer or in strata title to local operators.

17.3.9. Precinct 9 — Community Facilities Precinct

To be accommodated in the retail development will be a range of community support facilities, including:- • police station; • ambulance; • fire station; • community hall; • library; • primary school; • Post Office; • Telstra office; and • medical centre, including private hospital, 10 to 15 bed geriatric hospital

and infant health clinic-

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It is likely these facilities will be housed within a number of smaller buildings rather than a single complex at different locations within Clarke's Cove. The primary school will be located on a 7 hectare site near the entrance to the development. A retirement village (detailed in Precinct 6), including hostel accommodation and a nursing home, will be included in the development. Buildings in this Precinct will be of similar style and design as the commercial buildings within the development.

17.3.10. Precinct 10 — Golf Course Precinct

An 18 hole championship golf course will be developed in the Valley, in the western part of the site. The watercourse which runs through this area will be beautified and incorporated in the golf course. The Golf Clubhouse will be contained in the Golf Resort.

17.3.11. Precinct 11 — Recreational Facilities Precinct

Apart from the natural attractions offered by the ocean and Dryander National Park, Clarke's Cove will contain the following:-

• swimming lagoon to provide a safe year round area for water activities and scuba diving training;

• tennis courts; • lawn bowls; and • walking and jogging tracks particularly along the watercourses.

17.3.12. Precinct 12 - Marina Precinct

In deep water on the northern coastline of the Peninsula will be developed a marina, containing the following:-

• 250 berths; • ferry terminal; • public boat ramp; and • handstand area.

17.4. GENERAL

No development has been proposed for areas containing mangroves, or on the higher slopes where the gradient is too steep to support development. Ile range of resort accommodation will offer the tourist a diversity with regards to price, environment and recreational activity emphasis. The marina basin will have a solid rock bottom which will not require dredging, thus its future maintenance costs will be quite low compared to Laguna Quays and Abel Point Marinas. When completed Clarke's Cove will be a totally integrated resort community with a population of approximately 8,000 persons.

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18. RESORTS IN THE WHITSUNDAY REGION

18.1. EXISTING MAINLAND RESORTS

The focus for tourism and resort development in the Whitsunday Region has been towards island projects, however a number of mainland resorts have also been constructed to take advantage of the natural attractions. The region generally has many natural advantages facilitating recreational activities, particularly those associated with its extensive protected waters. This has provided an ideal marine environment for boating, fishing and reef and island exploring. The most prominent development on the mainland are Laguna Quays, Mediterranean Village, and Club Crocodile (Cannonvale) resorts. None of these are within close proximity to the subject. These, together with other major mainland developments, include the following:

18.1.1. Laguna Quays & Turtle Point Tournament Golf Course

Sixty kilometres south of Arlie Beach is the Laguna Quay Integrated Tourist Resort and Township. Laguna Quays is a recent mainland development. The property is situated at the southern end of the Whitsunday shire on a 1,776 hectare site on the beach front at Midge Point. Whilst it is widely recognised as being the finest existing mainland resort in the Whitsunday's it has not proved financially successful. The development has been recently sold reportedly to the Village Roadshow group at a substantial loss. Featuring the Turtle Point Golf Course – classified by many as one of Australia's best - the golf course hosts the Australian Skins Tournament. It is understood that in excess of 4,000 golf memberships have been sold both in Australia and overseas. The first stage of the resort now completed features a 60-unit resort hotel, 137 condominiums, 70 berth marina, recreational facilities and service infrastructure. Further stages are to include; tourist and residential accommodation units, commercia/ retail precincts, recreational and marina facilities.

18.1.2. Mediterranean Village

This resort was completed in 1999 following a three / four year construction period. The Mediterranean Village is situated on an elevated site overlooking Airlie Beach, Pioneer Bay and the Whitsunday Passage and Islands. The resort has been constructed over four stages and contains 52 strata title apartments in resort situation, a licensed restaurant and recreational facilities.

18.1.3. Club Crocodile Resort This resort was constructed in 1988 and contains 167 units, licensed restaurant.

conference Centre. souvenir shop and various recreational facilities. It is designed to cater for the “mid” market visitor. Situated in Cannonvale, it features limited ocean views.

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18.1.4. Coral Sea Resort

This is an older (approximately 20 years) resort. But totally refurbished in 1998/9. Catering for the higher end of the market, this Airlie Beach property has absolute ocean frontage. The resort contains 27 units, licensed restaurant, speciality shops, recreational facilities and a jetty.

18.1.5. Mango House Resort

Mango House Resort, built in 1998/99, is situated in Jubillee Pocket. It comprises a 4,194 sq.m. site zoned Residential B of level terrain with frontage to Campbell Creek and featuring rural and urban views only. The site is improved with 33 strata title units, reception and recreational facilities - catering for the “mid” market

18.2. PROPOSED MAINLAND RESORTS 18.2.1. Support for Mainland Resort & Island Development

Our previous comments under the section “ZONING” in this report have indicated that Council support for mainland resort development is divided between “mainland urban” and “mainland low key”. The proposed Clarke’s Cove development is “mainland urban” by definition. Current approved mainland urban sites include Shingley Hill and Abel Point (Whitsunday Harbour site - associated tourist oriented development proposals); Boathaven Bay (adjacent the Whitsunday Sailing Club site); Shute Harbour (potential marina site); and “Nodes” - intended to provide for a range of tourist accommodation and visitor and recreation experiences - sympathetic to their waterfront and/or National Park setting and prominent positions at the main road and sea entries to the Town. Development is intended to be encouraged where it meets a demonstrated community need. Mainland Low Key is intended for future mainland tourism development outside established areas is intended to take advantage of more remote locations along the Shire's coastline including Earlando and Monties. Council’s Strategic Plan indicates that it is not intended to encourage major concentrations of tourism facilities in these nodes as such may create disadvantages associated with dislocation from urban centres and undermine opportunities for a "whole-of-Shire" tourism network,

In so far as Island development is concerned, it is intended to consolidate urban style tourist facilities into established nodes such as existing island resorts at Hook, Hayman, Hamilton, Long, Daydream and South Molle Islands.

Any future redevelopment, and any proposals for harbours or marinas, are intended to be demonstrated as meeting a public need, not likely to create or increase significant adverse social and economic impacts on the host community. Development for island tourist facilities outside designated nodes (and which are not proposed within National Parks) are intended to be low key, non-urban and nature-rural based in character. Further, Council are required to ensure development does not prejudice existing resort or ongoing attraction (development which is compatible in form and character with the existing or desirable character of development in the designated node).

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There are, however, a number of resort developments that have either been proposed or approved for the region. Whilst many of these Projects are “on hold”, they generally fit within the strategic development options planned for the region, and are shown below:

18.2.2. Royal Orchid Resort A larger sized development, this resort represents a potential competitive threat

to the Clarke’s Cove development, although it does not have the same privacy and access to ocean views and water sports generally. As such is considered to be a less favourable site on a much smaller area compared to the subject. Situated in Cannonvale, the Royal Orchid Resort is a 66.3 hectare, gently sloping to undulating site featuring rural and urban views. The site is zoned Special Facilities. Improvements to the site include the Cannonvale Golf Course, with approval granted for a 460 room 5 star international resort hotel;, 120 twin key apartments in a 3 star hotel and conference Centre, 18 Hole international standard Golf Course and Country Club, licensed restaurants and bars, pro shop and golf academy; 265 condominiums, 302 residential sites; 3,000 square of commercial / retail land, and various recreational facilities.

18.2.3. Laguna Beach Resort (also known as “Cable Bay” Resort)

Situated on a 352 hectare site on the beach front at Midge Point, seven kilometres south of Laguna Quays, is the proposed Laguna Beach Resort. The site features attractive panoramic views over Repulse Bay to the southern Whitsunday islands. Stage 1 of this development was originally expected to commence in early 1999, however the Project now appears to be on hold. The resort when completed will contain a 324 room international hotel, 2,258 apartments or condominiums, 595 residential dwellings, an 18 hole golf course, commercial/retail facilities, recreational facilities and open space reserve. Enquiries with Mackay City Council indicate that this Project may be on hold for an indefinite period in favour of the expanding Laguna Quays resort developments.

18.2.4. Castaway Bay Integrated Resort Development and Wave Surf Pool

The Castaway Bay Development is situated on 6.3 hectares of beach front land at Clifford Beach, approximately eleven kilometres north of Airlie Beach. Known as the Castaway Bay Integrated Resort and Wave Surf Pool, the site contains beachfront land, elevated range country and a permanent creek. The site is to be developed with a resort hotel containing 24 strata title twin key units, licensed restaurant and central complex, 100 strata title apartments; 13 Group title dwellings, 3 commercial shops; a surf wave pool (the largest in the southern hemisphere); recreational facilities. service improvements; and site improvements.

18.2.5. Whitsunday Vista Quest Resort

Proposed, but not approved, for the site are a resort hotel complex; 132 strata title apartments; recreational lake; site improvements and other facilities. Situated in Jubillee Pocket, the site comprises a 51.28 hectare site, zoned Rural. Of elevated, sloping to steep terrain it features extensive ocean and island views. The site has very poor access and no services.

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18.2.6. Whitsunday Vista Quest Apartments

Also situated in Jubilee Pocket, the Whitsunday Vista Quest Apartments comprises an amalgamation of 10 allotments. Zoned Residential "B', of elevated., sloping terrain, the site features attractive ocean and island views. 24 strata title apartments have been constructed. In addition to a licensed restaurant complex , with another 121 apartments having been approved for the site.

18.2.7. Airlie Beach International Resort

Approved for the site is a seven level resort hotel complex containing 212 strata title apartments, licensed restaurant and bar. specialty shops and central resort complex; 10 condominiums; 250 seat conference Centre; and recreational facilities. Situated in Cannonvale, the site comprises a smaller sized, 3.259-hectare site, Zoned Special Facilities, it is of gently sloping terrain with frontage to a mangrove esplanade. There are no sea views from the site, although these will be available from the upper levels of the development.

18.2.8. Whitsunday Sailing Club Marina

The Whitsunday Sailing Club Marina development carries the strong support of Council. It is to be developed over 97 hectares at Boathaven Bay adjacent to Airlie Beach. The project will be developed over a number of years and when completed will contain 600 marina berths; commercial berths and docks; hardstand area containing travel lift, fuel jetty. and service facilities; ferry marine terminal; commercial and retail precinct, 150 room 4 star hotel; and condominium and residential development.

18.2.9. Australian Bareboat Charters Marina

The Australian Bareboat Charters Marina site is to be developed on 32 hectares of seabed lease and adjoining Crown Land in Shute Harbour approximately ten kilometres east of Airlie Beach. When completed this project will feature 310 marina berths; 100 condominiums; 240 resort hotel rooms; 1,300 metres of commercial space; hardstand facilities and maintenance area. and fuel outlet. and site improvements.

18.3. ISLAND RESORTS The islands of the Whitsundays were first sought out around the turn of the century for timber to build houses for the mainland settlements and for grazing land. By the 1920s a number of leases were held, and the first families established permanent residence. In 1923 a family living on Lindeman Island commenced the first manifestations of tourism with the hosting of occasional paying guests. By the mid 1930’s resorts were operating on Lindeman, South Molle, Long, Daydream and Hayman islands. Guests arrived by coastal passenger vessels which plied between Melbourne, Sydney, Brisbane, Townsville and Cairns. It was then that the concept of 'package' tours, so widely employed today, was first established. The resorts were homely and informal, a pleasant quality they shared with many Queensland resorts. During the war the resorts were, for the most part, closed; they re-opened in 1946.

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Today the islands and the adjacent mainland have some of the most the most up-to-date resort accommodation found anywhere. They are served by two jet airports, one at Proserpine and one at Hamilton Island.13 A description of the major island resorts follows:

18.3.1. Hayman Island The sheltered waters between Hayman’s wide sand beach and the northern shores of adjacent Hook Island form one large lagoon. Some of' the best coral growth to be found on any of' Australia's near-shore islands. In 1985 the then Royal Hayman Resort was closed for demolition and the rebuilding of a $300 million resort complex. The Hayman that emerged boasts membership of the prestigious Leading Hotels of the World, a group that nominates only the world's most eminent establishments. Comprising 240 luxury units, Hayman Island is classed as the world's third best hotel. Hayman has a European flavour, with an atmosphere of a stately residence rather than a hotel. Guests are visitors in a private mansion with profusely planted gardens that are adorned with huge Grecian statues and fountains. The lobby and passages are furnished with vases and antiques, the walls hung with original art by some of Australia's best known artists. No effort has been spared to create a grand style, an elegant, civilised 'place of good living'. The resort rooms, restaurants and other public areas are in two wings - East and West - which are linked by a central reception with shops and restaurants and scenic walks and gardens. The resort has a total of over two hundred rooms and eleven penthouses. The West Wing overlooks a gigantic swimming pool complex. The penthouse suites represent the ultimate luxury on offer, each having a different decorative theme - Greek, Japanese, Italian, Moroccan, English, Art Deco, French Provincial, north Queensland and others. The island caters for over four hundred guests and, being a five star resort, has round-the-clock room service. Hayman has a number of restaurants, ranging from formal to casual. The resort has six day/ night tennis courts, a sports centre with two squash courts, ping pong tables, a golf target range, nine-hole putting green, a health club, a PADI diver training facility and water sports centre, and three swimming pools. Dinghies and outboards are available for hire. Water-skiing and parasailing are available. The island has some good walking tracks. Scuba diving is also well catered for. Hayman has its own game-fishing boat and experienced local skippers. Other yachts based at Hayman's marina do casual day and sunset cruises. Hamilton airport has a helipad, with amphibious aircraft regularly taxiing through the boat harbour. The marina has floating berths for 25 yachts.

18.3.2. Hamilton Island

Hamilton is a resort island with a wide range of accommodation, restaurants and activities. Its jet airport has a 1,765 metre long airstrip which has made the

13 The foregoing has been extracted from source: Colfelt, D, 100 Magic Miles of the Great Barrier Reef:

The Whitsunday Islands (Sixth Edition) 2000.

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island a major transhipment centre for all the islands and is capable of handling non stop jet flights from eastern Australian States. Hamilton Island Aviation is based at the airport and offers a range of services including transfers to the championship golf course at Laguna Quays. Hamilton Island has been developed as the largest resort hotel in the southern Hemisphere capable of accommodating 4,000 guests as well as staff and permanent residents. There are two main centres on the island – the marina village built around a man-made harbour, and the resort side which has four styles of hotel accommodation. The marina has berths for 138 yachts, and is in effect a tiny township providing banking, post office newsagency, Laundromat, bakery and other services. In addition, there a number of restaurants , nightclub, tavern and a range of shops. The resort side features the deluxe Beach Club resort, multi-storey Reef View Hotel, Whitsunday Holiday apartments, and bure’ style Coconut Palm bungalows. The island offers a wide range of activities: golf driving range, mini golf, go-karts, target sports range, tennis and squash courts, gymnasium, wildlife and fauna park, a wide choice of water sports, a WireFlyer, and bushwalking tracks with excellent views over the surrounding islands. Guests are offered a variety of tours of the Whitsundays and the Great Barrier Reef by sea or by air. Fantasea Cruises operates daily tours to Reef-World at Hardy Reef as well as half-day trips to Whitehaven Beach on Whitsunday Island. There is also scuba diving tuition , other snorkelling and diving activities available.

18.3.3. South Molle South Molle is located close to the mainland. It has traditionally catered for the family market. The island features 192 cabins (mid market), restaurants and bars, souvenir shops and water sports. A 9-hole golf course has also been developed on the Island. Most of the island is a national park, with excellent walking tracks and spectacular views from the promontories. There are also a number of secluded beaches.

18.3.4. Daydream Island

Daydream was one of the early forerunners of tourist growth in the Whitsundays. In the early post-war days the island became a setting down point for flying boats. It is a small island, with spectacular views out over the Whitsunday Passage. In the early 1990s a completely new family resort with over three hundred rooms was built at the northern end of the island, and the old resort at the southern end became a day-visitor facility. Jennings redeveloped the island in 1990 at a reported cost of $100 m, which includes a new resort at Sunlovers Beach at the islands northern shore. The resort features 300 mid to up market units. The day-visitor facility has its own swimming pool and pool bar, coffee shop, souvenir shop, and offers a range of seaside activities. A boardwalk leads from the day-

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visitor centre to the resort, which has a pool and pool bar, spa, gym, shop and two restaurants.

18.3.5. Club Crocodile Long Island Resort This resort is situated on Long Island’s northern beach facing Port Molle. It opened in the 1930s. Since the mid-1980s the Happy Bay resort has undergone a number of transformations to its current style being a resort for all ages, with modern facilities and a wide range of activities. The development includes a quality resort containing 140 units, licensed restaurant and bars. specialty shops. And offers various recreational activities. Long Island is a national park with some tropical vine forest with various walking tracks.

18.3.6. Palm Bay Hideaway, Long Island

Palm Bay Hideaway is a tiny hideaway located just over 1 kilometre south of happy Bay. It has a pleasant, coconut palm fringed beach and lagoon allowing access for yachts with a draught up to 2.5 metres. A casualty of Cyclone Ada in 1970, the resort first opened in 1933. It has subsequently been rebuilt in the late 1980’s as a small resort with “down-market” accommodation consisting of several cabins and bure’s. There is a restaurant and bar, with a shop (basic provisions only).

18.3.7. Paradise Bay, Long Island

Paradise Bay is located at the southern end of Long Island and is the home of a small resort consisting of eight cabins grouped around a gazebo. Its mission is to provide seclusion for escapists (no day visitors, no children). Access is via the resort’s cruiser.

18.3.8. Hook Island Wilderness Resort and Underwater Observatory

The Hook Island underwater observatory first opened in 1969. Located in the narrow passage between Hook Island and Whitsunday Island. it was built in the days before it was possible to take day trips to the Barrier Reef. The observatory provides an opportunity to see and to photograph fish at very close quarters, with coral-viewing craft take sightseers out over the fringing reef. It is a low key, down market backpacker resort featuring 33 cabins. The observatory is in a narrow channel between two islands. Immediately north of the observatory is a small resort with camping area and twelve cabins with bunks, a restaurant/coffee shop, kiosk, barbeque facilities and small bar. Snorkelling and coral viewing are available just off the resort beach. Moorings are available for visitors.

18.3.9. Lindeman Island Located in the centre of the Cumberlands, Lindeman is a little “off the beaten track”, between the gateways of Shute Harbour to the north and Mackay to

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the south. Its relative isolation and many natural attributes traditionally fitted it for a role as a quiet, family sort of island. The resort was virtually demolished and completely rebuilt from 1987 to 1988 and was again extensively modified in 1991 and 1992 before reopening as a Club Med village. The resort is still in the old location, tucked against a hill in a bay on the south-western end of the island. The central complex is a series of open pavilions by the sea which take full advantage of the setting; its buildings, in natural timbers with pyramid-shaped shingled roofs, impart a village atmosphere. Club Med Lindeman was the company's first holiday village in Australia operated and staffed along the familiar Club Med lines - all-inclusive tariff, with guests joining in or dropping out as they wish. Staff (who come from all over the world) “blend in” with guests. Lindeman’s grasslands made it an obvious place for a golf course, and the island has a true links, a nine-hole course with some spectacular vistas out to the Passage. There are five day / night tennis courts (one covered). A number of' attractive beaches may be found on Lindeman, as well as on the adjacent Seaforth and Shaw Islands. In addition to the golf course, Club Med have developed an international resort containing 152 units, restaurants, bars, souvenir shops, airstrip and terminal and have available water sports and marine facilities. Being a national park, Lindeman has several graded bush tracks, one which meanders through forest and a valley of butterflies until it makes its ascent up a grassy slope to the summit of Mt Oldfield.

18.3.10. Brampton Island

Brampton Island was first developed for a resort in the early 1930s to take advantage of the good anchorages, beautiful beaches, water, and abundant wildlife. Roylen Enterprises bought the lease and ran the resort in conjunction with his cruise business until 1985. Brampton has traditionally been a romantic retreat for those on their first - or subsequent – honeymoon. An island for quiet relaxation where guests can either enjoy each other or the natural surroundings. Today it is part of the stable of resorts belonging to P&O Resorts, which owns Barrier Reef island properties from Heron Island in the south to Lizard Island in the north. The sand beach directly in front of the resort looks north to the islands of the Sir James Smith Group, which sit on the horizon. This beach, unlike many in the Whitsundays, remains usable for water sports at all tides (the fringing reef does not dry). The beach is the focal point of the resort. Brampton offers a complete range of water sports. It has a short, 'fun' golf course, tennis courts and an archery range. A full schedule of organised activities is offered. The island is a national park and has a system of graded walking tracks that is regarded by many as the most scenic track system in the Cumberland Group, with many spectacular views, particularly over the southern bays of the island.

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19. OUTLOOK FOR THE TOURISM INDUSTRY

19.1. THE ECONOMIC CONTEXT OF TOURISM14

Tourism encompasses most short-term travel away from the normal place of work and residence, including travel undertaken for business and pleasure. It is defined by the World Tourism Organization (WTO) as: "the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes". This identifies 'tourism' as being more than just leisure travel. It also encompasses travel for business, health, education, religious and other reasons. Tourism comprises both domestic and international travel. In an economic context, its effects are to generate economic activity and to transfer such activity between different parts of the economy. As it involves the consumption or purchase by tourists - or 'visitors' in the WTO terminology - of any good or service, its economic impact ranges over many sectors of the economy. Tourism also draws on services provided by the Commonwealth Government, the State and Territory Governments and local government organisations without direct charge to tourists. These include the construction and maintenance of roads, airports, harbours, railways and national parks, tourism promotion, immigration and customs services, information services and the provision of a large number of recreational facilities. While tourism has been an economic factor in Australia for a very long time, in recent times it has grown to the extent that it is now recognised as a major contributor to total economic activity. In particular, international tourism has experienced substantial growth in the past decade or so, and the holding of the Summer Olympics in Sydney in September 2000 is expected to have long term positive effects on inbound international visitors well into the next decade. This has focused the need for improved standards of facilities and service, and has contributed to a recognition that tourism covers a sophisticated set of economic activities with great potential for future domestic and export earnings.

19.2. THE NEED TO ADOPT A LONG TERM VIEW Since development of the subject property as a tourist resort is closely related the tourist industry, it is appropriate to examine prospects for the industry in the short and longer terms. However, since the development proposed for the property is relatively large scale and long term, a longer terms view of the industry and its prospects is considered the most meaningful approach. Accordingly, it is submitted that short term developments in the industry have only limited impact on the property development as proposed, possibly relating more to marketing period and scope, rather than property values.

14 Extract from Australian Bureau of Statistics, Year Book Australia, 2001

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Further, market conditions for the tourism industry have recently been in a state of considerable change. It should be stated that some of these conditions are considered to have had a relatively severe, but only short tem impact. The two most significant impacts include:

1. The September 11 bombings in the United States and its impact on international travel to tourist destinations

2. The demise of the Ansett airline group In the first case, it is likely that with stricter security measures, and assuming the problem can be generally contained without further incident, in time the market will respond positively and travel by international tourists will return to their previous levels or thereabouts. Given the resources being poured into this situation by, notably the United States, there is every reason to have confidence in the outcome suggested. In the second case, the slack is already being taken up by alternate airlines, and a takeover of the operator is a distinct possibility even in the short term. The net result is likely to be no long term change, from the point of view of numbers of persons travelling to tourist destinations in Australia carried by domestic airlines. There is some anecdotal evidence suggesting that the international scenario has meant that Australian tourism operators have had to rely more heavily on domestic markets. However, as demonstrated in the data provided hereafter, this is not to be over-emphasised as the Australian tourism industry has always had a strong reliance on their domestic market, despite growth in international travel to Australia in recent years. Accordingly, and despite these events, the evidence available to the Valuer suggests a more buoyant longer term scenario. Of course, from a retrospective point of view, none of these significant events noted above had occurred prior to 2001. This reinforces industry buoyancy as it may have applied in 1999.

19.3. PROJECT’S RELATIONSHIP TO TOURISM

Tourism has an economic impact which ranges over many sectors of the economy. It is most directly felt by sectors such as transport and tour operators, accommodation establishments, theme parks and attractions, entertainment and arts venues, museums and historical sites, restaurants, travel agents and souvenir retailers. However, other sectors also benefit both directly and indirectly from tourism demand. Now recognised as a major contributor to total economic activity. There has been a significant increase in international tourism in the past decade or so. This has focused the need for improved standards of facilities and service, and has contributed to a recognition that tourism covers a sophisticated set of economic activities. Accordingly, the proposed development of the subject property as a tourist resort is clearly related the prospects for the tourist industry. Moreover, prospects relate not only to the domestic scene, but the international scene as well. Therefore, in undertaking this analysis, the Valuer has presumed a macro

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analysis of the industry as a relevant focus for determining prospects for the project generally than might otherwise be the case. Moreover, the proposed development is one of all – local, state-wide, national, and even international interest.

19.4. INTERNATIONAL & DOMESTIC TOURISM, AND THEIR RELATIVE IMPORTANCE

19.4.1. The Relative Importance of the Domestic Market Despite an Increasing

International Market Because of Australia's island status and distance from most of its international source markets, tourism in this country will continue to be dominated by domestic tourism for the foreseeable future. Despite high annual growth rates, international tourism still only accounts for around a quarter of total tourism activity. While international tourism is forecast to continue to enjoy significantly higher growth rates than domestic tourism, it will be well into the new century before it matches the level of activity of domestic tourism. The Tourism Satellite Account shows that, for 1997-98, tourism's contribution to gross domestic product (GDP) was 4.5%15. Domestic tourism accounted for 79% of total tourism GDP, with households contributing more than four-fifths of this proportion. International tourism contributed 21% to total tourism GDP. Expenditure by international visitors on Australian-produced goods and services (tourism-related exports) accounted for 11% of all exports during 1997-98.

19.4.2. Potential Markets (International)

In 1998 Japan had been Australia's most important source of international visitors. However, a decline of Japanese visitors in 1999 saw New Zealand become Australia's most important source, accounting for 16.3% of total inbound visitors. This was closely followed by Japan which accounted for 15.9% of inbound visitors, the United Kingdom (13%), United States of America (9%), and other European countries (8%).

The largest category of international visitors during 1999 was those arriving for 'holiday' purposes, who accounted for 56% of all visitor arrivals. Another 19% arrived for the purpose of 'visiting friends/relatives' and 12% arrived for 'business' purposes or to attend a 'convention/conference'.

New Zealand was the main source of visitors for 'business' (25%), and 'convention/conference' (19%). United Kingdom provided the most visitors (24%) for 'visiting friends and relatives' and for 'employment' (26%). Japan provided 24% of 'holiday' visitors, and 'Other Asia' was the main source (16%) of visitors arriving for 'education'.

15 The Australian Tourism Satellite Account produced by the ABS represents the first attempt at placing

tourism in a national accounting framework, using international standards.

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INBOUND VISITORS, By Country/Region of Residence and Main Purpose of Trip - 1999

Country / region of residence

Convention/

conference

'000

Business

'000

Visiting friends/

relatives

'000

Holiday

'000

Employment

'000

Education

'000

Other and not stated

'000

Totalvisitors

'000

Change on 1998

% New Zealand 20.7 109.3 197.6 333.0 11.0 5.1 52.1 728.8 2.7 Other Oceania 4.1 11.0 27.0 61.3 1.2 6.9 26.3 137.8 8.0 Germany 2.5 10.1 19.2 100.5 1.0 3.5 7.8 144.5 13.4 United Kingdom 7.6 36.4 207.0 270.7 11.6 3.4 32.2 568.9 14.1 Other Europe 13.0 33.4 75.9 187.0 3.6 12.2 33.7 358.9 10.3 Indonesia 2.1 8.9 16.2 38.2 0.9 14.4 10.3 91.0 -2.2 Malaysia 3.6 8.9 26.2 81.5 0.8 11.0 7.8 139.8 24.7 Singapore 5.4 29.0 29.0 178.6 0.9 13.5 10.6 267.0 8.1 Hong Kong (SAR of China) 2.4 14.6 25.5 74.9 0.5 8.7 7.6 134.0 -6.5 Japan 3.8 27.3 20.5 604.9 2.9 11.3 36.9 707.5 -5.8 Korea 2.8 8.9 15.3 61.7 0.5 8.4 11.1 108.6 63.0 Taiwan 1.7 5.4 7.9 109.1 0.4 7.7 15.3 147.5 -1.6 Other Asia 11.8 42.2 51.2 103.8 2.9 23.7 34.8 270.2 19.4 United States of America 16.8 72.5 82.7 191.6 4.0 15.4 34.2 417.1 11.5 Other America 4.5 9.8 28.8 51.7 1.4 5.1 9.3 110.6 10.9 Middle East and North Africa 1.9 4.2 13.3 26.3 0.4 1.1 5.2 52.4 24.5 Other Africa 2.6 9.1 20.9 27.7 0.9 1.4 8.3 70.8 -0.1 Not stated - - 0.3 0.2 - - 3.5 4.0 62.2 Total 107.1 441.0 864.4 2,502.7 44.6 152.7 347.0 4,459.5 7.0Source: Overseas Arrivals and Departures, Australia (3401.0).

The long travelling distances needed for most international visitors to arrive in Australia contribute to a relatively long stay in this country. In 1999, 41% of visitors stayed for more than two weeks, while 21% stayed for more than a month (table 22.7). A factor contributing to the relatively long stays is that 67% of travellers 'visiting friends or relatives' stayed for more than two weeks. Visitors arriving for 'education' purposes also tended to be long stayers (73% for greater than two weeks and 45% for six months), but their absolute numbers were relatively small in comparison those with other reasons for travel.

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(16.3%) New Zealand

(3.1%) Other Oceania (3.2%) Germany (12.8%) United Kingdom

(8.0%) Other Europe

(2.0%) Indonesia

(3.1%) Malaysia

(6.0%) Singapore

(3.0%) Hong Kong (SAR of China)

(15.9%) Japan

(2.4%) Korea (3.3%) Taiwan (6.1%) Other Asia

(9.4%) United States of America

(2.5%) Other America

(1.2%) Middle East and North Africa (1.6%) Other Africa (0.1%) Not stated

INBOUND VISITORS, By Country/Region of Residence- 1999 Australia

Australian Bureau of Statistics, 2001 Queensland Year Book: Number 58, ABS Catalogue No. 1301.3, Commonwealth

(2.4%) Convention/conference

(9.9%) Business

(19.4%) Visiting friends/relatives

(56.1%) Holiday(1.0%) Employment

(3.4%) Education

(7.8%) Other and not stated

INBOUND VISITORS, By Main Purpose of Trip - 1999 Australia

Australian Bureau of Statistics, 2001 Queensland Year Book: Number 58, ABS Catalogue No. 1301.3, Commonwealth

19.4.3. The Growth of International Tourism in Australia Source: Australian Bureau of Statistics, Year Book Australia 2001

The 4.2 million international visitors in 1997-98 had an average consumption per head of $3,031 on Australian-supplied goods and services. The 75 million domestic overnight visitors during 1997-98 had an average consumption per

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head of $465, while the 155 million domestic day trips accounted for an average consumption of $69 per head. Growth in tourism flows to Australia in the mid to late 1980s was at almost twice the international growth rate in tourism flows to all countries. However, Australia's share of world tourism is still small, accounting for only around 0.5% of total international visitor arrivals in all countries. Because Australia is a long-haul destination for most international visitors, this share is never likely to be large. However, starting from a low base, there is still considerable potential for growth. The number of international visitors to Australia increased at an average of 25% per year from 1984 to 1988. However, 1989 saw a 7.5% fall in arrivals to 2.1 million, following the strong contributions of Expo 88 and the Bicentennial to the growth in the previous year, but also reflecting the adverse impact of the disruption to domestic airline services caused by the airline pilots' dispute in late 1989. Arrivals recovered by 6.5% to 2.2 million in 1990 and then increased to a new record level of 2.4 million in 1991, and grew by double digit rates in most years to reach 4.4 million by 1997. The number of arrivals in 1998 was 4.2 million, representing a 3.5% drop in arrivals over 1997. There were almost 4.5 million arrivals in 1999, a 7.0% increase over 1998. The domestic travel market was relatively stagnant in the late 1980s, and experienced an overall small downward trend in visitor nights during the early 1990s. Because of changes in survey methods, it is not possible to compare the figures from 1998 on with earlier figures. Visitor nights in 1999 were virtually unchanged from 1998.

19.4.4. International Visitors to Queensland

Source: http://www.qttc.com.au/research/trends/issue18/update.htm An Update of International Visitors to Queensland Since 1990, international visitation to Queensland has grown an average of 8.4 percent per annum. In 1998, Queensland received 1,818,179 international visitors which represented 47.1 percent of total international visitors to Australia. During the same period, international visitors generated almost 23.5 million visitor nights to Queensland. This represented 23.5 percent of total international visitor nights to Australia. Queensland led New South Wales and Victoria for the number of international holiday visitors received in 1998. It was equal to New South Wales for international holiday nights. In terms of visitors, Queensland’s two most important international markets are Japan and New Zealand. In 1998, Queensland received 245,300 New Zealand visitors (up 0.4 percent on 1997) and 516,600 Japanese visitors (down 11.6 percent on 1997). Short term overseas arrivals to Queensland from emerging markets such as China, India and Africa increased 5.4 percent, 14.3 percent and 30.4 percent respectively for the year ended June 1999, compared with the year ended June 1998 (Australian Bureau of Statistics).

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The table below shows the proportion of visitors to Queensland regions from overseas countries. It shows, for example, that travellers from Asia (excluding Japan) are more likely to visit the Gold Coast and Brisbane than other regions of Queensland. International Visitors to Queensland in 1998

Regions

All Countries

(Number)

New Zealand

(%)

Japan

(%)

Asia Exc.

Japan

(%)

North America

(%)

United Kingdom

(%)

Germany

(%)

All Other Countries

(%)

Gold Coast 792,138 14% 38% 27% 5% 6% 2% 9%

Brisbane 660,539 17% 9% 26% 10% 15% 4% 19%

Sunshine Coast 187,273 26% 11% 9% 8% 19% 6% 21%

Fraser Coast 172,640 10% 3% 6% 9% 25% 15% 33%

Darling Downs 29,310 22% 2% 17% 15% 16% 7% 21%

Bundaberg 35,863 9% 6% 5% 16% 20% 17% 27%

Capricorn 116,215 15% 2% 4% 13% 21% 15% 30%

Mackay 44,298 11% 2% 2% 8% 16% 19% 40%

Whitsunday Isl. 182,335 8% 14% 2% 11% 23% 12% 30%

Northern 136,127 13% 4% 5% 11% 18% 14% 35%

Tropical North 762,321 6% 28% 8% 16% 15% 6% 20%

Outback 35,617 5% 4% 4% 17% 14% 17% 39%

Net Queensland 1,818,179 13% 28% 19% 10% 11% 4% 15%

Source: International Visitors Survey, 1998 (BTR)

19.4.5. International Market Barometer (December 2001) Source: http://www.qttc.com.au/research/trends/issue18/barometer.htm United Kingdom The GST in Australia is starting to become a concern for UK travel agents. Queensland operators appear to be more aware of implications that will stem from the new Australian taxation system. New Zealand There was a very large range of packaged holidays available during July. Lead in package prices from New Zealand to the Gold Coast flying Freedom Air started at NZ $599.00 return for 6 nights.

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The Americas The US economy continues to show steady growth and personal disposable income is also on the rise. Confidence remains high and personal consumption is still at record levels. Qantas recently announced the introduction of direct flights from Los Angeles to Brisbane via Auckland. Japan The number of Japanese overseas travellers during January to July 1999 was around 9,155,000, up 3.0 percent from the same period of the previous year. According to the Japanese National Tourist Organisation (JNTO) this number has grown for five consecutive months since March 1999. Taiwan Whilst Taiwanese outbound travel performance in the first half of 1999 was promising, the devastating earthquake in late September can be expected to have adverse effects on both economic performance and outbound travel throughout the coming months. Korea Korean outbound travel has reflected a turnaround in economic performance. Arrivals to Australia for the six months from January to June 1999, compared with the same period in 1998, rose by nearly 87 percent.

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Growth in Visitor Arrivals

12 Months to June 1999 compared with previous year

Country Australia (%) Queensland main state of stay (%)

Brisbane Airport (%)

Cairns Airport (%)

Sydney Airport (%)

New Zealand 3.1 3.1 6.9 -0.2 -0.5

United Kingdom 8.4 10.3 18.4 2.4 4.4

France 17.8 50.3 59.3 19.1 2.5

Germany -1.1 -4.3 -2.6 -10.1 -3.1

Italy 4.7 6.9 18.3 12.3 2.6

Netherlands 11.1 20.6 15.6 42.3 3.9

Switzerland 6.4 17.4 21.9 23.1 -2.8

Japan -9.2 -9.7 -12.3 -3.2 -11.1

China 13.4 5.4 -10.9 27.4 29.1

Hong Kong -3.9 -3.7 -8.0 -29.9 8.2

India 11.4 14.3 14.0 11.5 4.1

Indonesia -16.4 -26.4 -12.9 59.0 -30.1

Korea -33.6 -53.5 -53.0 -88.2 -21.7

Malaysia 2.6 7.6 10.8 82.5 -2.7

Philippines 2.5 0.9 -9.9 60.3 9.3

Singapore -5.0 -19.9 -26.5 39.9 0.6

Taiwan -4.8 9.5 29.3 -43.8 -20.6

Thailand 32.9 89.2 64.7 130.9 41.8

Other Asia 14.0 18.5 5.6 13.9 14.6

Total Asia (excluding Japan) -4.7 -10.5 -11.5 -16.4 -3.9

Total Middle East & North Africa 28.4 70.0 51.6 117.6 16.4

Canada 10.0 13.5 38.6 4.1 6.4

USA 10.3 18.3 24.8 28.4 10.0

South Africa 36.2 28.8 43.0 90.0 29.5

Total All Countries 1.4 -1.6 -2.2 1.5 0.7

Source: Australian Bureau of Statistics, Overseas Arrivals and Departures (OAD)

Note: Queensland growth percentages are indicative only. OAD tends to understate visitation to Queensland as it is a measure of main state of stay in Australia.

Note: Data represents airport movement only.

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19.4.6. The Growth of Domestic Tourism Source: Australian Bureau of Statistics, Year Book Australia 2001

In 1999, Australian residents, 15 years of age and over, spent a total of 294.2 million nights visiting other parts of the country (table 22.1). Each trip took an average of four nights, and each person in the population made an average of five trips during the year. Residents of the Australian Capital Territory were the most frequent travellers (average of eight trips), while residents of the Northern Territory tended to stay away for the longest period (average of seven nights). All of these features of domestic tourism are virtually unchanged from those in 1998.

22.1 SUMMARY OF PERSON TRIPS AND NIGHTS AWAY(a), By State/Territory of Origin- 1999

State/Territory of origin

Estimated population

as at 30 June 1999

'000(b)

Persontrips

'000

Averagetrips

per person

Total nightsaway

'000

Averagenights away

per person trip

New South Wales 5,095 25,525 5.0 98,664 3.9 Victoria 3,764 17,421 4.6 68,260 3.9 Queensland 2,763 14,144 5.1 57,084 4.0 South Australia 1,199 5,222 4.4 22,373 4.3 Western Australia 1,463 6,268 4.3 28,504 4.5 Tasmania 370 1,768 4.8 7,769 4.4 Northern Territory 142 657 4.6 4,618 7.0 Australian Capital Territory 245 1,962 8.0 6,927 3.5 Australia 15,042 72,969 4.9 294,198 4.0

(a) For persons aged 15 years and over. (b) Population aged 15 years and over. Source: National Visitor Survey, Bureau of Tourism Research

As table 22.2 shows, 'pleasure/holiday' was the main purpose of visit, accounting for the biggest proportion of visitor nights (49%), followed by 'visiting friends/relatives' (30%). 'Business' visits accounted for 15% of all visitor nights, while 'other' reasons accounted for 5%. New South Wales was the most popular destination, accounting for almost a third of all visitor nights (32%). Queensland was the next most popular destination, attracting just over a quarter of all visitor nights (27%), while Victoria accounted for nearly a fifth of all visitor nights (18%).

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22.2 VISITOR NIGHTS(a), By State/Territory of Destination and Main Purpose of Visit - 1999

State/Territory of destination

All business

'000

Pleasure / holiday

'000

Visiting friends / relatives

'000

Other

'000

Total (b)

'000

New South Wales 13,322 43,821 31,168 4,004 93,871 Victoria 6,801 26,664 16,736 1,823 52,540 Queensland 11,250 40,333 20,401 4,678 78,055South Australia 2,643 8,890 6,182 1,150 19,263 Western Australia 5,342 14,644 7,084 1,185 29,205 Tasmania 1,366 4,554 2,138 (d)319 8,522 Northern Territory 1,532 3,172 909 (d)258 6,430 Australian Capital Territory 1,948 1,593 2,232 (d)169 5,962 Australia(c) 44,209 143,932 86,849 13,598 294,198

(a) By Australian residents, 15 years of age and over. (b) Includes visitor nights where purpose of visit was not asked. (c) Includes other and not stated. (d) Subject to sampling variability too high for practical purposes. Source: National Visitor Survey, Bureau of Tourism Research.

In 1999 the most frequently used accommodation by domestic travellers was the property of friends or relatives (40% of visitor nights), followed by hotels, resorts and motels (23%) and caravan parks or commercial camping grounds (11%). A similar pattern occurred in New South Wales, Victoria, South Australia, Western Australia and the Northern Territory. However in Queensland, Tasmania and the Australian Capital Territory, self catering cottages/apartments were more popular than caravan parks, accounting for 13%, 8% and 9% of visitor nights respectively (table 22.3).

22.3 VISITOR NIGHTS(a), Type of Accommodation Used by State/Territory - 1999

Accommodation type

NSW

'000

Vic.

'000

Qld

'000

SA

'000

WA

'000

Tas.

'000

NT

'000

ACT

'000

Aust.(b)

'000

Hotel, resort, motel, motor inn 21,637 10,918 19,838 4,029 6,023 2,466 1,975 2,102 68,994 Guest house/B&B 1,862 968 553 *349 466 *282 *27 *3 4,511 Self-catering cottage/apartment 6,985 3,655 10,257 1,191 2,513 673 *174 554 26,003 Caravan park or commercial camping ground 10,919 6,380 7,196 2,294 3,177 642 944 *196 32,002 Friends' or relatives' property 40,141 22,564 29,316 7,995 11,507 2,991 1,427 2,641 118,582 Own property (e.g. holiday house) 4,534 3,703 2,199 1,430 1,102 573 *46 *69 13,671 Caravan or camping by side of the road, or on private (non-commercial) property 2,938 2,143 2,925 795 1,744 398 736 *33 11,712 Other/not stated(c) 3,299 1,696 4,378 780 1,720 350 542 464 13,111 Total(d) 93,871 52,540 78,055 19,263 29,205 8,522 6,340 5,962 294,198

(a) Australian residents aged 15 years and over. (b) Includes other and not stated. (c) Other accommodation includes backpacker/hostel, university/school dormitory/college, hospital/hospital related accommodation for relatives, and privately owned boat/yacht etc. (d) Includes visitor nights where accommodation type was not asked. Source: National Visitor Survey, Bureau of Tourism Research.

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Intrastate visits accounted for the majority of total domestic tourism visitor nights (58%). They are a particularly important component of domestic tourism for Western Australia, New South Wales and Victoria, where 70%, 65% and 62% respectively of domestic visitor nights in the State were accounted for by residents of the State in 1999 (table 22.4). In terms of numbers of visitor nights, net beneficiaries from domestic tourism (i.e. where inbound interstate visitor nights are greater than outbound interstate visitor nights) are Queensland, Western Australia, Tasmania and the Northern Territory. While Queensland is the biggest relative net beneficiary, with 2.2 times as many inbound nights as outbound nights, Victoria is the biggest relative net contributor, with 1.8 times as many outbound nights as inbound nights.

22.4 VISITOR NIGHTS(a), By State/Territory of Residence and States/Territories Visited - 1999

State or Territory of residence

State/Territory visited

NSW

'000

Vic.

'000

Qld

'000

SA

'000

WA

'000

Tas.

'000

NT

'000

ACT

'000

Aust.

'000

ination - New South Wales 60,910 12,753 9,858 2,933 1,945 761 557 4,153 93,871 - Victoria 8,238 32,787 3,192 3,802 2,071 1,107 *423 920 52,540 - Queensland 18,280 12,433 39,523 2,909 1,769 1,275 635 1,231 78,055 - South Australia 2,483 3,489 1,038 10,354 757 *227 786 *129 19,263 - Western Australia 2,439 3,127 1,470 848 20,323 *270 541 *187 29,205 - Tasmania 1,087 1,802 566 505 *395 3,900 *9 *257 8,522 - Northern Territory 1,531 1,056 669 653 799 *112 1,576 *34 6,430 - Australian Capital Territory 3,607 805 514 *369 *444 *117 *90 *15 5,962 Australia(b) 98,664 68,260 57,084 22,373 28,504 7,769 4,618 6,927 294,198

(a) For Australian residents aged 15 years and over. (b) Includes other and not stated. Source: National Visitor Survey, Bureau of Tourism Research

19.4.7. Tourist Accommodation Source: Australian Bureau of Statistics, Year Book Australia 2001

At December 1999 there were 190,079 rooms available in Australia in hotels, motels, guest houses and serviced apartments having 15 or more rooms or units (table 22.16). This was an increase of 4% over the number available at December 1998. The number of serviced apartments having 15 or more rooms or units increased by 9% (to 600) over the same period. During 1999 the supply of accommodation in hotels, motels, guest houses and serviced apartments (with 15 or more rooms or units) exceeded demand (the number of room nights occupied), with room occupancy rates of 63% for hotels, 54% for motels, and 60% for serviced apartments.

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22.16 TOURIST ACCOMMODATION(a) - 1999

Quarter ended Year ended

Units March June September December December 1999

LICENSED HOTELS WITH FACILITIES(b)

Establishments no. 753 747 753 766 766 Guest rooms no. 71,637 71,908 72,265 73,416 73,416 Bed spaces no. 193,366 194,135 194,757 196,329 196,329 Room occupancy rates % 62.4 60.1 64.9 65.1 63.1 Bed occupancy rates % 38.0 35.9 40.0 40.1 38.5 Gross takings from accommodation $'000 514,165 476,859 537,904 574,687 2,103,616

MOTELS AND GUEST HOUSES WITH FACILITIES(b)

Establishments no. 2,386 2,398 2,396 2,413 2,413 Guest rooms no. 84,614 84,972 85,267 86,019 86,019 Bed spaces no. 251,693 253,031 253,219 255,588 255,588 Room occupancy rates % 53.7 52.9 56.3 54.8 54.4 Bed occupancy rates % 32.2 30.8 33.5 32.3 32.2 Gross takings from accommodation $'000 322,196 316,845 356,224 347,480 1,342,744

SERVICED APARTMENTS(b)

Establishments no. 564 575 582 600 600 Guest rooms no. 27,610 28,423 29,308 30,644 30,644 Bed spaces no. 96,217 99,507 102,314 107,748 107,748 Room occupancy rates % 60.6 56.2 63.9 60.8 60.4 Bed occupancy rates % 37.8 33.8 39.8 37.3 37.2 Gross takings from accommodation $'000 166,699 152,662 183,666 190,280 693,307

TOTAL HOTELS, MOTELS AND SERVICED APARTMENTS(b)

Establishments no. 3,703 3,720 3,731 3,779 3,779 Guest rooms no. 183,861 185,303 186,840 190,079 190,079 Bed spaces no. 541,276 546,673 550,290 559,665 559,665 Room occupancy rates % 58.1 56.2 60.8 59.7 58.7 Bed occupancy rates % 35.2 33.1 37.0 36.0 35.4 Room nights occupied '000 9,586 9,427 10,396 10,414 39,822 Gross takings from accommodation $'000 1,003,060 946,366 1,077,794 1,112,447 4,139,666

(a) Comprising establishments with 15 or more rooms or units. (b) For definitions see the source below. Source: Tourist Accommodation, Australia, December quarter 1999 (8635.0).

The most recent data relating to the origin of guests staying in hotels, motels and guest houses relate to 1994-95. In that year, overseas visitors accounted for 23% of room nights occupied in these establishments, compared with 37% for interstate visitors and 40% for intrastate visitors (table 22.17). Queensland and the Northern Territory had the highest proportions of overseas room nights to total room nights, each having 29%. Next highest were New

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South Wales with 25% and Western Australia with 20%, followed by Victoria (17%), the Australian Capital Territory (13%), South Australia (12%) and Tasmania (8%). The strong popularity of New South Wales and Queensland is reflected in the fact that 70% of overseas room nights in hotels, motels and guest houses were spent in these States. The Australian Capital Territory, Tasmania and the Northern Territory were the most dependent on interstate visitors. On the other hand, in New South Wales and Queensland, interstate visitors accounted for only a third of total room nights in hotels, motels and guest houses.

22.17 ORIGIN OF GUESTS STAYING IN HOTELS, MOTELS AND GUEST HOUSES WITH FACILITIES - 1994-95

Origin of guests (room nights occupied)

State/Territory

Intrastate

'000

Interstate

'000

Overseas

'000

Total

'000

New South Wales 5,076 3,949 2,963 11,988 Victoria 2,511 2,158 986 5,655 Queensland 3,616 3,054 2,715 9,385 South Australia 845 902 233 1,980 Western Australia 1,425 1,128 643 3,196 Tasmania 326 638 89 1,053 Northern Territory 241 576 332 1,149 Australian Capital Territory 36 706 110 852 Total 14,076 13,111 8,071 35,258

Source: Experimental Estimates of the Origin of Guests, Hotels, Motels and Guest Houses, Australia, 1994-95 (9501.0).

19.4.8. Queensland — An Overview Source: Australian Bureau of Statistics, Regional Statistics, Queensland 2000, ABS Catalogue 1362.3

Queensland is a vast and diverse State. It is the second largest State in Australia based on area. The east coast is characterised by sandy beaches and the Great Barrier Reef Across the northern peninsula and east of the Great Dividing Range are large expanses of rainforest and eucalypt forests. This contrasts with west of the Great Dividing Range which is noted for minerals, livestock and grain crops. Queenslanders enjoy an outdoor lifestyle in what is known as the Sunshine State. Queensland has one of the highest annual daily averages of sunshine for Australia. During October, 5% of Queensland has more than 10 hours a day of sunshine while the remainder of the State record at least 8 hours a day. Weather conditions vary from the subtropical south to the tropical north and from the drier inland to the relatively wet coastal plains. Average annual rainfall in Queensland varies from 150mm a year in the desert of the extreme south-western comer of the State to 4,000mm a year in parts of the north-

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eastern coast, where sugar cane abounds. The north-eastern coast also has the highest rainfall of any area in Australia. In the 12 months to 30 June 2000, the south-east corner of Queensland had Australia's largest increases in population. Brisbane City, the most populous LGA in Australia, increased by 14,686 persons (1.7%) while Gold Coast City increased by 13,252 people (3.4%). The Brisbane Statistical Division accounted for 45.6% of the total Queensland population at 30 June 2000. This was lower than the Australian average proportion of people who resided in capital city statistical divisions (63.9%). The level of population growth of many regions in Queensland is determined mainly by net internal migration. Declining rural and increasing urban populations are a continuing trend across Queensland. However, in the 12 months ending June 1999, notable growth occurred in a number of regional centres providing goods and services to surrounding regions including Townsville (C), Toowoomba (C) and Emerald (S). Coastal areas are popular with older retired people and younger people wanting a change in lifestyle or who are attracted by service-based employment opportunities associated with tourism. Most coastal areas in Queensland experienced population increases. In 1999-2000, eight of the ten fastest growing local government areas in Queensland were coastal. Tourism is an important part of the Queensland economy with takings from accommodation of $1,091m in 1999-2000. Takings were highest in the Moreton Statistical Division (which includes the Gold Coast) and the Far North Statistical Division (which includes Cairns and the Atherton Tableland). The Brisbane and Moreton Statistical Divisions combined accounted for 53% of Queensland's total takings from accommodation. This contrasted with the western statistical divisions of North West, Central West and South West, which together accounted for only 1.6%. Room occupancy rates were highest in the Northern Statistical Division (62.5%) and lowest in the North West Statistical Division (51.2%). The industries of accommodation, cafes and restaurants represented 3.9% of Queensland's business locations in September 1998 and provided 6.6% of the State's total employment. Of the 4.4 million overseas visitors to Australia in 1999, 29.4% specified Queensland as their 'main State of intended stay' (an increase from 21.3% in 1989). The most popular tourism regions for international visitors within Queensland were the Gold Coast, Tropical North Queensland and Brisbane. The Gold Coast Tourism Region was the third most popular national destination. The Sunshine Coast, Whitsunday Islands, Hervey Bay/Maryborough, Northern and Fitzroy Tourism Regions were ranked in the top 20 tourism regions visited by international visitors to Australia in 1999.

19.4.9. Tourist Accommodation in Queensland / Mackay Statistical Division & The Whitsundays Extracts from primary Source: Australian Bureau of Statistics, Regional Statistics, Queensland 2000, ABS Catalogue 1362.3

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The Statistical Division of Mackay

For the purpose of presenting the principal series of official statistics for the State, Queensland is divided into a number of geographical areas. These areas consist, for the most part, of aggregations of local government areas. The primary division of the State is into 11 statistical divisions. These are intended to represent as far as possible 'regions' of the State which are characterised by discernible social and/or economic links between the inhabitants and economic units within them, under the unifying influence of one or more major cities or towns. Mackay Statistical Division, which contains the Whitsunday Shire and the subject property, covers 68,997 square kilometres (4.0% of total Queensland) and had an estimated resident population of 125,781 persons at 30 June 1999, representing 3.6% of the Queensland population. Mackay Statistical Division is bordered to the east by the Great Barrier Reef and off-shore islands. The main population centre of the area is Mackay, with an estimated resident population of 75,501. Other major population centres are Moranbah, Dysart, Sarina, Proserpine and Clermont.16 The main economic bases of Mackay Statistical Division are sugar cane growing and processing, mining, cattle grazing and hospitality. In 1998-99, Mackay Statistical Division was Queensland's second largest producer of sugar cane cut for crushing.

16 The foregoing has been extracted from Source: Australian Bureau of Statistics, Regional Statistics,

Queensland 2000, ABS Catalogue 1362.3

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As shown on the table below, the Whitsundays (and the Mackay region generally) is an important part of the tourism industry in Queensland. Although the population of the Whitsundays is less than one half percent of the total Queensland population, the region accounts for:

• Almost 2% of the total number of Queensland tourism establishments

• Almost 5% of the total number of rooms / units for tourist accommodation in Queensland

• Just under 8% of the total takings from tourist accommodation Queensland.

Population & Accommodation Whitsunday Whitsunday Mackay Queensland Queensland

% of Queensland

Totals

30-Jun-99 30-Jun-2000

Estimated Resident Population 30/06/99 0.43% 15,177 125,781 3,506,881 3,566,357Population Change From the Previous Year

30/06/99 2.2% 1.3% 1.5% 1.7%

Median Age 30/06/99 33.9 32.7 34.3 n.v.a.Building Approvals 1999-2000 (dwellings)

1.05% 317 1,024 30,144 34,438

Tourist Accommodation 30 June 2000

Establishments no. 1.95% 18 68 924 947Rooms/ Units no. 4.73% 2,406 3,959 50,887 52,145

Room Occupancy Rate 58.60% 58.60% 58.80% 59.20%Takings from Accommodation 7.71% $80,337,000 $99,308,000 $1,041,531,000 $1,091,237,000

Source: Australian Bureau of Statistics, Regional Statistics, Queensland 2000, ABS Catalogue 1362.3

19.4.10. Accommodation Trends in Queensland Source: http://www.qttc.com.au/research/trends/issue18/abs.htm According to the Australian Bureau of Statistics’ Survey of Tourist Accommodation, Queensland’s stock of hotel, motel/guest house, and serviced apartment guest rooms totalled 50,887 at 30 June 1999, a 4.8 percent increase (2,340 rooms) on the number available as at 30 June 1998 (48,547). The increase in supply of guest rooms was outpaced by a 6 percent increase in the number of room nights sold (645,200) for the year ended June 1999 compared with the year ended June 1998. Despite an increase in demand and a 2 percent decline in the average daily room rate, the average occupancy rate remained unchanged at 59 percent. The overall increase in Queensland’s total room supply was driven by a 28 percent increase in the number of serviced apartment guest rooms available (11,902 as at 30 June 1999). The number of hotel and motel/guest house rooms declined 0.8 percent and 0.5 percent respectively for the year ended June 1999 compared with the previous year. Similarly, demand was driven by a 21.9 percent increase in the number of serviced apartment room nights occupied, and to a lesser extent, a 5.5 percent increase in the number of hotel room nights occupied. Motel and guesthouse room nights sold for the year ended 30 June 1999, compared with the year ended 30 June 1998, remained unchanged.

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Guest Rooms, Room Nights Sold & Occupancy by Sector - Total Queensland; June Quarter

June Quarter Supply Demand Room Occupancy

Guest RoomsRoom Nights Sold

(000s) Rate (%)

Licensed Hotels with Facilities

Motels & Guest Houses with Facilities

Serviced Apartments

Total

Source: Survey of Tourist Accommodation (ABS); Product Number 8635.3.40.001

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19.5. CONCLUSIONS

Tourism is a major contributor to total economic activity in Australia. International tourism has experienced substantial growth in the past decade or so. The holding of the Summer Olympics in Sydney in September 2000 is expected to have long term positive effects on inbound international visitors well into the next decade. This represents great potential for future domestic and export earnings. This has focused the need for improved standards of facilities and service. Tourism in Australia will continue to be dominated by domestic tourism for the foreseeable future. Australian tourism industry has always had a strong reliance on the domestic market, despite growth in international travel to Australia in recent years. Despite high annual growth rates, international tourism still only accounts for around a quarter of total tourism activity. While international tourism is forecast to continue to enjoy significantly higher growth rates than domestic tourism, it will be well into the new century before it matches the level of activity of domestic tourism. Growth in tourism flowing to Australia in the mid to late 1980s was at almost twice the international growth rate in tourism flows to all countries. However, Australia's share of world tourism is still small. There is considerable potential for growth. Whilst market conditions for the tourism industry have recently been in a state of considerable change because of certain world and domestic events, these changes are considered to have had a relatively severe, but only short tem

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impact. None of these significant events had occurred prior to 2001. This reinforces industry buoyancy as it may have applied in 1999. Moreover, the evidence suggests a more buoyant longer term scenario. A recent decline of Japanese visitors in 1999 saw New Zealand become Australia's most important source of international visitors, accounting for 16.3% of total inbound visitors. This was closely followed by Japan which accounted for 15.9% of inbound visitors, the United Kingdom (13%), United States of America (9%), and other European countries (8%). Since 1990, international visitation to Queensland has grown an average of 8.4 percent per annum. Queensland’s two most important international markets are Japan and New Zealand. In as far as domestic tourism is concerned, New South Wales was the most popular destination, followed by Queensland which attracts just over a quarter of all visitor nights. The strong popularity of New South Wales and Queensland is reflected in the fact that 70% of overseas room nights in hotels, motels and guest houses were spent in these States. Net beneficiaries from domestic tourism (i.e. where inbound interstate visitor nights are greater than outbound interstate visitor nights) are Queensland, Western Australia, Tasmania and the Northern Territory. Queensland is the biggest relative net beneficiary, with 2.2 times as many inbound nights as outbound nights, Tourism is an important part of the Queensland economy. Coastal areas are popular with older retired people and younger people wanting a change in lifestyle or who are attracted by service-based employment opportunities associated with tourism. In Queensland, there are four main tourist destinations, all of whom compete with one another, viz:

1. Cairns 2. The Whitsunday’s 3. Gold Coast 4. Brisbane

In Queensland, during 1999 the supply of accommodation in hotels, motels, guest houses and serviced apartments exceeded demand, with room occupancy rates of 63% for hotels, 54% for motels, and 60% for serviced apartments. Room occupancy rates are highest in the Northern Statistical Division (62.5%). The overall increase in Queensland’s total room supply during 1999/2000 was driven by a 28 percent increase in the number of serviced apartment guest rooms available. The number of hotel and motel/guest house rooms declined marginally for the year ended June 1999 compared with the previous year. Similarly, demand was driven by a 21.9 percent increase in the number of serviced apartment room nights occupied, and to a lesser extent, a 5.5 percent increase in the number of hotel room nights occupied. Motel and guesthouse room nights sold for the year ended 30 June 1999, compared with the year ended 30 June 1998, remained unchanged.

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Whitsunday Islands, Hervey Bay/Maryborough, Northern and Fitzroy Tourism Regions were ranked in the top 20 tourism regions visited by international visitors to Australia in 1999. Given the outlook for continued buoyancy and growth from international tourism markets, despite recent events, together with continued support from domestic tourism especially into north Queensland and the Whitsundays, the Project’s viability appears to be underpinned by a continuation of increased, albeit slower in the short term, tourist demand. In the context of assessing the impact of tourism on the development proposed (due to its size nature and scope) a longer terms view of the industry as a whole and its prospects is considered the most appropriate focus.

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20. IRR (INTERNAL RATE OF RETURN) & DCF (DISCOUNTED CASH FLOW) ANALYSIS

20.1. THE USE OF DCF AND IRR

Our valuations have been prepared with reference to the best available comparable sales data and analysis. However, due to difficulties in drawing meaningful comparisons between this evidence and the subject, we have relied heavily upon the land residual analysis or residual valuation technique calculated via Discounted Cash Flow (DCF) Analysis, utilising independently prepared costing data. The Valuer has processed a series of gross and net income yields from hypothetical buildings of various types and sizes in order to derive a use and program of future utilisation producing the highest present land value. The general equation for the residual value is:

L = V minus (B + F + P)

Where… L = Land V = Value B = Building Cost F= Finance Cost, and P= Profit or developers margin Thus, the “discounting” process, in examining cumulative cash flow, takes into account the magnitude and timing of the project’s cash flow – the “time value of money”. The resultant IRR is the rate of interest which results from the recovery of initial outlays plus a return on the unrecovered investment balances during the life of the project.

It should be noted that this process involves many assumptions to be made including (and in particular) the period of development, costs of development, and market realisations for the differing classes of property to be offered. Nonetheless we believe our approach has been rigorously prepared and tested, including the conduction of various sensitivity analysis. The Valuer therefore has a high level of confidence in the outcome.

20.2. BASE ASSUMPTIONS

We have based our cash flow upon the information provided in documentation authored by Sinclair Knight Mertz which provides comprehensive detail of the proposed development concept and costings. An extract of relevant parts of that documentation is attached to this Report.

20.2.1. Gross Realisations

We have adopted conservative Gross Realisation estimates based on relevant sales evidence in order to derive anticipated sale prices for each of the major components in the project. The gross realisations can be summarised follows:

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Clarke's Cove - Development Summary Gross Expected Realisations Resort Hotels $29,850,000Condominiums & Resort Apartments $401,796,500Single Unit Residential Allotments $87,050,000Commercial / Boardwalk Retail $2,845,000Community Facilities $3,000,000Recreational Facilities (not included in DCF Analysis) $3,000,000TOTAL $527,541,500

For convenience, the above information is graphed below, showing the Project’s strong reliance upon realisations for Condominiums and resort apartments for Project viability accounting for 76.2% of the total17:

$0 $100 $200 $300 $400 $500

Millions

Gross Realisation (Income)

Resort Hotels

Condominiums & Resort Apartments

Single Unit Residential Allotments

Commercial / Boardwalk Retail

Community Facilities

Recreational Facilities

Clarke's Cove - Development SummaryGross Expected Realisations

Average unit values for the Gross Realisations have been assessed as shown in

the table below, depicting individual Gross Realisations according to the product or development category:

17 Further, Single Unit Residential Allotments account for 16.5% of the total, therefore also representing

an important factor in overall Project viability

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GROSS REALISATION – CLARKE’S COVE Precinct

�� Units

(no) Sale

Price ($) Total ($) $

RESORT HOTELS 1 Peninsula Resort (4-5 star) 300 40,000 12,000,000 2 Hillside Resort (3-4 star) 210 35,000 7,350,000 3 Golf Resort (3-4 star) 300 35,000 10,500,000 Total Resort Hotels 810 36,852 rooms 29,850,000 CONDOMINIUMS & RESORT APARTMENTS 4 Resort Apartments R40 (Strata

Titled, 92 sqm) 395 182,000 71,890,000

5 Resort Condominiums R30 / R40 (1-3 B/R; 70-140 sqm)

755 195,900 147,904,500

6 Residential / Retirement Condominiums (1-3 B/R; 60-120 sqm)

1,010 180,200 182,002,000

Total Condominiums & Resort Apartments

2,160 186,017 401,796,500

SINGLE UNIT RESIDENTIAL ALLOTMENTS 7 Small Lots (1,000 - 1,700 sqm) 562 125,000 70,250,000 7 Large Lots (2,500 sqm) 112 150,000 16,800,000 Total Single Unit Residential

Allotments 674 129,154 87,050,000

COMMERCIAL / BOARDWALK RETAIL 8 Neighbourhood Retail -

Commercial 3,500 m2 3,500 590 2,065,000

8 Boardwalk Retail (Resort) Speciality Shopping 1200 m2

1,200 650 780,000

Total Commercial / Boardwalk Retail

4,700 605 2,845,000

COMMUNITY FACILITIES 9 Police, Ambulance, Fire, Library,

School, Post Office etc support facilities

only NFS 9 Medical Centre - Private Hospital 10

- 15 bed 200 15,000 3,000,000

Total Community Facilities 200 15,000 3,000,000 RECREATIONAL FACILITIES (Not included in DCF Analysis) 10 Golf Course Site - 18 Hole

championship 1 2,000,000 2,000,000

11 Swimming Lagoon, Tennis Courts, lawn bowls

support facilities

only NFS 12 Marina Site - 250 Marina births, ferry

terminal and boat ramp etc 1 1,000,000 1,000,000

Total Recreational Facilities 2 1,500,000 3,000,000

TOTAL $ 527,541,500

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20.2.2. Timing of Sales / Milestones

The timing of sales is largely determined by the construction period (in the short term), and the need to ration sales to prevent oversupply in the longer term. Whilst the costs for development and construction can be determined with reasonable accuracy (and in this case, we have relied upon independently prepared data), the sale prices for the differing categories of property may be inferred within close limits by comparison with sales in the general locality of the Whitsundays mainland. In determining the length of the selling period for each of the categories, we have carefully considered the strength of demand and the weight of other competition from other similar developments or alternate property investments that are or likely to become available. Taking all the above into account, and based on our market investigations and research we have adopted the following timings / rates of sale (this information is fully detailed in the Development Cash Flow attached to this Report). Overall timings for major events is summarised as follows:

Year 1 Construction of major services (External Roadworks, Electricity, Water Supply, Telecommunications, Refuse Disposal, Sewerage). Construction of some internal services (Earthworks/Lakes (Flood tide & storm surge). Some marketing undertaken.

Year 2 Completion of above and intensive engineering and planning undertaken. Commencement of some internal services and completion of most major services as above. Marketing commences on a regular basis – some forward sales possible.

Year 3 Completion of majority of internal services (Roadworks, Bridges & Drainage, Top Soil, Earthworks/Lakes (Flood tide & storm surge), Electricity Supply, Water Supply (reticulation and storage), Sewerage. Commencement of building program (and progressive sale) of notably Golf Resort Hotel (3-4 star), Resort Apartments, Resort Condominiums, Residential / Retirement Condominiums, Commence sale of Small Lots (1,000 - 1,700 sqm). Sale of leased space for Neighbourhood Retail - Commercial 3,500 m2

Year 4 Construction and sale of further Resort Apartments, Resort Condominiums, Residential / Retirement Condominiums, and Small Lots (1,000 - 1,700 sqm)

Year 5 Construction and sale of Peninsula Resort (4-5 Star) Hotel, Boardwalk Speciality Shopping 1200 m2, and Medical Centre - Private Hospital 10-15 bed. Continuation of construction and sale of further Resort Apartments, Resort Condominiums, Residential / Retirement Condominiums, and Small Lots (1,000 - 1,700 sqm)

Year 7 Construction of Saltwater lagoon

Year 9 Construction and sale of Hillside Resort Hotel (3-4 star). Commencement of sale of Large Lots (2,500 sqm). Continuation of construction and sale of further Resort Apartments, Resort Condominiums, Residential / Retirement Condominiums, and Small Lots (1,000 - 1,700 sqm). Last sales of Resort Apartments.

Year 15 Last sales of Residential / Retirement Condominiums.

Year 16 Completion of all Internal services and building construction program generally

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Year 17 Last sales of Large Lots (2,500 sqm)

Year 19 Last Sales of Small Lots (1,000 - 1,700 sqm)

Year 22 Last sales of Resort Condominiums, and subsequent Project completion.

This information is more fully detailed in the table below:

Product Category Sales Program / Schedule TOTAL

RESORT HOTELS Peninsula Resort (4-5 star) Programmed for sale in Year 5 – 300 units @

$40,000 12,000,000

Hillside Resort (3-4 star) Programmed for sale in Year 9 – 210 Units @ $35,000

7,350,000

Golf Resort (3-4 star) Programmed for sale in Year 3 – 300 Units @ $35,000

10,500,000

Total Resort Hotels 29,850,000 CONDOMINIUMS & RESORT APARTMENTS Resort Apartments R40 Commence sales of 80 units in year three, 90

units in Year 4, and maximum rate 100 units by Year 5, tapering off until Year 9 for final sales. Total sales 395 @ average price realised of $182,000.

71,890,000

Resort Condominiums R30 / R40

Along with Residential / Retirement Condominiums, this category represents the major portion of gross anticipated sales realisation. Schedule for zero pre sales with a sales rate of 10 units per year per type over the first 5 years commencing in Year 3, then 20 per year for the balance of the development. Maximum sale rate of 40 per annum maintained until completion. Total of 755 units realising an average of $195,000 each.

147,904,500

Residential / Retirement Condominiums

This is the highest single category of gross realisation expected. Zero pre sales with a sales rate of 55 units per year for the first year (Year 3), and then with an average of 85 units per year for the balance of the development until completion by Year 15. Average price realised $180,200 for a total of 1,010 Units.

182,002,000

Total Condominiums & Resort Apartments 401,796,500 SINGLE UNIT RESIDENTIAL ALLOTMENTS Small Lots (1,000 - 1,700 sqm) Zero pre-sales and a sales rate of 30 per

year for the first 5 years commencing in Year 3, and 40 per year for the balance of the development until completion by Year 19. 562 allotments to realise an average of $125,000 per lot

70,250,000

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Product Category Sales Program / Schedule (continued) TOTAL

SINGLE UNIT RESIDENTIAL ALLOTMENTS (continued) Large Lots (2,500 sqm)

Schedule for 7 pre-sales and a sales rate of 10 per year in the first five years (commencing in Year 9), and 20 per year for the balance development until completion by Year 17. Average price to be realised is $150,000 per lot for a total of 122 allotments.

16,800,000

Total Single Unit Residential Allotments 87,050,000 COMMERCIAL / BOARDWALK RETAIL Neighbourhood Retail -

Commercial 3,500 m2 Scheduled for sale in Year 3 @ an average of $590 per square metre.

2,065,000

Boardwalk Speciality Shopping 1200 m2

Scheduled for sale in Year 5 @ an average of $650 per square metre.

780,000

Total Commercial / Boardwalk Retail 2,845,000 COMMUNITY FACILITIES Police, Ambulance, Fire,

Library, School, Post Office etcNFS (not for sale)

Medical Centre - Private Hospital 10-15 bed

Scheduled for sale in Year 5 3,000,000

Total Community Facilities 3,000,000 RECREATIONAL FACILITIES (NOT INCLUDED IN DCF ANALYSIS) Golf Course Site - 18 Hole

championship Anticipated sale price of $2m not included in DCF Analysis (outside the scope of this Report)

0

Swimming Lagoon, Tennis Courts, lawn bowls

NFS (not for sale)

Marina Site - 250 Marina births, ferry terminal and boat ramp etc

Anticipated sale price of $1m not included in DCF Analysis (outside the scope of this Report)

0

Total Recreational Facilities GROSS REALISATION 524,541,500 Less Selling Costs (39,715,613)NET REALISATION 484,825,888

20.2.3. Development & Construction Costs / Net Realisation

Our analysis has made extensive utilisation of cost estimates provided by Sinclair Knight Mertz in their feasibility study and other related documentation. A comparison between this data and cost estimates used by the Valuer is shown in the tables below, with the major adjustments including: • Provision for additional selling costs, based on gross all up costs of 7.50% • Exclusion of the Sinclair Knight – calculated cost of Land (which is the

subject of this Report). Our primary interest is the net return / realisation before the cost of land acquisition

• Additional Contingency – based on construction costs (ex selling and land costs) extended @ 10.00% (The only contingency provided in the Sinclair Knight Mertz Report was based on development costs only )

• Interest, or financing costs (comments on this aspect follow later)

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Costs Estimated by Sinclair Knight Mertz

DEVELOPMENT COSTS Sinclair Knight Mertz Major Services External Roadworks 5,376,000 Electricity 2,944,000 Water Supply 5,049,000 Telecommunications 256,000 Refuse Disposal 128,000 Sewerage 3,584,000 17,337,000 Internal Services Roadworks, Bridges & Drainage 19,197,440 Top Soil 1,324,800 Earthworks/Lakes (Flood tide & storm surge) 2,703,360 Electricity Supply 1,996,800 Water Supply (reticulation and storage) 5,496,320 Sewerage 4,441,360 Saltwater lagoon 1,154,560 36,314,640 Contingency @10% 10.00% 5,365,164 TOTAL DEVELOPMENT COSTS 59,016,804 CONSTRUCTION COSTS BUILDING COSTS Condominiums 69,028,600 Retirement Units 79,244,600 Resort Apartment 29,072,000 177,345,200 PROFESSIONAL FEES Engineering, Planning, Architecture,

Engineers, Quantity Surveyors 21,809,800 RATES & TAXES Initial Year of development 40,000 Subsequent increases as site revalues 990,000 SELLING COSTS Year 1 250,000 Advertising & Promotional 1.00% of total revenue Sales commissions(units & leasing of

commercial retail and office space) 3.50%

29,832,800 PROJECT ADMINISTRATION Project Administration 2,200,000 LAND COST Three instalments over initial years of

development program 24,000,000 INTEREST Rate p.a. 8.00% 18,574,000 TOTAL CONSTRUCTION COSTS 274,751,800

TOTAL 333,768,604

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Cost Estimates Used by the Valuer (Excluding Certain Adjustments) TOTAL GROSS REALISATION 527,541,500 CONSTRUCTION & DEVELOPMENT COST SUMMARY DEVELOPMENT COSTS Major Services 17,337,000 Internal Services 36,314,640 Contingency @ 10.00% 5,365,164 Total Development Costs 59,016,804 CONSTRUCTION COSTS BUILDING COSTS 177,345,200 PROFESSIONAL FEES 21,809,800 RATES & TAXES 990,000 SELLING COSTS (as per Sinclair Knight) 29,832,800 ADDITIONAL SELLING COSTS - based on gross

all up costs of 7.50% 9,732,813

PROJECT ADMINISTRATION 2,200,000 LAND COST (As per Sinclair Knight Report)18 24,000,000 Contingency ex selling and land costs @

10.00% 20,234,500

INTEREST (As per Sinclair Knight Report)19 18,574,000 Total Construction Costs 304,719,113TOTAL CONSTRUCTION & DEVELOPMENT COSTS 363,735,917TOTAL CONSTRUCTION & DEVELOPMENT COSTS (Ex Land) 339,735,917 NET RETURN (REALISATION) Before Cost of Land Acquisition $ 187,805,584

20.2.4. Interest Rates / Cost of Finance

Our DCF analysis also includes a further adjustment to the above by virtue of interest (financing costs). This adjustment is necessary because:

1. Our best estimate for long term interest rates is 9% per annum, compared to the Sinclair Knight Mertz assumption of 8%.

2. Any adjustment to the cash flow (inflows or outflows) will affect the financing cost, irrespective of the rate used. Our model has made a number of changes to the Sinclair Knight Mertz model thereby affecting interest payable.

The cost of finance is perhaps one of the most difficult issues to deal with. Our approach is perhaps “classical” since it assumes that all funds will be derived from a single source, and interest is charged to the account when it is in debit. We have ignored the possibility that financing could be achieved in a package comprising both debt and equity. Although an actual interest payment is not incurred for equity capital, an opportunity cost has been allowed. Since this investment potential foregone, for the purposes of our analysis we have assumed that this equates to an equivalent interest rate charge if the equity was in the form of debt.

18 This Value has later subtracted this amount to calculate Net realisation (before cost of land

acquisition). Its inclusion here therefore has no impact on the DCF Analysis conducted by the Valuer. 19 This amount has been included for reference purposes only and has not been used in DCF Analysis. Its

inclusion here therefore has no impact on the DCF Analysis conducted by the Valuer..

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6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

Prediction

Inte

rest

Rat

es -

Indi

cativ

e

Jun-91Jun-92

Jun-93Jun-94

Jun-95Jun-96

Jun-97Jun-98

Jun-99Jun-2000

Jun-2001Jun-2002

Indicative Prevailing Interest Rate for Business

Calculation and Analysis: Global Solutions 4 Pty Ltd

We have calculated our model on the basis of an interest rate charge of 9% per annum which is our best estimate for long term interest rates. This estimate takes into account historical trends (refer diagram), current and projected economic conditions, and rates applying for business / property developers utilising landed interests as security. Given that the development, if undertaken, would likely be conducted by a corporate enterprise, our rate selection is considered conservative. To ensure that the above scenario does not overly bias results, we have constructed a sensitivity analysis for varying rates of interest to examine the impact it has on the Project and its viability (covered later in this Report)

20.3. DCF (DISCOUNTED CASH FLOW) & IRR SUMMARY 20.3.1. Explanation of Methodology Utilised in Analysis

By convention, the developers equation may be generally expressed as

V = L + B + F + P

Where… V = Value L = Land B = Building Cost F= Finance Cost, and P= Profit or developers margin

This represents the probable amount that a prospective purchaser would be prepared to pay for the development as an investment, i.e. total benefits created is the money worth of the scheme upon completion and fully occupied as a “going concern”. This equation may be rearranged in order to calculate land value, i.e. L = V minus (B + F + P) as noted in the preliminary comments to this section “THE USE OF DCF AND IRR” of this Report. This rearrangement is known as residual analysis and is the primary methodology utilised in our analysis, in conjunction with DCF (discounted cash flow) which accounts for the “time value of money”. DCF provides for discounting of a series of net cash flows over a time period (in this case, 22 years). The net cash flows are discounted at a number of trial rates with the IRR obtained by a trial and error process. Rather than a measurement of return on the initial investment, the IRR is the rate of interest which results from the recovery of the investment outlay plus a return on the unrecovered balances during the life of the project.

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20.3.2. Clarke's Cove Development Cash Flow & IRR Summary

Attached to this Report are the Valuer’s detailed calculations for cash flows over a 22 year period, and resultant IRR. By way of overall summary, this information is provided thus:

GROSS REALISATION 524,541,500 Less Selling Costs (39,715,613)NET REALISATION 484,825,888 TOTAL CONSTRUCTION & DEVELOPMENT COST (ex land) 288,275,919 Plus Land Cost 2,980,000 Plus Acquisition costs 149,000TOTAL CONSTRUCTION & DEVELOPMENT COST (incl. land) 291,404,919 TOTAL INCOME / REALISATION After Selling Costs 484,825,888 Reconciliation: TOTAL COSTS (Before Interest) 284,725,304 NET CASH FLOW (Before Interest) 200,100,584 INTEREST (6,679,615) NET CASH FLOW 193,420,968 INTERNAL RATE OF RETURN 35.00%

Cash flows for the Project over the period are summarised in the graph below:

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TOTAL CONSTRUCTION & DEVELOPMENT COST (incl. land)

Development Cash Flow & IRRClarke's Cove

A more detailed analysis is shown in the table below, representing a summary of the cash flows over the period of the life of the Development Project.

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Clarke's Cove Development Cash Flow & IRR Summary 22 Year TOTAL

GROSS REALISATION Resort Hotels Peninsula Resort (4-5 star) 12,000,000 Hillside Resort (3-4 star) 7,350,000 Golf Resort (3-4 star) 10,500,000 Condominiums & Resort Apartments Resort Apartments R40 71,890,000 Resort Condominiums R30 / R40 147,904,500 Residential / Retirement Condominiums 182,002,000 Single Unit Residential Allotments Small Lots (1,000 - 1,700 sqm) 70,250,000 Large Lots (2,500 sqm) 16,800,000 Commercial / Boardwalk Retail Neighbourhood Retail - Commercial 3,500 m2 2,065,000 Boardwalk Speciality Shopping 1200 m2 780,000 Community Facilities Medical Centre - Private Hospital 10-15 bed 3,000,000 Recreational Facilities (Not included in DCF Analysis) Golf Course Site - 18 Hole + Marina Site - 250 births 0 GROSS REALISATION 524,541,500 Less Selling Costs (39,715,613) NET REALISATION 484,825,888LESS CONSTRUCTION & DEVELOPMENT COST DEVELOPMENT COSTS Major Services External Roadworks 5,376,000 Electricity 2,944,000 Water Supply 5,049,000 Telecommunications 256,000 Refuse Disposal 128,000 Sewerage 3,584,000 Internal Services Roadworks, Bridges & Drainage 19,197,440 Top Soil 1,324,800 Earthworks/Lakes (Flood tide & storm surge) 2,703,360 Electricity Supply 1,996,800 Water Supply (reticulation and storage) 5,496,320 Sewerage 4,441,360 Saltwater lagoon 1,154,560 Contingency @ 10% 5,365,164 TOTAL DEVELOPMENT COSTS 59,016,804 CONSTRUCTION COSTS BUILDING COSTS 177,345,200 PROFESSIONAL FEES Engineering, Planning, Architecture, Engineers, Quantity Surveyors 21,809,800 RATES & TAXES - Initial Year of development, then Subsequent increases as site revalues 990,000 PROJECT ADMINISTRATION 2,200,000 CONTINGENCY COST @ 20,234,500 Sub-Total (Construction Costs) 222,579,500 INTEREST - Rate p.a. = 9.00% 6,679,615 TOTAL CONSTRUCTION COSTS (EX LAND) 229,259,115 TOTAL CONSTRUCTION & DEVELOPMENT COST (ex land) 288,275,919 Land Cost 2,980,000 Plus Acquisition costs, say 149,000 TOTAL CONSTRUCTION & DEVELOPMENT COST (incl. land) 291,404,919 Reconciliation TOTAL INCOME / REALISATION After Selling Costs 484,825,888 TOTAL COSTS (Before Interest) 284,725,304 NET CASH FLOW (Before Interest) 200,100,584 NET CASH FLOW (After Interest) 193,420,968 INTERNAL RATE OF RETURN 35.00%

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20.3.3. Acceptability of Chosen IRR (Internal Rate of Return)

The IRR represents the required return to the investor for providing the capital over time to carry out the proposed development. From a developers / investors point of view, the acceptability of a Project is determined by comparing the internal rate of return with a required rate of return, or alternatively by comparing the IRR of various projects against one another. This relates strongly to the profit expectation taking into account the risk of the venture. These factors are generally revealed by conducting sales analysis however one may expect material variations from one project to the next taking into account the nature and scope of the development. Any sales analysis would need to ensure that there is close comparability to readily permit direct comparisons. Margins may be widened where, as in this case, extensive and costly construction works are involved over an extended period. Accordingly it is reasonable to expect a substantial margin for risk to the increased capital. This is in contrast to smaller projects where the construction works required are simpler, the Project coming to fruition relatively quickly and especially where an investor may be prepared to accept a lower margin for a quicker return. Taking into account all the above factors, we have completed our calculations on a required Internal Rate of Return of 35%. The valuer believes that this represents a conservative but nevertheless realistic market return expectation taking into account the size, nature and scope of the proposed development. It also takes into account the relatively long lead time before a positive cash flow can be realised. It is also our best estimate of the minimum return that a prudent investor would demand for this type of large, long term Project. We have also undertaken sensitivity analysis to calculate the impact on residual land value for alternate rates of return (see next section).

20.4. SENSITIVITY ANALYSIS 20.4.1. Sensitivity Analysis Based on Cost of Land

Sensitivity analysis conducted on the cost of land provides the following resultant IRR’s:

SENSITIVITY ANALYSIS

Land Cost IRR Land Cost IRR

30,000,000 13.79% 2,750,000 35.41% 23,250,000 16.95% 2,500,000 35.86% 20,000,000 18.64% 2,250,000 36.33% 15,000,000 21.77% 2,000,000 36.81% 10,000,000 25.93% 1,750,000 37.30% 4,000,000 33.32% 1,500,000 37.81% 3,500,000 34.12% 1,000,000 38.88%Valuation 2,980,000 35.00%

The above table indicates that the Project is only moderately sensitive to the cost of the vacant, undeveloped land. However, given the size, nature and scope of the Project, it is unlikely that any proponent, even one with a special, interest, would be prepared to accept a land value of greater than around

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$4m since that would push the IRR below 30%. Given risk and profit expectations, a land value of $10m or greater would push the Project into an unfavourable situation (with an IRR of approximately 26%), although a positive IRR of approximately 14% is still indicated at $30m. The tabled information is graphed below:

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Development Cash Flow & IRRSENSITIVITY ANALYSIS BASED ON COST OF LAND

Clarke's Cove

20.4.2. Sensitivity Analysis Based on Cost of Interest (Finance)

Sensitivity analysis conducted on the cost of interest (finance) provides the following resultant IRR’s: SENSITIVITY ANALYSIS

Interest Cost (rate)

Interest Cost ($) IRR

25.00% 25,195,967 24.84% 20.00% 18,040,328 28.05% 18.00% 15,510,578 29.34% 16.00% 13,160,035 30.64% 14.00% 11,046,623 31.91% 12.00% 9,241,073 33.13% 10.00% 7,514,133 34.37%Valuation 9.00% 6,679,615 35.00% 8.00% 5,864,119 35.64% 7.00% 5,067,434 36.28% 6.00% 4,289,354 36.92% 5.00% 3,529,671 37.57% 4.00% 2,788,178 38.23% 3.00% 2,064,669 38.89% 2.00% 1,358,939 39.56%

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The above table demonstrates that the Project is quite insensitive to interest rate fluctuations. Even the most conservative proponent would not project interest rates at above 12% long term, where an IRR of over 33% is still indicated. Even at an interest rate of 16% p.a., the IRR stays above 30%. Conversely, a very low interest rate regime does not significantly alter the strength of the IRR. For example, even at 2% - a rate that may be adopted by some larger overseas corporations - the IRR remains below 40%. We are therefore confident that our chosen rate of 9% is representative IRR expectations. The tabled information is graphed below:

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Development Cash Flow & IRRSENSITIVITY ANALYSIS BASED ON COST OF INTEREST (FINANCE)

Clarke's Cove

20.4.3. Sensitivity Analysis Based on Gross Price Realisation

Sensitivity analysis conducted on variations to gross price realisation provides the following resultant IRR’s:

(Gross price realisation is the gross sale amount from the property for all categories)

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SENSITIVITY ANALYSIS

Variation in Average Gross Realisation Price

Gross Realisation ($)

IRR

-34.00% 346,197,390 -7.28% -30.00% 367,179,050 4.95% -25.00% 393,406,125 11.58% -20.00% 419,633,200 17.15% -15.00% 445,860,275 22.05% -10.00% 472,087,350 26.58% -5.00% 498,314,425 30.94%Valuation 0.00% 524,541,500 35.00% 5.00% 550,768,575 38.90% 10.00% 576,995,650 42.65% 15.00% 603,222,725 46.25% 20.00% 629,449,800 49.72% 25.00% 655,676,875 53.06% 30.00% 681,903,950 56.30% 50.00% 786,812,250 68.05%

The above data suggests that the Project is extremely sensitive to prices achieved from the sale of property. Even a 10% price reduction would result in an IRR of only 27%, with a negative return indicated at around 32% variation. Conversely, an upwards realisation of 20% higher prices would result in an IRR of almost 50%. The implication here is that forecast prices must be realised as per that projected, otherwise the Project runs too great a risk for adequate reward.

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Development Cash Flow & IRRSENSITIVITY ANALYSIS BASED ON GROSS PRICE REALISATION

Clarke's Cove

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20.5. CONCLUSIONS & RESULTS

Based on the assumptions provided above, expectations from the Project by investors indicate a vacant land value of $2,980,000 which would provide a satisfactory return (IRR) of 35%. This information is fully detailed on the DCF and IRR calculations attached to this Report. At 35% IRR, it would be anticipated that this would meet industry expectations for a project of this nature, size and scope. The IRR as quoted includes finance charges (including interest @ 9% p.a.) and relatively conservative gross realisation prices and rates of sale. Excluded from our analysis are values attributed to the Golf Course and Marina complexes which, when completed, will add further value and support the prices to be realised for other components of the resort. However, at the prices projected to be achieved, realisation of these facilities will have only minimal impact on IRR and DCF calculations. Sensitivity analysis conducted indicates that:

1. The relative insensitivity of the DCF / IRR to the cost of the undeveloped land suggests that a prospective investor may be prepared to pay a premium above that indicated in this Report, without severely undermining project viability and net return expectations.

2. The insensitivity of the project with regards interest rates not only emphasises the above comment, but suggests that the Project may appeal to an investor utilising funds offshore where higher rates of interest may apply. In this case, within reason, IRR is not unduly affected. Conversely, international consortiums whom may enjoy a low cost of funds have no significantly greater attraction to the project than others whom may be scanning the market for opportunities under higher interest rate regimes.

3. The greatest sensitivity of the Project lay in the area of gross prices to be realised for the sale of the various categories of property. It is critical that the projected sale prices be achieved as indicated, otherwise the Project could quickly become unviable. This comment particularly applies in the case of Condominiums and resort apartments, and to a lesser extent, Single Unit Residential Allotments, since there is a strong reliance here with regards both prices and rates of sale.

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21. PROPERTY MARKET COMMENTARY

The development as proposed must take into account two main aspects:

1. The property market for large scale tourism development such as the one proposed, taking into account the current mood of investors, their likely attraction to the Project, and what other major projects similar to the subject may be in the course of planning or development , and

2. The outlook for realisation with regards Condominiums and resort apartments, upon which this Project is heavily reliant

Perhaps the mood of the market may be best gauged in consideration of several recent sales that are considered to be key market indicators:

1. The sale of Woodwark Bay development @ $3.5m

2. The sale of Laguna Quays development for a reported $20m. Whilst the purchaser is understood to have been attracted by the tax losses, this is a $200m + development that was clearly heavily discounted in order to achieve sale

3. The (as yet unsubstantiated) sale of a 180 acre property at Airlie Beach for $2.2m to the Hoggs Beath café group (asking price was $12m)

Firstly, in considering the Woodwark Bay site, whilst this property is over three times the size of the subject, the Valuer considers this to be a key indicator of value. The reason for this is that it is located within relatively close proximity to the subject (approximately 15 km south of the subject property), and similar to Clarke’s Cove in that it is set on the coast in a very scenic location, enjoys a varied topographic landscape, and has a white sandy beach and peninsula. Although there the site is much larger, it has proportionally less developable land, but on the other hand the white beach frontage (and there are several of them) is much more extensive. In this sense the property is far superior compared to the subject. In addition, Woodwark bay has bitumen road access and all services on site (the subject has none). Existing development is limited, it is now utilised as a private resort hideaway (not open to the public). A major integrated resort township development was approved for the site, however approvals with Council advice that this was at the request of the new owner whom wanted to ensure complete privacy. The 1,227.5 ha site sold in November 1997 for $2,500,000 translating to $2,036 / ha. Some reports record an additional option fee of $1.2m was paid at the time of sale which if included raises the price to $3,014 per hectare all up for a gross of $3.7m, The 1,776 ha Laguna Quays site sold in 2001 for a reported $20m. Other reports suggest $25m which translated places it in a range of between $11,261 - $14,076 / ha. This is a $200m + development that was clearly heavily discounted to achieve sale, even taking into account that the purchaser is understood to have been attracted by the available tax losses, Located 60 kilometres south of Arlie Beach, placing it at the other (southern) end of the Whitsundays (in comparison to the subject property which is located towards the northern end of the shire), Laguna Quays is a recent mainland development which features the superior Turtle Point Golf Course, a 60-unit resort hotel, 137 condominiums, 70 berth marina, recreational facilities and service infrastructure. Further stages are well advanced in their approval which will include tourist and residential accommodation units, commercia/ retail precincts, and recreational and marina facilities. In some ways the Laguna

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Quays development is less superior than the proposed development of the subject since Clarke’s Cove has a deepwater harbour emanately suitable for marina development, is almost completely surrounded by national park and has a variety of natural topographic and other features that are generally more desirable. By contrast, Laguna Quays has a saltation pond, with the marina requiring constant dredging. Its natural features are less private, and arguably, less aesthetically pleasing. Finally, whilst some caution must be exercised when viewing available sales data (confirmation of details has proved difficult to obtain), the sale and transfer of ownership is well known locally (including to Council, local agents, and the local business community generally). In addition to the sale of a 180 acre property at Airlie Beach for $2.2m to the Hoggs Breath café group, other indicators including the Tranquil Bay site (600 ha @ $9,783 / ha) are indicative of the value of ocean front sites potentially capable of development – with or without formal Council approval. Whilst there is little doubt that the property market for key resort developments has taken a significant downturn since the more “heady 1980’s” and early 1990’s, there is some reason to believe that the market may be set for recovery despite recent events affecting the international tourism market. In historical terms there is evidence suggesting that the market may now have “bottomed out” and that there are investors prepared to take a longer term view. Indeed, for such a large scale development as proposed for the subject, a long term investment / return philosophy is mandatory. This must be tempered with the fact that there has only been a moderate demand for large scale approved integrated tourism resort sites. Much of this has been undertaken on resort islands in the Whitsundays, rather than on the mainland. One outstanding exception to this is the Laguna Quays development, but essentially that has yet to prove an economic success. Even island resort developments have had a chequered history. Further, whilst some significant proposed developments in the Whitsunday’s have apparently been placed “on hold”, others are proceeding albeit on a modified scope, and on a different time-scale perhaps compared to that originally envisaged. A good example of the latter is the Luguna Quays resort expansion. Approvals for these kind of developments are not easy to obtain, and whilst the current zoning on the subject is rural, retrospectively the property has had Council approval for large scale tourism redevelopment. Even though such consent was not gazetted, there was every reason to believe that this would occur provided conditions within the approval had been met. Council are still today supportive of rezoning despite their preference towards a more modest or low key development than originally approved. Any large scale development is only likely to succeed in areas where there is an established international tourist presence. The existence of an established (and preferably expanding) tourism industry with access to a jet-capable (and preferably an international) airport is paramount (easy travelling distance to a major airport facility is considered critical). The Whitsundays, along with Cairns and the Gold Coast (also possibly the Sunshine Coast) are among the few areas in Queensland where this criteria applies. Accordingly, the Clarke’s Cove development is located in a potentially viable tourist region, given its proximity to Hamilton Island.

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The large scale development originally planned for the Clarke’s Cove site is only likely to attract the attention of offshore investors, or national / international development consortiums capable of sustaining the large cash flow deficits indicated in the first few years of development. There are few local developers or Australian consortiums capable of supporting the Project, unless a more modest form of development is initially undertaken with the residual eventually on sold to a more substantive development organisation.

One of the advantages of the subject property is its size and developable area. This is one of the few, and perhaps the only area left in the Whitsundays that is capable of supporting the large scale development proposed. Whilst there are other areas available for development, they tend to occur in relatively small pockets incapable of large scale integrated development such as that proposed. Others are incapable of development because of environmental sensitivities where approvals are likely difficult to obtain. Almost fully surrounded by the Dryander National Park, few have the seclusion of the subject.

Another unique feature of the proposed Clarke’s Cove development is the fact that this would fill a gap in marina resources that are quite scarce, north of Schute harbour / Airlie Beach.

When examining the sales that have occurred in the region, comparison is

complicated not only by virtue of size differentials and general nature of the properties being compared, but there are seemingly inexplicable wide variances (on a per hectare basis) for prices realised. Aside from the differing expectations of developers, from a return point of view, this may be in part explained by the relative minimal impact typically illustrated with respect to Project viability in terms of price paid for the undeveloped land. These factors, taken together with the specialised nature of such properties and the limited market may mean that premiums are paid where a certain property fits a particular kind of development which just happens to suit the special needs and desires of the developer.

Aside from any speculative risk deemed acceptable by an investor, this might also explain the apparent premium purchase price of $15m paid by the last developer in January 1999 (with settlement in May of that year) prior to their demise. By direct comparison, @ $38,670 per ha is a significantly high figure to pay for an undeveloped property with poor access and no services. It is more indicative of much smaller properties having a better proximity location to existing node developments (such as Airlie Beach), and with services available or development already undertaken.

Recent sales would indicate (by direct comparison) that a more realistic amount would be in the order of below $6,000 per ha bare (current value, taking into account the subject property’s current zoning and market conditions), and $7,000 per ha retrospectively (early to mid 1999).

Proximity to the township of Airlie Beach, and or coastline / beach frontage

weigh heavily on values in the area. Premiums are paid for good quality developable land as well as where there is a high standard and quality of capital development existing or approved.

Historically, the mainland has restricted itself to domestic tourism, whilst the islands have catered for the international traveller (in particular Hayman and Hamilton Islands). More specialised targeting has occurred at other island resorts such as Brampton. Whilst the Laguna Quays development may be

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heralding a change, other island resorts are capable of gearing up their facilities to meet anticipated increased long term demand that requires international standards. Further, despite apparent sound long term prospects for resort developments in the region and a relatively buoyant longer term scenario for the tourism industry generally (especially for north Queensland), large integrated resort complexes on the mainland in the Whitsundays, whilst almost inevitable, have yet to prove financially successful. Nonetheless, the relatively recent (December 1998) “Needs Study for a Resort Community in the Whitsundays”, independently prepared by L.S. Fair and Associates (attached to this Report) appears to be generally supportive of such a development based on anticipated long term needs and demand. One of the conclusions reached in the Report is “… The Whitsunday region is already a major tourist destination with the potential to further expand with the development of new infrastructure and tourism superstructure on the mainland. Thus, the Whitsunday location is appropriate for the type and scale of development envisaged for Clarke’s Cove”. The Fair Report further states that “too often critics are premature in their assessment of financial performance of an integrated resort project. From an economic standpoint, an integrated tourist resort represents the highest and best use of the land given the size of the site, topographical and environmental constraints”. This responds to the apparent questioning by government officers of the need for an integrated tourist resort in the Whitsunday region, or for that matter, any place in Australia. The Report suggests that such officers use the failure of the Laguna Quays project as an example to argue that this type of project has no place in the tourism product of the region. However, Mr Fair argues that integrated resort development within Australia, for the most part, has been financially successful, using Sanctuary Cove, Hope Island and Twin Waters as examples of successful integrated resort developments in Queensland. Whilst the Valuer can accept much of the Fair Resort and its philosophy (albeit the Sanctuary Cove example is a little unfortunate in that its initial development was a financial disaster for the original developer), there is good reason to proceed with a modicum of caution with regards the Clarke’s Cove site, for all the reasons stated earlier.

22. VALUATION RATIONALE

One disconcerting aspect with regards to the Clarke’s Cove site in that its Tourism focus for the subject property has now been removed from Council’s Strategic Plan. The area around Earlando is specifically listed as “mainland low key”, rather than the more desirable (from a property development potential point of view) “mainland urban”. Airlie Beach is a clear priority for development, at least that is the way Council see the strategic development of the region. However, even Council are prepared to accept that the property is suitable for some form of tourism development. Their concerns for larger scale development such as that proposed are more related to its timing, rather than

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suitability. Indeed, the Valuer would contend that a large scale development on the Clarke’s Cove site is inevitable – it is just a question of time-scale. Nonetheless due regard must be given towards market conditions applying as at the date of valuation, and in this regard we have commented previously on the subject of difficulties presented in relation to deciding at what relevant date which zoning or development approvals were place in a form likely to continue indefinitely. We would emphasise that the only point of contention is at the duration of time that might elapse before a rezoning event supporting such a large scale development event would occur. We have therefore proceeded in conducting our valuation on the following basis:

• Retrospectively (February / April 1999), on the basis of Council’s then existing approval for rezoning to Tourist facilities, there was a reasonable expectation that the property would either be formally gazetted, or alternatively there was reasonable expectation that the property would be approved for “Special Facilities (integrated Tourist Development” under the Integrated Planning Act 1997.

• Current valuation has been prepared on the basis that the “highest and best use” for the property takes into account:

o the certainty that the property has potential for tourism development and approval

o the high probability that some form of tourist development approval would be fairly immediately be forthcoming

o large scale tourism development remains a distinct possibility / inevitability at some future, longer term time. Accordingly, a prudent, prospective purchaser would be taking into account both precise, and imprecise factors.

Clarke’s Cove is considered to be a clearly superior style of property

considering

� the natural attributes of the site, including amphitheatre style topography and topographic aesthetics, developable area, beach / shoreline frontage, scenic outlook, seclusion and size

� zoning potential

� situation in an area of existing significant international tourism infrastructure

� it is one of the few areas available that potentially can be developed on such a large scale located within the Whitsundays

� the type and standard of planned capital improvements and the diversity of property products eventuating from the development.

On the other hand, the property has poor suitability as a grazing allotment

which is not its highest and best use. It has existing poor access, with no services or facilities. Any development needs to take into account the relatively high costs of providing such infrastructure, including roads, water supplies, effluent disposal and other factors.

Sales figures are very much dependent on situation and quality, and premiums

would be expected for those properties with rezoning approvals in place,

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permanent water access, extensive shoreline frontage (especially white sandy beach frontage), and close proximity to existing major townships.

Weighing up all these factors, Clarke’s Cove is therefore assessed as being

placed in the mid bracket of values applying for undeveloped tourist facility land.

Further, in assessing the market value of the subject property, we have had

regard to the presentation, location, accessibility, and the nature of capital improvements which the property enjoys. Attention has also be given to present economic conditions, and the outlook for tourism in Queensland generally, having regard to the supply and demand conditions prevailing as at the date of this valuation.

Accordingly, and in view of difficulties associated with drawing meaningful

comparisons of historical sales, we have relied upon Discounted Cash Flow Analysis / IRR in order to form conclusions as to estimate of value of the undeveloped land. This is our primary method of calculation.

As a cross-check, but as a secondary approach, we have also referred to the Direct Comparison of Sales Method after review and analysis of recent market sales evidence detailed in this Report.

Based on the assumptions and findings detailed within this report, we are of the opinion that the Market Value of the subject site on the basis that it is an identified Integrated Residential Resort Site is as follows: OPEN MARKET VALUATION (CURRENT)

1. $2,980,000 by DCF / IRR analysis, less reduction of 30% for risk (also equivalent to approx. 3 year holding period to obtain necessary approvals) = $2,086,000 rounded to say $2,090,000 which is equivalent to best available comparative data with premium, or alternative development.

2. By direct comparison, 387.9 ha @$5,400 / ha = $2,094,662, rounded to say $2,095,000

Adopt $2,090,000 OPEN MARKET VALUATIONS (RETROSPECTIVE) 5 February 1999, 13 February 1999, 15 April 1999, and 20 April 1999 1. $2,980,000 @ 35.00% IRR (Internal Rate of Return) assuming:

• 524,541,500 Gross Realisation • 281,596,304 Total Construction and Development Costs

(before Interest, ex land) • 9.00% Effective Annual Interest rate • 22 Years Period of development

This is equivalent to $7,682 per hectare bare

2. By direct comparison, 387.9 hectares @ $7,000 = 2,715,303 rounded to say

$2,715,000

Adopt $2,980,000

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"FORCED SALE" VALUATIONS (RETROSPECTIVE) 5 February 1999, 13 February 1999, 15 April 1999, and 20 April 1999

$ 2,600,000 Based on opportunity cost of 18 month marketing period: • Opportunity cost = $402,300 reduces OMV to $2,577,700 rounded to say

$2,600,000 (equals Discount Equivalent of 13.50% and consistent to best available comparative data with premium for site).

Adopt $2,600,000 Equivalent to $6,703 per ha

The Open Market Value of the property is assessed on the basis that it is

exposed to the market for a reasonable period for a hypothetical sale and that the owner would be willing but not anxious to dispose of the property. If the presumed selling period is in any way restricted then the price likely to be achieved and my perception of value could be affected.

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23. VALUATION

23.1. OPEN MARKET VALUATION (CURRENT) I am of the opinion that the open market value of the property known as

Clarke’s Cove, today, as described in this report, subject to comments contained herein, in fee simple and assuming that the property is free of encumbrances, restrictions or other impediments of an onerous nature that would affect value (except as otherwise indicated in this valuation report), is the sum of $2,090,000 (Two Million and Ninety Thousand Dollars). The valuer further comments that given current conditions and a limited, specialised market, an extended marketing period of up to 18 months for the above sale price to be achieved is a distinct possibility. Marketing of the property internationally is probably required. Any seller of the property would also need to take into account the likelihood of significant costs being occurred (outside of any commission payable) to effect a sale of the property. These costs would include expenses associated with conducting property inspections in this relatively remote location.

23.2. OPEN MARKET VALUATIONS (RETROSPECTIVE) I am of the opinion that the open market value of the property known as

Clarke’s Cove, as described in this report, subject to comments contained herein, in fee simple and assuming that the property is free of encumbrances, restrictions or other impediments of an onerous nature that would affect value (except as otherwise indicated in this valuation report), is:

• As at 5 February 1999 the sum of $ 2,980,000 (Two Million, Nine Hundred and Eighty Thousand Dollars)

• As at 13 February 1999 the sum of $ 2,980,000 (Two Million, Nine Hundred and Eighty Thousand Dollars)

• As at 15 April 1999 the sum of $ 2,980,000 (Two Million, Nine Hundred and Eighty Thousand Dollars)

• As at 20 April 1999 the sum of $ 2,980,000 (Two Million, Nine Hundred and Eighty Thousand Dollars)

The above valuation amounts calculate to an IRR (Internal Rate of Return) of 35.00% which the Valuer has determined to be acceptable given the nature, size and style of development proposed. No differences have been calculated between the stated dates since the Valuer has determined that:

• There were no significant changes in the market over this time

• The basis of assumptions used in the IRR analysis held true for the period

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• There were no material changes in relation to rezoning or development approvals having taken place over this time, despite an application to rezone the land from Rural A (Pastoral) Zone to the Special Facilities (Integrated Tourist Development) being withdrawn by the existing developer prior to determination being made by Council, on 19 April 1999.

It should be noted that it was not until 13 September 1999 that concerns were first formally raised by State Government about rezoning the land from Rural A (Pastoral) zone, to Tourist Facilities Zone. Formal refusal was not advised until 04 May 2000.

23.3. “FORCED SALE” VALUATIONS (RETROSPECTIVE) Under “forced sale” conditions where adequate marketing of the property may

not be possible (e.g. a marketing period of 18 months or greater), in the past market a significant discount to the property would be incurred. The Valuer estimates this discount to be in the order of 13.5%, based on the opportunity cost of a foregoing a suitable marketing period equivalent to the likely holding costs to effect a sale (consistent with the best available comparable data), with the “market” value for a “quick sale” in this case being:

5 February 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars 13 February 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars 15 April 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars 20 April 1999 $ 2,600,000 Two Million, Six Hundred Thousand Dollars

As for the same reasons stated in the comments concerning the retrospective open market valuations (above), no differences have been calculated between the stated dates.

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24. QUALIFICATIONS & DISCLAIMERS In undertaking a valuation of this property, the Valuer declares that he is not

currently in possession of formal qualifications in a building/structural discipline. It is therefore recommended that an assessment of costs or any departures from acceptable standards of construction and/or relevant Australian Construction Standards be provided by another suitably qualified person, e.g. Engineer, Architect, Quantity Surveyor.

In addition, we have not inspected unexposed or inaccessible portions of the

property. The Valuer also assumes:

• Vacant possession basis

• This Valuation is made on the basis that there are no encroachments by or upon the property. This should be confirmed by a current survey report (a copy of which has not been sighted by the Valuer), and/or advice from a registered surveyor. If any encroachment is found to exist, the Valuer should be consulted to assess any effect upon value stated in this report.

In accordance with the normal practice of Global Solutions 4 Pty Ltd, I confirm

that this report is confidential to Elliott & Harvey, subject to its provision to Lawloan Mortgages Pty Ltd (as instructed). No responsibility is accepted to any third party and neither the whole of the report nor any part or reference thereto (including annexures to this report) may be published in any document, statement or circular nor in any communication with third parties without the prior written approval by Global Solutions 4 Pty Ltd of the form and context in which it will appear.

All other parties other than Elliott & Harvey referred to above should obtain their

own valuation report and/or contact the Valuer before relying on the whole or any part of the contents of this valuation

Yours sincerely, GARY OWEN GARNER B.Bus., A.V.L.E.(Val.), Assoc.Dip.Val., P.Ag., Dip.Ag., A.I.M.M., M.A.A.A.C. Registered Valuer (Qld) No. 1959

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25. APPENDICES

25.1. COPY OF CERTIFICATE OF TITLE

CURRENT TITLE SEARCH NATURAL RESOURCES & MINES, QUEENSLAND

Request No: 105607216 Search Date: 24/12/2001 3:15 pm Title Reference: 50266401

Date Created: 17/05/1999

Previous Title: 21491234 21491235 21491236 21491237 REGISTERED OWNER

Dealing No: 703334124 13/05/1999

COVE RESORT PTY LTD A.C.N. 085 958 925

ESTATE AND LAND Estate in Fee Simple

LOT 20 REGISTERED PLAN 748499 County of HERBERT Parish of GLOUCESTER Local Government: WHITSUNDAY

For exclusions refer to Plan RP 748499

EASEMENTS, ENCUMBRANCES AND INTERESTS 1. Rights and interests reserved to the Crown by Deed of Grant

No. 21328049 (POR 20) 2. MORTGAGE No 703334136 13/05/1999 at 09:55

LAWLOAN MORTGAGES PTY LTD A.C.N. 066 587 068

ADMINISTRATIVE ADVICES - NIL UNREGISTERED DEALINGS - NIL

CERTIFICATE OF TITLE ISSUED - Yes 06/03/2000 703913940 Certificate No. 3

Caution - Charges do not necessarily appear in order of priority

** End of Current Title Search **

COPYRIGHT THE STATE OF QUEENSLAND (NATURAL RESOURCES & MINES) [2001]

Page 1/1

PRINTED BY LAWPOINT ON 24 DEC 2001 AT 04:15pm FOR GOG REF E&H CLARKES COVE

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25.2. COPY OF SURVEY PLAN

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25.4. DISTRICT MAP

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25.5. CADASTRAL PLAN

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25.6. CLARKES COVE — OVERVIEW MAP

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25.7. ANCHORAGES

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25.8. WHITSUNDAY PLANNING SCHEME (EXTRACT)

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25.9. WHITSUNDAY STRATEGIC PLAN (EXTRACT)

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25.10.MARKETING BROCHURE: CLARKE’S COVE

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25.11.SALES EVIDENCE

The following sales evidence relates the comparison of the undeveloped Clarke’s Cove site, and the Clarke’s Cove site as it is proposed to be developed as a whole.

A large volume of sales data for individual property categories (e,g, strata title units, residential allotments, condominiums and apartments, as per the Clarke’s Cove redevelopment proposal) is held on our files for reference. For practical reasons it has not been reproduced here.

Property Name Sale date Sale Price Land Area (ha)

Analysis Title

1 Clarke’s Cove 1 Jan. 1999 (settlement 07 May 1999)

$15,000,000 387.9 ha $38,670 / ha Lot 20 on Registered Plan 748499, Parish of Gloucester

Comments: Subject property – acquisition by Cove Resort Pty Ltd. Property currently mortgagee in possession. Gross sale equivalent to 387.9 hectares @ $38,670 per ha = $15,000,000.


Analysis Title

2 Woodwark Bay 19 Nov. 1997

$2,500,000 1,227.5 ha $2,036 / ha Part ZZ Lot 154 RP 858305

Comments: Located approximately 15 km south of the subject property and the same distance from Airlie Beach. The site has 3.6km of beach frontage to Pioneer Bay, Woodwark Bay and Double Bay East. The beach frontage to Woodwark Bay proper is excellent and contains extensive areas of white sand, unlike the much smaller beach head on the subject. In this sense the property is far superior compared to the subject. Bitumen road access and all services on site. Existing development (confirmed by aerial inspection) consists of a number of bungalows, helipad, and a main residence. It is understood that the recent sale was to a OneTel Director, now utilised as a private resort hideaway and consequently not open to the public. A major integrated resort township development was approved for the site, however approvals have lapsed and zoning reverted to Rural (Council advise that this was at the request of the new owner to which they were happy to comply). Site comprises a series of ranges with a comparatively narrow but level coastal strip. Inland is gently undulating before the more steeply sloped higher range country which could prove difficult to develop. Location is closer to Airlie township, and considering access is superior to the subject in that regard. Despite the limited amount of developable land the site (a significant proportion of the site is fairly rugged), it is considered broadly comparable with the subject with similar views and situation. Some reports record an additional option fee of $1.2m was paid at the time of sale which if included raises the price to $3,014 per hectare all up for a gross of $3.7m, Bearing in mind that this property is over three times the size of the subject, the Valuer considers this to be a key indicator of value.


Analysis Title

3 Woodwark Bay (Dryander via Cannonvale)

28 Feb. 1994

28 Feb. 1998

$293,000

$212,325

126.8 ha

27.11 ha

$2,310 / ha

$7,832 / ha

Lot 2 CP 847576

Lot 5 & 18 on CP 858 305, both Parish Dryander

Comments: These properties adjoin the Woodwark Bay site (above) being purchased from the Crown by the same new owners. Zoned rural, country comprises undulating forest country with some ocean views. Limited opportunity for re-development because of zoning, and thought to represent a “buffer” for the new owners of Woodwark Bay site proper. Amalgamated sale presents as 153.91 ha @ $3,283 per ha. Considered inferior to the subject due to limited development potential. Is also of smaller size.

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Analysis Title

4 Laguna Quays 1999/2000 (exact contract date unknown)

Reported $20m. Other reports $25m

1,776 ha $11,261 - $14,076 / ha

N/a

Comments: This records the sale of Laguna Quay Integrated Tourist Resort and Township development for a reported $20-$25m. The development has been recently sold (1999 contract for settlement in 2000) reportedly to the Village Roadshow group at a substantial loss. Whilst the purchaser is understood to have been attracted by the tax losses, this is a $200m + development that was clearly heavily discounted to achieve sale. Located 60 kilometres south of Arlie Beach, Laguna Quays is a recent mainland development. The property is situated at the southern end of the Whitsunday shire on a 1,776 hectare site on the beach front at Midge Point. Featuring the Turtle Point Golf Course – classified by many as one of Australia's best - the golf course hosts the Australian Skins Tournament. It is understood that in excess of 4,000 golf memberships have been sold both in Australia and overseas. The first stage of the resort (now completed) features a 60-unit resort hotel, 137 condominiums, 70 berth marina, recreational facilities and service infrastructure. Further stages are to include; tourist and residential accommodation units, commercia/ retail precincts, recreational and marina facilities. Discussions with local Council (Mackay) indicate that required additional approvals are well advanced. The sale and transfer of ownership is well known locally (including Council and local agents), however confirmation has proved difficult to obtain - therefore some caution must be exercised when viewing available data.


Analysis Title

5 Tranquil Bay site (via Hideaway bay)

June 1998 $5,873,000 600 ha (approx)

$9,783 / ha Lot 6 on RP 892317 and Part Lot 4 on RP 808296, Parish Gloucester

Comments: Contract price of $5.873m excludes cost of road provision estimated $2.0m, therefore analysis extends to $13,100 per ha inclusive of road cost. Zoned rural with no rezoning or development approvals in place, with no services available. Poor access with 18 km of poor gravel road accesses the general locale. Situated near Montes Reef Resort at Tranquil Bay, approx. 60 km north of Airlie Beach. The site contains steep sloping areas with elevated position. Contains 1.6 kilometres of beach frontage to the Gloucester passage providing attractive ocean and island views. Although land area is nearly twice the size of the subject, considered in some ways inferior. Considered long term development site with contract conditional (understood to relate to final survey). Proposed development understood to include both residential and commercial products, in addition to resort complex.

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Analysis Title

6 Whitsunday Springs (Coral Coast, Bowen)

Reported but not confirmed November 1998

$12,000 (un-confirmed)

438.8 ha $27,347 / ha Lot 3 on RP 737838; Lot 194 on Plan K124309 and Lot 123 on Plan HR 8434

Comments: It is understood that Council approval had been forthcoming for the development of this 438.8 ha site for a 250 room resort hotel, 250 room golf course resort, 320 resort villas, 1,500 condominiums, 592 single residential allotments, 102 rural residential allotments, 250 berth caravan park, 2.56 ha commercial / retail, 90 berth marina and yacht club, 18 hole golf course , and various community and recreational facilities. Unconfirmed sale details suggest a sale price of $12m for settlement originally March 1999 (therefore lacking in confidence for reliance on data). Located at Whitsunday Springs on the Coral Coast (22km north of Bowen) the site featured 5.5km of ocean frontage (attractive ocean views are available from its frontage and higher country) and 3.6km frontage onto Euri Creek on its eastern boundary. Wide variety of topographic features but mainly gentle slopes / gentle undulations, with some relatively flat land. Zoned tourist Facilities, this site has the advantage of bitumen access road, with telephone and electricity connected, however its location is regarded as being less desirable than the subject property being out of the mainstream tourist region. Superior access compared to subject, with services connected unlike the subject. Otherwise, broadly comparable. The land is gently undulating to gently sloping which is broken up by numerous water courses.


Analysis Title

7 Castaway Bay Resort

20 Dec 1993

1 July 1997

$600,000

$215,000

1.835 ha

2.628 ha

$326,975 / ha

$81,811 / ha

Lot 2 on RP 840155

Lot 15 on Plan HR974

Comments: Improved property with a substantial dwelling to be demolished in its development. Situated on 6.3 hectares of beach front land at Clifford Beach, approximately 11 kilometres north of Airlie Beach. Known as the Castaway Bay Integrated Resort and Wave Surf Pool, the site contains beachfront land, elevated range country and a permanent creek. The irregular shaped site is to be developed with a multi unit resort and “boutique” hotel, comprising: resort hotel containing 24 strata title twin key units, licensed restaurant and central complex, 100 strata title apartments; 13 Group title dwellings, 3 commercial shops; a surf wave pool (the largest in the southern hemisphere); recreational facilities. service improvements; and site improvements. Amalgamated, the sale price of 4.463 ha @ $182,613 per ha is achieved. Better located than the subject but much smaller property size so comparison is difficult.


Analysis Title

8 Whitsunday Vista Quest Resort

7 August 1996

$850,000 53.58 ha $15,864 per ha

Lot 1 on RP 744905, Parish Conway

Comments: Situated 1 km to the east of Airlie Beach, the site is considered inferior to the subject because of its terrain an no beach frontage. It is a much smaller property, but has a much superior location compared to the subject. Proposed, but not approved, for the site are a resort hotel complex; 132 strata title apartments; recreational lake; site improvements and other facilities. Situated in Jubillee Pocket, the site comprises a 51.28 hectare site, zoned Rural. Of elevated, sloping to steep terrain it features extensive ocean and island views. The site has very poor access and no services.

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Analysis Title

9 PRD Site (Airlie Beach)

6 August 1996

$1,350,000 39.2 ha $34,439 / ha Lot 1 on RP 722223 and Lot 3 on RP 738123, Parish of Conway

Comments: Situated in central Airlie Beach, the site has good ocean and island views from the higher slopes. Considering its bitumen road access and zoning for commercial and residential development, together with its location, considered in some respects much superior to subject but lacks sufficient land area for the possibility of a major development such as that planned for the subject. Apparently rezoning approvals have been sought to further capitalise on redevelopment potential which would see the construction of additional commercial and multiple unit dwellings. Partially services with an amount of low lying areas. Overall, difficult to compare with the subject since it is of a different nature, potential scope / size and style.


Analysis Title

10 Mandalay Hill 18 June 1997

$2,501,000 76.39 ha $32,739 / ha Lot 21 on RP 732039, Lot 20 on RP 732040, Lot 26 RP 741863 & Lots 27/31 on RP 744918, Parish Conway

Comments: Zoned rural with no development approvals in place. Superior position compared to subject (5km east of Airlie Beach on the Mandalay Road) comprising elevated position, Much of the site is steeply sloping but there are excellent ocean and Whitsunday island views available. Limited services (water supply, etc.) but good access. Otherwise, inferior to subject and much smaller property size incapable of being developed to the extent proposed for the subject. Bare price (i.e. sale price less improvements consisting of substantial dwelling and various outbuildings) demonstrate a sale value of approximately $20,000 per ha. Overall, superior to subject but not comparable nevertheless an interesting reference point.


Analysis Title

11 Club Crocodile Resort (Cannonvale)

January 1999

$9,500,000 1.299 ha 167 rooms @ $56,900 / room

Lot 1 on RP 734308, Parish of Conway

Comments: Resort constructed in 1988 containing 167 units, licensed restaurant. conference Centre. souvenir shop and various recreational facilities. Situated in Cannonvale, it is designed to cater for the “mid” market visitor. Of similar but perhaps inferior quality to that proposed for the subject, it features limited ocean views. Considered inferior to the subject when it is hypothetically redeveloped. Site size very small compared to subject. Included under analysis for information and “market sentiment” reasons as it is not strictly comparable. However, useful guide to assist in the determination of likely realisations for resort hotel rooms.

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Analysis Title

12 Airlie Beach International Resort Hotel

October 1998 (contract un-confirmed)

$3,700,000 3.259 ha $1.23m / ha Lot 8 on RP 734596, Parish Dryander

Comments: Situated in Cannonvale, the site comprises a smaller sized, 3.259-hectare site, Whilst the property size makes it incomparable to the subject, the sale is relevant since the site itself forms part of that required for a large resort hotel. Together with the balance of the property, the site is approved for a seven level resort hotel complex containing 212 strata title apartments, licensed restaurant and bar. specialty shops and central resort complex; 10 condominiums; 250 seat conference Centre; and recreational facilities. Zoned Special Facilities, it is of gently sloping terrain with frontage to a mangrove esplanade. There are no sea views from the site (rural and urban only), although these will be available from the upper levels of the proposed development.

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25.12.PHOTOGRAPHS

Clarke’s Cove, facing south from a position close to the nearby Earlando Resort property boundary

The beach – head (Dryander National Park portion)

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Grassy Island is located just off the mouth of Clarke’s Cove – facing east from the pensinsula

Typical landscape in the basin area

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The beach – head – situated on the subject property (aerial photo)

Clarke’s Cove – overview of the “amphitheatre”

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The basin inlet and waterways of the bay (aerial photo)

Clarke’s Cove – aerial overview looking east (Grassy Island middle distance)

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The nearby Woodwark Bay – considered to be key sales evidence

Close up from the air of Woodwark Bay – note expansive white sandy beach and some limited development on the shoreline

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The neighbouring Earlando Resort – a low key development with a small white sandy beach. Clarke’s Cove is located to the left middle / far distance

The peninsula at Clarke’s Cove (to the right of picture), and Dryander National Park (middle and left). Note white sandy beach turns to grey coral as it extends

to the Dryander boundary.

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26. ATTACHMENTS

26.1. CERTIFICATE OF TITLE (FEBRUARY 1999)

26.2. CONTRACT OF SALE 29/1/1999: EARLE & OTHERS TO COVE RESORT PTY LTD

26.3. IRR & DCF ANALYSIS, CASH FLOWS

26.4. NEEDS STUDY: L.S. FAIR & ASSOCIATES (DECEMBER 1998)

26.5. EXTRACT FROM SINCLAIR KNIGHT MERTZ FEASIBILITY & EIS

26.6. FULL PLANNING & DEVELOPMENT CERTIFICATE (WHITSUNDAY SHIRE COUNCIL

26.7. COPIES OF CORRESPONDENCE RECEIVED FROM WHITSUNDAY SHIRE COUNCIL, INCLUDING RE-ZONING APPLICATIONS, APPROVALS & REFUSALS

26.8. WHITSUNDAY SHIRE COUNCIL PLANNING SCHEME

property known as “clarke’s cove” lot 20 on …eprints.qut.edu.au/7231/1/7231.pdf · county...

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