spotlight on karratha seminar
DESCRIPTION
Mr Mark Wallace, Senior Economist of RPS Australia presented an overview of the Karratha area to Finbar's Property Insight guest on 18 August 2012.TRANSCRIPT
Spotlight on Karratha Summary of Finbar Property Insight Forum ‐ 18 August 2012 Background Mr Mark Wallace, Senior Economist of RPS Australia presented an overview of the Karratha area to Finbar’s Property Insight guests on 18 August. Finbar has summarised this presentation as a point of reference for attendees. The Mining Boom Currently there is $500 billion of resource projects on the books nationally, with $260 billion of these located in WA. In spite of the GFC and subsequent economic volatility, WA continued to experience robust growth in its mining investment pipeline, exceeding all other States including Queensland. There is currently approximately $5 trillion of economically demonstrated mineral and energy resources in Australia with a value equivalent to 5‐6 years of Australia’s total economic activity. Beyond this, there is an additional estimated $10‐$15 trillion in resources still to be identified or not yet economical based on current prices and technology.
Above image depicts Advanced Mineral and Resource projects as of April 2012 (Source: BREE 2012).
The investment cycle in WA’s mining sector is now in full swing with new capital expenditure by mining companies climbing rapidly over the last three quarters and now topping $11 billion in the March 2012 quarter. To put this in context, this is now almost double the peak of the last cycle in 2008. While the investment cycle for current projects is expected to peak in 2014/15, strong investment is likely to continue in the medium term. In particular, Iron Ore in WA is generally a lower cost resource then our international major competitors (e.g. South America) while we hold a major competitive advantage in the form of our proximity to emerging economies such as China and India.
Ultimatecertainty Steel pro
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han just Iron
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ome to interest. Due to ith West as it
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the Karrathaes sector andtes for accomcontrol.
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ojected to extor.
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ss regional prurthermore, nd currently
n 40,000‐50,0This in turn
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$65 million.
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xceed supply
d is thereforeG typically sesure to bothn the long‐te
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roduct of $7unemploymis below 2%
000 workers will be refleent living, w
rth West’s reea including:
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billion and rent in Karrat.
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asin near Karof developms workforce.
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2005
Sales Volum
When colocationfactors: apprecia The Karrexperien2005‐20price gropresent than Porless volaNorth W
Average
Source:
2006 20
mes, Houses an
KELT has beecommunity High School
onsidering in you need torisk and capation.
ratha housinnced robust 007 and sinceowth has steKarratha is 2rt Hedland aatile than othWest.
e Rents and G
PDC (2012)
007 2008
nd Units, Karrath
Home
en allocatedand sportingproject.
nvestment ino consider twital
ng market growth frome then propeeadied. At 25% cheapernd has beenher towns in
Gross Renta
$100
$200
$300
$400
$500
$600
$700
$800
$900
Median Prices
2009
ha Suburbs, 200
Unit
a total of $2g precinct, to
n a wo
m erty
r the
l Return, Kar
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2005
Median Pri
2010 20
05 to 2011
Source: RPData (2012) and
20.3 million together with
rratha, June
2006 2
ices, House an
11
RPS
to assist with the second
The Kaeasierpriceswider volum Overaon parrates. corpoHowebe volthe prwith cagencWest
2012
007 2008
nd Units, Karra
House U
h funding thestage of the
arratha markr propositioncontinue tomarket, sup
mes.
ll rental retur with Perth This reflectsrate residentver, corporaatile in the Nroperty has gorporate or ies, as is bein(5 year term
2009 20
atha Suburbs,
Unit
e building of Karratha Se
ket is also a mn for resale bo be accessibpporting sale
urns in Karracommercial/s the influenctial rental mte rental retNorth West, guaranteed cgovernmentng offered at
ms).
10 2011
, 2005 to 2012
Source: RPD Data (2Notes: 2012 is Year
f a nior
much ecause le to a s
tha are /retail ce of the arket. turns can unless contracts t t Pelago
2012*
2
2012) and RPSTo Date
Conclusions Based on the analysis by RPS Australia the following conclusions can be drawn:
The mining boom 2.0 has commenced;
Karratha is a major centre of iron ore production/ export and future LNG production;
This in turn will drive employment and population growth;
Pilbara Cities initiative and State Government investments support future population growth to 50,000 in 2035;
House prices experiencing stable, steady growth; and
Price points are more affordable than other Pilbara Centres yet characterised by strong gross rental returns.
It is this combination of strong economic activity, sustainable house price growth, accessible price points, corporate rental returns and robust sales volumes than make Karratha a highly attractive investment proposition. Invest with Finbar
Finbar currently has a number of corporate and government leased apartments which offer a term of 5 years at a yield of 9.47% or weekly rent of $1500. There is an option to extend the leases for a further 5 years with annual CPI increases. The benefit of this arrangement is that the Government agencies will in fact manage the properties and the tenants i.e. conduct inspections etc. at no cost to the owner (nil management fees). Therefore as an owner you
are only required to pay outgoings such as strata management fees and Council rates, and any minor repairs inside of the apartment, that are not the responsibility of the tenant. All external maintenance and repairs are covered by the strata fees. Under a contract with the Government, property owners are also guaranteed security that the rent will be paid weekly i.e. no chance of default in payments. These rent returns are for unfurnished apartments. Priced from $823,300 these 2 bed/2 bath apartments are at the forefront of the Karratha CDB redevelopment and hence are well positioned for capital growth. Would you like more information? If you would like to discuss the purchase of one of these limited Pelago West leased apartments then please contact John Bell on 0413 153 227.