The month in review: Darwin
By Herron Todd White
April, 2010
Darwin is an isolated city, surrounded by national parks
and closer to Indonesia than it is to another Australian
Capital city. Darwin is 320km north of the closest
township and a further 500km from the next, and both
of these townships are not considered desirable holiday
locations. With numerous national parks such as Kakadu,
Litchfield National Park and numerous popular fishing
destinations, many Darwin locals prefer to spend their
money on large boats, in expensive camping equipment
or travelling abroad and interstate.
There are two major weekender spots in outer Darwin, the
first and most significant being Dundee Beach including
the Mandora/Wagait beach area.
Dundee Beach is located approximately 140 kilometres
from the Darwin CBD It consists of mixed style, rural
residential dwellings and vacant land on a variety of
allotment sizes. Being a recently established weekender
location, the township is without major services including
shops and public transport, the closest of which is located
within 120 kilometres. Back from the beach are Dundee
Forest Estate and Fog Bay Estate, which were both
developed in 1995. There are no building regulations
at present in Dundee Forest, Dundee Downs or Fog Bay
Estate. Only Dundee Beach has building requirements,
where buildings must be built to cyclone standard. This
has encouraged a standard of housing that might better
be described as dongas than dwellings.
The area enjoyed very strong growth through 2004 to
2008 with vacant land in Dundee Beach selling for around
$50,000 in 2005 and now selling around the low $200,000
mark.
A driver of the market in Dundee was the planned
development of a large resort at the Lodge of Dundee,
a licensed roadhouse with cabins and camping and the
only shop in the area. The lodge was purchased in 2007
for more than $5million by a publicly listed company that
planned build a large tourist resort worth tens of millions
of dollars. The project was shelved when the credit crisis
hit in 2008 and the asset was liquidated for a fraction of
the purchase price. It was bought by a local investor who
has kept the business operating but lacked the resources
to complete the development and the Lodge is now for
sale again. The planned development was a significant
feature of the market through Dundee and its failure had
a major impact on the local market.
Since 2008 the market has remained flat with few
transactions and little growth. Currently there is a large number of properties for sale with ever extending
sales periods. The graph below shows the number of
properties advertised each week since the start of 2006.
It rises sharply in 2008 then settles and rises to a current
high. This may be due to the expectation of increased
interest rates and the lack of permanent residency in the
area, which has resulted in a shortage of available rental
income.
Mandora is located a similar distance from Darwin via road
but a very short distance via the Mandora ferry. The area
underwent significant growth when the road was sealed
and for some time there were suspicions that the area
would be developed due to its relative close proximity to
the city, via water. However this has not transpired and
the area has stagnated.
The other sector is Lake Bennett, a man made lake
located about 83km from the Darwin CBD. The area
is dominated by small lakeside cabins all constructed
virtually identically by the developer, who also owns the
Lake Bennett resort.
The Google earth image below shows the large area
occupied by the Lake Bennett resort and the numerous
lakeside cabins that neighbour it.
The cabins surrounding the lake enjoyed a surge in
popularity between 2006 and 2008. In 2006 a cabin was
priced around $150,000, and by mid-2008 newer cabins
were selling for abput $450,000. The market has since
stagnated with few sales and little growth. It is fair to say
however, that the growth for these cabins may have been
adversely affected for some time throughout the 2006 to
2007 period due to a pending legal battle between the
developer and surrounding landowners. This has now
been settled and as part of the settlement agreement
there is to be no further lakeside accommodation made
available. We believe it is possible that these cabin may
again enjoy market popularity when the ownership of
holiday accommodation is more achievable.
This will be further boosted by the possibility of significant
development occurring to the Lake Bennett Resort, which
will increase the availability of holiday accommodation.
This is to occur away from the water and is dependent
upon approvals etc before development begins and this
seems some time away.
It would seem that the Darwin holiday market has been
the victim of too much growth in the metropolitan market.
Affordability is very low across all of Darwin. Typically this
would support the improved performance of holiday
precincts, but due to Darwin’s transient population
people tend to go to Bali for the beach, home for a rest
and fishing on the weekends.
Given the current expectations for increased interest
rates and continued capital growth through metropolitan
Darwin, and no change in Darwin’s transient population, it
is likely that the market will continue to show a preference
for the boat and swag.
Since 2008 the market has remained flat with few
transactions and little growth. Currently there is a large |
