The Outlook for Cairns

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While tourism still plays a very important role today, Cairns’ economy now offers diversity through agriculture, education, health care, and mining.

Sharing a blog post with you written by Simon Pressley* which featured on the website therealestateconversation.com.au:

Improvements to Cairns’ economic mix has resulted in increased employment opportunities and improved confidence in the region. This has directly contributed towards a 31% increase in the number of property transactions over the last two calendar years.

In the past, Cairns’ economy had been a one-trick-pony, riding the wave of tourism’s booms and busts. While tourism still plays a very important role today, the economy now offers diversity through agriculture, education, health care, and mining. With a population of 160,000 people and 66,000 dwellings, Cairns is Australia’s eleventh biggest city.

Over the last ten years, Cairns’ population has grown by 2.6% per annum compared to Brisbane’s 1.9% and Australia’s 1.7%.

There are a number of major projects which will improve infrastructure, amenities, and employment opportunities:

– Rio Tinto South of Embley Project (Weipa) – $1.45 billion development of alumina mine, involves a new mine and processing plant. 950 jobs are expected to be created one Rio Tinto give the green light on construction jobs. A further 1275 direct jobs, and even more indirect jobs, are expected upon completion of the three year project. Most of the goods and services will be supplied by Cairns.

– Cairns Airport – $1 billion redevelopment plan was approved March 2013 with a 20-year implementation. Bruce Highway – $300 million major upgrades to improve access, including flood proofing.

– Sheraton Mirage Resort – $200 million major refurbishment (a new six-star guest resort plus a new golf course).

– Cairns Aquarium – $35 million new tourist attraction in Cairns CBD, set to open in July 2016.

– Aquis Casino Resort – $8.15 billion integrated resort at Yorkeys Knob. Preliminary approvals are held however there are still a couple of hoops for Hong Kong billionaire, Tony Fung, and his team to jump through. Direct jobs during construction are anticipated to be 9,300; 10,000 jobs will be created upon completion

– Aspial Corporation – $400 million CBD apartment complex consisting of six towers. The Singaporean developer will start construction mid-2015. Too much new housing supply in 2005-2007, especially apartments, had an adverse impact on Cairn’s property market.

The onset of the GFC proved to be the wake-up call that the construction industry needed. Supply has since been more controlled.

Vacancy rates have consistently been at or below 2% for a few years. There is a seasonal component to vacancy and unemployment rates which is directly linked to peak tourism seasons.

Rental yields are currently 5.2% and 6.8% for houses and apartments, respectively.

*About the author: Simon Pressley is Managing Director of Propertyology, a property market analyst, accredited property investment adviser, and Buyer’s Agent. Propertyology works exclusively with property investors to purchase properties in strategically chosen locations all over Australia.

 

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