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National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 1
National Top 5
Boom Town
Hotspots 2016
August to December 2016
Copyright hotspotting.com.au
Our business is helping people achieve their dreams
2 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au CODE OF CONDUCT - HOTSPOTTING Our Mission We are in the business of helping people achieve their dreams. Just as home -buyers seek their dream home, investor-buyers also have dreams: to provide for their retirement, to pay for their children’s education or to travel around the world . We’re happiest when customers tell us they achieved their goal and that we helped them get there. Our Business We deliver quality research based on the best information we can find. Our views are totally independent and free of vested interests or outside influences. We are committed to the opinions we express and the recommendations we make. Our Culture Our culture is firmly centred on the delivery of high customer service. We take pride in our teamwork, open and honest communication, mutual respect, personal development and innovation. Feedback from customers is greatly valued. Our People Our people are highly motivated, take responsibility for their own actions and ensure they keep up-to-date with technology and business trends. At all times, o ur people act with honesty and integrity; they do not accept improper payments, benefits or gains. Terry Ryder, Founder, Hotspotting.com.au
National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 3
Contents Page
Chapter 1: What are Boom Towns? 5
Chapter 2: Hotspot “Core Categories” 6
Chapter 3: National Top 5 Boom Towns 7
1 Wagga Wagga NSW 8
2 Newcastle NSW 19
3 Cairns QLD 35
4 Bendigo VIC 49
5 Busselton WA 61
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4 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
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National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 5 Chapter 1 What are Boom Towns? B oom Towns are significant regional centres with strong, diverse economies – and boosted by specific events. These can include major industrial projects such as power stations or wind farms, or major infrastructure developments such as new or expanded hospitals, airports, universities, export ports or rail links. Often such projects involve capital investment of $500 million or $1 billion or more - and their construction and ongoing operation create significant numbers of jobs, which places pressure on housing supply. This drives rents and property values higher, presenting opportunities for investors who understand the dynamics and risks of such markets. Boom Towns are usually regional cities, but sometimes they can be smaller towns or even capital cities. In the recent past we have seen Darwin (a large regional centre, as well as a capital city) experience property market up- cycles influenced by major resources and infrastructure developments. Some obvious examples of Boom Towns are country centres impacted by gas ventures, coal mining or iron ore production. We hesitate to suggest such locations because mining towns are among the riskiest of residential property investments. Investors who get in early can make big capital gains, but these types of locations exist in a bubble which can burst if demand for resources drops, or the local mine closes, or housing demand falls away after construction of the major project is completed. In addition, the growing use of fly-in-fly-out workforces and temporary workers camps means there is less demand for residential rentals than developers expect, often resulting in over-supply. Locations solely reliant on one industry or one project are vulnerable markets. Our preference in selecting Boom Towns is to focus on regional centres which have an economic life before and beyond the resources boom. These are locations with diverse economies which are not solely dependent on a single industry for their prosperity. They are rounded economies for which any boost from the resources sector is a bonus.
6 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
Chapter 2
Hotspotting Core Categories
The hotspots to emerge in Australia in recent years have been strongly influenced by one or more of
the Hotspotting Core Categories – events or influences which create capital growth for property. The
areas spotlighted in this report have at least three of the Core Categories in their favour.
Transport New roads and train lines can create value growth. Industrial property benefits the most
Infrastructure from new motorways, but residential is also boosted. A major new road can open up
previously inaccessible areas or provide faster connections for commuters. Rail links and
bridges can have similar impacts on real estate.
Education-Medical Most major cities have education and medical infrastructure located in the one precinct.
Infrastructure North Melbourne has a universities precinct as well as major hospitals. Areas like this
attract strong accommodation demand from students, teachers, doctors, nurses and many
others. The suburbs surrounding such facilities tend to out-perform on capital growth.
Ugly Ducklings/ Some suburbs were once shunned as downmarket but now are regarded as trendy. “Ugly
Cheapies with Ducklings” can transform into real estate swans. Richmond in inner Melbourne has made
Prospects that change, as has Bulimba in Brisbane. Whenever affordability is a key issue, Ugly
Ducklings with potential to change will do well.
Urban Renewal Governments or Local Authorities can transform areas through policy decisions or
and targeted action. Urban renewal programs have changed the character of suburbs,
Govt Decisions sometimes turning waterside industrial areas into prestige residential. Regional policy
decisions – such as growth management plans – can also have an impact.
The Stayers Some locations always seem to perform steadily. They’re the ones that provide at least
some growth each year, in good times and bad. While the property industry claims they
are mostly found close to the inner-city, our research indicates outer suburbs and regional
centres are more likely to be The Stayers than the expensive near-city suburbs.
Ripple Effect Property up-cycles often begin with the inner-city suburbs. As prices rise, they become
unaffordable for many buyers – who seek less expensive property nearby. The growth,
therefore, ripples out – and continues to do so until it reaches the outskirts of the city.
Growth cycles can also ripple out from the capital city to regional towns and cities.
Lifestyle Features The most expensive real estate tends to be beside water or overlooking it. The ocean rates
highest (although climate change may alter that perception) , while rivers, canals and lakes
aren’t bad either. Homes fronting golf courses command price premiums, but not as high
as water. Buyers also pay premiums to live near “eat street” lifestyle precincts.
Jobs Nodes One reason inner-city suburbs often don’t excel on capital growth is that people prefer to
live as close as possible to their work – and many of the biggest employment nodes are a
long way from the CBD: airports, seaports, factories, light industrial precincts, centres of
transport and logistics, manufacturing plants and major shopping centres, among others.
Boom areas Sometimes areas take off for specific reasons. Some towns in Western Australia and
Queensland have had real estate booms because of resources activity nearby. Development
of major industrial projects can have a similar impact. The key factor is jobs creation.
Sea Change and We’re (arguably) more drawn to live by the ocean than any other people on the planet. Sea
Hill Change Change is less in the news today but migration to the beach remains a factor. Investors
need to be aware that economies based primarily on tourism and retirement can be fragile
and volatile. Some people escaping the city head for the hills, rather than the beach. The
Blue Mountains near Sydney and the Adelaide Hills are classic Hill Change destinations.
National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 7 Chapter 3 The National Top 5 Boom Towns 2016
8 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
WAGGA WAGGA
Riverina Region, NSW
Strong population growth Service centre for region of 180,000
Popular with first home buyers $450 million hospital upgrade
Affordable housing $54 million freight hub
$1 billion in Defence projects Expansion of Charles Sturt University
Suburb - Typical Suburb - Typical Suburb - Typical
houses prices houses prices units prices
Ashmont $225,000 Mt Austin $233,000 Kooringal $230,000
Kooringal $308,000 Wagga $356,000 Wagga $240,000
Wagga Wagga, named Australia’s most family-friendly city in 2014, has good prospects for future
capital growth.
One of the many qualities that makes it worthy of consideration by property investors is the high
number of first-home buyers taking advantage of affordable properties in the area. Wagga Wagga
ranks No.12 among NSW locations for first-home-buyer benefits over the past 15 years, with most
of the top 10 being locations in the Sydney metropolitan area.
This strategic inland city is noteworthy for multiple economic drivers,
lack of dependence on mining and a low jobless rate. There’s an
expanding military presence (army and air force bases); education,
health and other community services for a region of 180,000 people;
and steady population growth.
Upgrades and expansions either completed or under way include projects at Charles Sturt
University and Wagga Wagga Base Hospital. Major spending on the region’s military bases is in
planning.
Location
Midway between Sydney and Melbourne (about 450km from both)
On the Murrumbidgee River, at the junction of the Sturt Highway and Olympic Highway.
Major regional centre for the Riverina and South West Slopes regions of NSW.
POPULATION & DEMOGRAPHICS
Population 2011: 63,900 (Census)
Population 2030: 80,000 (projected)
Ranked No.3 among inland regional centres for growth
Regional population: 180,000.
Source: ABS
National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 9
Economy and Amenities
Wagga Wagga is an important agricultural, military and transport hub for Australia. It is the main
regional centre for the Riverina district of NSW and also for the South West Slopes region. It
provides education, health and retail services for an area extending to Griffith in the west, Tumut in
the east and Cootamundra in the north.
Wagga Wagga was named
Its location on the Sturt and Olympic Highways, and close to the the country's most
Hume Highway, halfway between Sydney and Melbourne, ensures “family-friendly” city in
Wagga Wagga’s importance as a heavy truck depot for a number 2014 by Suncorp Bank.
of companies including Toll Holdings.
The city has major industrial precincts in Bomen and East Wagga Wagga. Major employers include
the Fonterra dairy company, Heinz and Cargill. Meat processor Teys employs 1,000.
Evocities
Wagga Wagga is one of seven cities that form part of Evocities, a project funded by the Federal
Government aimed at encouraging more people to relocate from Sydney to the regional cities and
take advantage of the NSW Government’s regional relocation grant.
Evocities lists Wagga Wagga employment prospects as being “medical & allied health, aviation,
education & training, engineering, construction, retail, property & business services, public sector
and hospitality”.
Education
It has a Charles Sturt University campus and three campuses of the Riverina Institute, which is a
collection of TAFE institutes headquartered in Wagga Wagga. The Primary Industries Centre on
250ha at North Wagga Wagga runs courses in agriculture and horticulture.
CSU Wagga accounts for 7.9% of the city’s GDP and 9% of full-time jobs.
The city has eight secondary schools and 22 primary schools.
Military presence
There is a major military presence, including the Wagga Wagga RAAF Base at Forest Hill (which has
the National Aerospace Training Centre) and the Australian Army base at Kapooka (which has the
national Army Recruit Training Centre), both just outside the city.
Wagga Wagga has a long history as a military City – the Air Force has had a base here for 70 years,
and the Army a base since World War II. The Navy trains around 100 aviation trainees each year in
conjunction with the Air Force. The military presence continues to increase, with infrastructure
expansion planned, in addition to the $160 million invested in the bases over the past three years.
Around 8% (1,590) of all NSW Defence Force employees are located in Wagga Wagga and, with
their families, they form an important part of the Wagga community socially and economically.
10 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au The Australian Defence Force is the sixth largest employer in Wagga Wagga and it is estimated that the local staff and sub- contractors of associated companies supporting the ADF number 9,000 across Wagga and the Riverina Region according to Wagga Wagga Council. Kapooka holds a March Out Ceremony each weekend – with hundreds of supportive family and friends coming to the City to witness graduation. This is reportedly one of Wagga’s greatest tourist attractions which translates into overnight accommodation and increased commercial activity for food, beverage and retail outlets. Transport and access Wagga Wagga retains suburban bus services and a station on the Sydney-Melbourne railway line, with twice-daily fast rail services by CountryLink. Wagga Wagga Airport has daily flights to Sydney and Melbourne – passenger numbers passing through the airport have grown every year since 2002 and are now well above 200,000 per year. The city is a one-hour flight from Sydney, with 58 flights per week. Tourism It is known as a city of gardens, including the Wagga Wagga Botanic Gardens which has desert plants and species from Africa, China, Europe and the Americas. The city has a reputation fo r the visual and performing arts. The city attracts a large number of visitors who attend the many events held each year including horse races, the Wagga Pro Am, a wine and food festival, Gumi Races on the Murrumbidgee River (where entrants race in tyre tubes and other make-shift watercraft), Wagga Wagga Jazz and Blues Festival, a garden festival and numerous sporting events. There are two major shopping centres – Wagga Wagga Marketplace and Sturt Mall. There are also numerous suburban shopping centres including South City, Lake Village and Kooringal Mall. The CBD has hundreds of retailers headed by Big W, Myer and Target. Property Profile A third of households rent, which is above average for NSW and perhaps reflects the influence of the military and educational institutions. About 35% own homes outright and 25% have mortgages. Wagga Wagga is particularly popular with first-home buyers, with 5,369 buyers receiving first-home owner grants between 1 July 2000 and 31 January 2016. Wagga Wagga is one of The Stayers of NSW real estate. From 2000 to 2010 the market showed at least some growth each year, with major growth spikes in 2004 and 2008 – although some parts of the market contracted in the three years after 2010. From late 2013 into early 2014, annua l sales numbers began to rise, with the trend continuing through 2015.
National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 11
The rising market has continued in 2016, according to valuation firm Herron Todd White.
HTW says that expansion is occurring around the edges of Wagga Wagga, in particular Estella,
Boorooma, Gobbagombalin, Forest Hill, Bourkelands, Lloyd and Uranquinty. All these areas have
seen 10% to 20% growth in vacant land values over the past two years.
The most sought-after locations are central Wagga Wagga and Kooringal. The median house price
for central Wagga Wagga is $356,000, while other suburbs have median house prices ranging from
$225,000 (Ashmont) to $233,000 (Mt Austin) and $408,000 (Bourkelands).
Most suburbs have recorded solid growth in the past 12 months, led by Kooringal where the
median price rose 10%.
Long-term, the median house prices for most of the city’s suburbs have grown an average of about
3% a year over 10 years.
APM indicates that gross yields for houses vary considerably from one suburb to the next with Mt
Austin and Ashmont the best, with yields around 6.6%.
Around 85% of Wagga Wagga dwellings are houses, with the rest comprising flats and units. The
median unit price is $240,000 for Wagga Wagga and $230,000 for Kooringal, according to
Australian Property Monitors. The typical gross yields for units are in the 5.5% to 6.1% range.
The vacancy rate in Wagga Wagga has seen spikes in December–January in four of the last five
years, according to sqmresearch.com.au. In most years, the rate has fallen to around 3–4% for the
remainder of the year and currently, it is 4.4%.
The housing market in the city can be summarised like this:-
Suburb No. of sales Median price 1-year growth 10-year Median yield
average
Ashmont 55 $225,000 -7 % 1% 6.6 %
Bourkelands 67 $408,000 7% 2% 4.9 %
Kooringal 144 $308,000 10 % 3% 5.8 %
Mt Austin 76 $233,000 7% 2% 6.6 %
Turvey Park 74 $340,000 5% 3% 5.6 %
Wagga Wagga 191 $356,000 2% 3% 5.2 %
Source: Australian Property Monitors. “snr” is “statistically not reliable”. “10yr average” is the
average annual rise in median prices over the past 10 years.12 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
Future Prospects
Proposed Defence spending of $1 billion over the next 20 CORE INFLUENCES:
years will help to ensure Wagga Wagga’s economy remains Government Policy,
vibrant. Education-Medical, Boom
Towns.
During this time, the number of uniformed personnel in the Australian Defence Force is projected
to grow by about 5,000, from 57,500 to 62,400. Many of these recruits will pass through the
Defence Force recruitment training centres at Kapooka and Forest Hill, which are both marked for
$400 million upgrades.
The medical and education sectors also contribute to the equilibrium of Wagga Wagga’s economy.
The Wagga Wagga Rural Referral Hospital (formerly Wagga Wagga Base Hospital) is the largest in
the region, providing medical services to the wider Riverina area. It underwent a two-stage, $450
million re-development between 2012 and 2016. The facility now offers additional health services
and 56 extra beds.
At around the same time, the private Calvary Hospital underwent a $19 million expansion.
Rising numbers of students (now around 2,500) are attending Charles Sturt University (CSU). The
construction of a further 60 student accommodation rooms, adding to the 200 recently completed,
has created a building program totalling $40 million.
CSU also has plans to create a Murray Darling Medical School to encourage new doctors to work in
the regions. The proposal would see $46 million spent on delivering infrastructure across three
campuses, including Wagga Wagga and at 19 medical training centres.
Yet another proposed CSU project is an AgriSciences Research and Business Park to be co-located
with the Department of Primary Industries.
The University of NSW (UNSW) has also launched plans for a $50 million stand-alone medical school
in Wagga. It is competing with CSU for Federal Government funding approval.
The Riverina Oils & Bio Energy Pty Ltd (ROBE) facility at Bomen began operations in 2013. The single
largest Green Field Investment in the Agri/Food Processing Sector in the last five years in Australia,
ROBE has a crushing capacity of 500 tonnes of oilseeds per day and will produce 200 tonnes of
refined vegetable oil and 300 tonnes of vegetable protein meal per day for the poultry, dairy and
animal feed industries. ROBE employs 50 staff and expects annual revenue of around $125 million.
The Riverina Intermodal Freight and Logistics (RIFL) Hub, Bomen, has been in the planning for many
years. In July 2014, Wagga City Council announced it would partner with railway infrastructure firm
Traxion to develop the $70 million facility. But Traxion went into voluntary liquidation in April 2015,
followed by reports that it was replaced by international rail company, Genesee and Wyoming in
late 2015. Subsequent reports indicate that some funding is to be sourced from both State and
Federal Governments.National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 13
The RIFL Hub is designed to encourage a shift from road to rail for freight transport in the region.
The project includes the construction of rail and road infrastructure, an intermodal container
terminal, agricultural bulk goods precinct and a rail related development precinct.
The RIFL Hub will be the only intermodal terminal on the main southern railway line able to load
and unload trains of the current 1,800 metre maximum length.
Projects currently impacting Wagga Wagga are:
INFRASTRUCTURE - EDUCATION FACILITIES
Project Value Status Impact
Medical school, $50 million Proposed.
University of NSW UNSW is competing
with Charles Sturt Uni
for Federal Govt funds.
Charles Sturt Uni, TBA Proposed.
south campus
redevelopment
Charles Sturt Uni, TBA Proposed.
AgriSciences Research To be co-located with To be opened by mid-
and Business Park, the DPI. 2017.
Wagga Wagga
INFRASTRUCTURE - HEALTH AND MEDICAL FACILITIES
Project Value Status Impact
Upgrade, Rural $450 million Completed.
Referral Hospital, Additional health A two-stage project
Wagga Wagga services and 56 extra carried out between
beds. 2012 and 2016.
Medical Centre, $5 million Approved.
2 Docker St A 3-storey medical
centre.
New ambulance $4 million Under construction.
station, Fernleigh Due for completion in
Road, Turvey Park 2016.14 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
INFRASTRUCTURE – SPORT & ENTERTAINMENT
Project Value Status Impact
Bolton Park upgrade $10.5 million Approved.
A multi-purpose Approved March 2013.
stadium.
Exhibition Centre $9 million Approved.
expansion (Equex), Expansion includes
Kooringal Road clubhouse additions &
new multi-purpose
indoor courts.
Motorsport complex, $4 million Approved.
Wokolena Rd A 2.6km race track on
85ha.
A N Aviation Wagga
INFRASTRUCTURE - GENERAL
Project Value Status Impact
Upgrade of Wagga $18.8 million Approved.
Wagga’s levee bank Levee to provide Feb 2016: Is reliant on
protection during Federal Govt funding
Wagga City Council floods. for completion.
Wagga Courthouse $17.2 million Under construction. Jobs:
upgrade Completion of the 2- 100 construction.
stage devt is expected
Wagga City Council around mid-2016.
Army Recruit Training $400 million Proposed.
Centre, Kapooka Upgrades would be
upgrade 1 carried out from 2016
to 2026.
Army Recruit Training $120 million Proposed.
Centre, Kapooka Upgrades would be
upgrade 2 carried out from 2026
to 2036.
RAAF Base Wagga, $400 million Proposed.
Forest Hill upgrade 1 Upgrades would be
carried out from 2016
to 2026.
RAAF Base Wagga, $40 million Proposed.
Forest Hill upgrade 2 Upgrades would be
carried out from 2026
to 2036.National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 15
RESIDENTIAL DEVELOPMENT
Project Value Status Impact
The Grange Lifestyle $35 million Under construction.
Village Over 55s lifestyle
village.
Turvey Park project $34 million Proposed.
A 90-lot estate of DA lodged in
Alatalo Bros medium-density November 2013.
dwellings.
Estella Rise $110 million Under construction.
subdivision 370 homes to be First resident moved in
completed by 2018. June 2014.
Combined Devt Group
Brunslea Park Estate TBA Under construction.
development Residential land 200 houses already
development at the built, 650 blocks still to
Wagga showgrounds. be developed.
Unit development, $35 million Proposed.
former Staunton & 140 units. DA lodged November
Weissel Ovals 2014.
Nash Bros Cons
The Mill $35 million Under construction.
redevelopment 84 apartments, office
(Murrumbidgee Mill) space, retail space,
conference facilities.
KannFinch
Apartments, Sturt St, TBA Proposed.
Wagga Wagga CBD A six-storey residential Zoning laws were
and commercial changed in April 2016
building. to accommodate the
project.16 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
COMMERCIAL DEVELOPMENT
Project Value Status Impact
Wagga Marketplace $30 million Under construction. Jobs:
redevelopment Includes 20 new stores Work began in June 130 retail.
and an alfresco dining 2015 and is expected
Industry Super precinct. to take 14 months to
Property Trust complete.
Sturt Mall upgrade $33 million Approved.
Includes 24 shops, a Approved by the
Dexus Property multi-level car park Southern JRPP
and a Coles February 2014.
supermarket
Renewed Metal $50 million Proposed. Jobs:
Technologies Increase production of DA not yet submitted. 100.
expansion lead batteries from Enirgi Group has
42,000 to 150,000 by bought the adjoining
Enirgi Group transferring operations site for the expansion.
from a plant in Sydney.
The Rules Club Wagga $14 million Under construction. Jobs:
hotel, Glenfield Park An 80-room hotel and Work began in June 50.
conference centre. 2015.
Choice (Quality Hotels)
Southcity Shopping $30 million Under construction. Jobs:
Centre expansion First full-size Target Due for completion in 300.
store in Wagga Wagga. 2016.
Teys abattoir upgrade $50 million Approved. Jobs:
The plant will be able 200.
to process 1,429
carcasses, an increase
from 1,275 per day.
Estella shopping $13 million Approved.
centre, cnr Avocet and Includes a The project went out
Rainbow Drivs supermarket, chemist, to tender in May 2016.
café.National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 17
INFRASTRUCTURE - TRANSPORT
Project Value Status Impact
Riverina Intermodal $70 million Deferred. Economic benefit:
Freight and Logistics Intermodal container Funding remains an $20 million.
(RIFL) Hub, Bomen terminal, bulk goods issue after a private
precinct, rail and road investor went into
Wagga City Council infrastructure. liquidation.
Kappoka Bridge $55 million Under construction.
upgrade, Olympic Will improve safety at Completion expected
Highway a notorious black spot in 2016.
– 300,000 trucks cross
the bridge annually.
Freight train line, The $9.4 million Under construction. Economic benefit:
Rock to Boree Creek A 56km railway line Work began in October $2.5 billion.
will service the grain 2015.
industry.
Wagga Airport $4 million Proposed.
upgrade Funding will come
from Restart NSW
regional airports
program.
Eunony Bridge $9.8 million Proposed.
replacement,
Murrumbidgee River
Wagga Wagga Council
RESOURCES AND ENERGY
Project Value Status Impact
Gidginbung solar $30 million Proposed.
farm, Temora
Epho
Riverina Solar Project, $37 million Proposed. Jobs:
Yoogali Would power 12,000 100.
homes.
Solar farm, Bomen $18 million Proposed.
DA lodged in March
Southern Cross Energy 2016.18 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 19
NEWCASTLE
Central coast, NSW
Highlights
– Key regional centre for NSW – $2 billion in residential construction
– World’s largest coal export port – Upgrade to Newcastle port rail links
– $5 billion coal loading terminal – $350 million revitalisation of
– $1bil upgrade to airport/RAAF Base Newcastle CBD.
Suburb - Typical Suburb - Typical Suburb- units Typical
houses prices houses prices prices
Adamstown $510,000 Merewether $975,000 Adamstown $376,000
Adamstown Hts $600,000 Shortland $379,000 Merewether $465,000
Islington $510,000 Stockton $585,000 Newcastle $575,000
Kotara $518,000 Wallsend $400,000 Newcastle Wst $475,000
Mayfield $450,000 Waratah $450,000 The Hill $440,000
Newcastle has a rising economy and property market, having
benefited from major new projects in the city and the nearby
Hunter region.
The city has delivered solid capital growth over the past three
years and in the past 12 months some Newcastle suburbs
recorded double-digit median price growth.
Key projects keeping the Newcastle economy strong include the CBD revitalisation, residential
construction, upgrades to transport infrastructure and expansion of the Newcastle port.
Newcastle is already the world’s biggest coal export port and major upgrades to export facilities
occur regularly. A $1 billion upgrade to the Newcastle airport and RAAF Base is under way.
The city presents an appealing formula for property investors: affordable prices, an overall sol id
growth record and major impetus from economic activity in and around the city.
Location
165km north of Sydney (two hour’s drive from Sydney via the F3 freeway).
Newcastle is the second largest city in New South Wales.
It sits beside the Tasman Sea at the mouth of the Hunter River.
LGA: Newcastle City Council.
Neighbouring LGAs: Port Stephens Council and Lake Macquarie City Council.20 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
Economy and Amenities
Newcastle is Australia’s sixth largest city and one of
POPULATION
its oldest. It has a busy harbour, many beaches and
plenty of elegant historic buildings – including the
Newcastle LGA 2011: 156,000
Civic Theatre, Customs House, Station Master’s
Newcastle LGA 2014: 160,000
Cottage and the Court House as well as rows of iron-
LGA 2050 (projected): 193,000
laced terraced houses and a gothic-style Cathedral.
There is also Fort Scratchley – Australia’s only fort Newcastle region 2011: 308,000
Source: ABS & NSW Dept of Planning
that went to war.
Accessible within a 40-minute drive of Newcastle are the surrounding areas of Lake Macquarie, the
Hunter Valley wine country and the holiday destination of Port Stephens.
Newcastle’s economy is based on its port and interaction with the Hunter Valley. Newcastle has the
world’s largest coal port, but the facility also handles aluminium, iron and steel, grain and wood-
chip exports.
Australian Property Investor magazine described the region like this: “Mention of the Hunter Valley
conjures up images of a rural area studded with vineyards. The lush area is also famous for its horse
studs. This combination of wine, horses and country living is making the area increasingly popular
for retirees and those opting for a change from the bustle of Sydney.”
An emerging industry in the
Hunter region is creative FAST FACTS: University of Newcastle
industries, with about 5,000 One of the Hunter Valley’s biggest employers
people employed in media 24,000 students and 6,000 staff.
production, the performing arts,
advertising and internet services.
Between 2006 and 2011, the sector grew 11.7%, making it the fastest-growing in the state outside
of Sydney. The sector’s exports are worth about $1.4 billion to the state’s economy each year.
The Hunter Valley is also a key area for mining and power generation. Facilities in the region include
power stations such as Liddell and Bayswater, near Muswellbrook. The power stations are owned
and operated by AGL Macquarie. AGL took over the NSW Government power producer –
Macquarie Generation – in September 2014 to form AGL Macquarie.
AGL Macquarie produces 12% of the electricity needed by consumers in eastern Australia and 30%
of electricity needs in NSW.
Other assets owned by AGL Macquarie include the Hunter Valley gas turbines and the Liddell solar
thermal project. AGL Macquarie is the largest domestic buyer of NSW coal and employs over 650.
In June 2015, AGL opened a $310 million processing plant at Tomago, creating 300 construction
jobs.National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 21
Another major employer is the
FAST FACTS: Newcastle Airport
airport. The Newcastle airport
Worth $1.19 billion annually to local economy
runway is shared with the RAAF 3,346 direct & indirect jobs
Base Williamtown which means 1 million passengers each year.
civilian operations co-exist with a
military airfield.
Around 3,000 military and civilian personnel are employed at the base.
Property Profile
Newcastle appeals because many of its suburbs are affordable, relative to Sydney. It has also
delivered consistent price growth in recent years. After some decline in 2009, prices grew solidly in
many suburbs from 2010. The median house price for broader Newcastle put on double-digit
growth in 2012 and has continued to grow since 2013.
In its July 2016 edition of Residential Property Prospects 2016 to 2019 report, BIS Shrapnel predicts
Newcastle house prices will grow 6% over the three years to June 2019. The firm’s predictions are
always conservative and BIS senior manager Angie Zigomanis says economic factors such as
investment in the city centre and low unemployment rates have the potential to bring about a
better-than-forecast result in Newcastle.
Generally, Hotspotting regards Newcastle as one of Australia’s most under-rated markets. It has
strong prospects as an affordable alternative to Sydney, offering an attractive beach lifestyle,
proximity to the Hunter Valley and to Port Stephens, plus solid job prospects.
The impetus of the State Government's Urban
Renewal Strategy for Newcastle is becoming Residential Building Approvals
clearly evident; building activity significantly Year Houses Units Total
increased in FY2013, FY2014 and FY2015 – FY2015 295 526 821
especially unit construction – as the city strives FY2014 287 380 667
towards higher-density living to cater for FY2013 313 136 449
population growth. Source: ABS
CoreLogic RP Data provides further confirmation of this, naming Newcastle & Lake Macquarie as
the second best performing regional market nationally (the best being Illawarra) in the 12 months
to March 2016. CoreLogic says house prices in the region grew 8.1% in the year to March to a
median of $495,000, while unit prices grew 6.3% to a median of $406,000 over the same period.
In the region’s rental market, house rents increased 1.3% to $400 per week over the year.
Over 100,000 new dwellings will be needed in the Lower Hunter region by 2031, according to the
NSW State Government.22 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
Vacancy rates vary across the city and with NEWCASTLE VACANCY RATES
new dwellings coming on line, a rise in P/code Suburbs Vacancy rate
vacancy rates can be expected in some 2293 Maryville, Wickham 1.0 %
areas until the stock is absorbed. 2299 Lambton, North Lambton 4.0 %
2300 Newcastle inner-city 3.5 %
The affordability of Newcastle relative to 2303 Hamilton, Hamilton East, 1.6 %
Sydney is shown in the median house Hamilton South.
prices in the Mayfield suburbs ($435,000 Source: sqmresearch.com.au
to $450,000), Shortland ($355,000),
Wallsend ($379,000) and Waratah ($450,000), as well as the median unit prices in New Lambton
($326,000), Adamstown ($376,000) and Waratah ($311,000).
The Newcastle unit market can be summarised as follows:–
Suburb: units No. of sales Median price 1yr growth 10yr ave. Median
yield
Adamstown 28 $376,000 18 % 3% 4.9 %
Cooks Hill 35 $545,000 19 % 6% 4.7 %
Mayfield 16 $370,000 snr 5% 5.6 %
Merewether 64 $465,000 9% 5% 4.5 %
New Lambton 16 $326,000 3% 5% 5.4 %
Newcastle 143 $575,000 8% 1% 4.4 %
Newcastle West 31 $475,000 -9 % 3% 4.8 %
The Hill 51 $440,000 8% 5% 4.8 %
Wallsend 23 $367,000 3% 4% 5.4 %
Waratah 22 $311,000 15 % 7% 5.3%
Source: Australian Property Monitors. “No. of sales” is the number of house sales in the past 12 months; “10yr ave.” is
the average annual rise in median house prices in the past 10 years. “Snr”: Statistically not reliableNational Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 23
The Newcastle housing market can be summarised as follows (the list includes many but not all of
Newcastle’s suburbs):–
Suburb: houses No. of sales Median price 1yr growth 10yr ave. Median
yield
Adamstown 105 $ 510,000 -2 % 3% 4.3 %
Adamstown Hts 77 $ 600,000 1% 5% 4.2 %
Broadmeadow 34 $ 518,000 15 % 5% 4.6 %
Cameron Park 147 $ 535,000 9% 4% 4.8 %
Carrington 50 $ 485,000 4% 6% 4.7 %
Cooks Hill 66 $ 768,000 25 % 6% 3.8 %
Fletcher 61 $ 565,000 6% 3% 4.6 %
Georgetown 42 $ 526,000 11 % 6% 4.4 %
Hamilton 100 $ 603,000 7% 5% 4.0 %
Hamilton East 16 $ 848,000 snr 2% 3.6 %
Hamilton North 21 $ 515,000 5% 5% 4.8 %
Hamilton South 55 $ 895,000 16 % 6% 3.6 %
Islington 28 $ 510,000 2% 7% 4.7 %
Kotara 84 $ 518,000 5% 5% 4.6 %
Lambton 69 $ 540,000 8% 6% 4.3 %
Maryville 31 $ 598,000 0% 6% 4.3 %
Mayfield 219 $ 450,000 8% 6% 4.5 %
Mayfield East 47 $ 450,000 8% 6% 4.7 %
Mayfield West 29 $ 435,000 4% 5% 4.9 %
Merewether 163 $ 975,000 14 % 6% 3.6 %
Merewether Hts 22 $ 718,000 -8 % 4% 3.8 %
New Lambton 176 $ 576,000 5% 5% 4.1 %
New Lambton Hts 61 $ 630,000 13 % 4% 4.3 %
North Lambton 63 $ 500,000 11 % 5% 4.4 %
Shortland 78 $ 379,000 4% 4% 5.0 %
Stockton 75 $ 585,000 5% 5% 4.2 %
The Hill 24 $ 930,000 -14 % 4% 3.5 %
The Junction 13 $ 680,000 Snr -1 % 4.2 %
Wallsend 284 $ 400,000 3% 4% 5.1 %
Waratah 85 $ 450,000 3% 5% 4.7 %
Source: Australian Property Monitors. “No. of sales” is the number of house sales in the past 12 months; “10yr ave.” is
the average annual rise in median house prices in the past 10 years. “Snr”: Statistically not reliable24 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
Future Prospects
There are good prospects for real estate in Newcastle, based on
extensive spending on infrastructure and property CORE INFLUENCES
developments. There is $2 billion in residential building either Boom Towns,
proposed or under way, with support from the Newcastle City Government Policy,
Council and the State Government. Urban Renewal,
Transport Infrastructure.
A June 2016 map of Newcastle building activity shows 28
residential projects with a combined value of $1.6 billion in the construction pipeline, with more
proposals set to be lodged. Around 3,000 apartments will be added to the city’s housing stock as a
result, including 1,200 in the west end.
Mining and Resources
Despite the perception that the mining sector has deteriorated, the coal industry is an essential
pillar in the Hunter Valley. In FY2015, the mining sector supported around 3,400 businesses and
spent $3.4 billion on goods and services.
The coal industry accounted for a quarter of the Hunter Valley’s economy in 2015, though down by
$1.1 billion from the previous year, according to a report by the NSW Minerals Council.
The report, peer-reviewed by the University of Wollongong, says mining companies contributed
$4.8 billion into the Hunter’s economy in FY2015, including the $1.4 billion paid to 11,189 mining
employees.
Rail Infrastructure
There are upgrades to transport infrastructure impacting on Newcastle and the Hunter region.
These include upgrades to the rail system between Gunnedah and Maitland, near Newcastle.
The Australian Rail Track Corporation (ARTC) announced in 2009 plans to spend $1 billion on rail
upgrades in the Hunter region. The 10-year plan was to create a third track for the Nundah Bank,
plus two holding tracks for the Newcastle coal terminals.
The ARTC is also creating a multi-user train fuelling and stabling yard at Rutherford near Maitland,
according to the Newcastle Herald. The $125 million project will ease rail congestion around the
port terminals, by relocating the fuelling and provisioning of trains out of the port area.
A light rail system forms part of Newcastle’s inner-city revitalisation project and is predicted to
support an extra 10,000 jobs and 6,000 new homes by 2036.
Construction on the light rail project is expected to begin in 2017 and be operational by 2019. The
2.7km line will have six stops - Wickham, Honeysuckle, Civic, Crown Street, Market Street and
Pacific Park. The system will be able to move 600 people an hour in each direction during week
days.National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 25 Port of Newcastle The 98-year lease to the Port of Newcastle Investments consortium, made up of Hastings Infrastructure Fund and China Merchants Group, was finalised in May 2014, delivering the state $1.5 billion. The port is broken up into four precincts: Carrington, Mayfield, Kooragang and Walsh Point and each has a different industrial and commercial focus. Coal accounts for 95% of the volume of port trade, but the other 5% – the non-coal trade – accounts for about one quarter of the value. Newcastle handles 20,000 containers a year, the cruise ship industry is growing steadily and strong growth is expected in fuel. The ongoing expansion of facilities is significant for the region’s economy. It is expected that the port’s coal-loading capacity will triple once the expansions are completed. Current and future expansions entail investment totalling about $9 billion. Newcastle Coal Infrastructure Group (NCIG), which includes BHP, Centennial Coal and Felix Resources, has a $1.2 billion expansion under way which will double the capacity at the port’s third terminal. Port Waratah Coal Services (PWCS) has received approval for another $5 billion terminal (T4) to provide an additional capacity of 70 mtpa. A cruise ship terminal, shortlisted for funding allocated to the Hunter Infrastructure and Investment Fund by Restart NSW in 2015, is proposed for Dyke Point, Carrington. The 2015 cruise season was worth $15–17 million to the Hunter and is projected to bring 18,000 guests in the coming year, according to Tourism Hunter. If a cruise ship terminal is built, the number of visitors could double within five years. CBD Revitalisation Work on revitalising the CBD began in December 2014, with the $73 million transport interchange at Wickham expected to open in 2017. The interchange will integrate trains, buses, taxis, light rail, cyclists and car drop-off and pick-ups, alongside a light rail service from Wickham to the beach. The Hunter Street Mall will also receive a serious makeover, transforming the CBD into 50% residential and 50% commercial/retail. Included in the plans are an “eat street”, an entertainment precinct and around 500 apartments. Making a significant contribution to the CBD revitalisation is GPT UrbanGrowth’s East End project. Approved in April 2016, the development will occupy 1.66ha bounded by Hunter, Newcomen, King and Perkins Streets. It will encompass the historic David Jones building and deliver 565 apartments, 4,900m² retail space and 2,700m² commercial space.
26 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au The $200 million proposal has been designed so that it can be independently staged, thus attracting a broad range of private investors and developers. University of Newcastle The State Government plans to move sections of Newcastle University into the CBD to help revitalise the inner-city. Key projections for the university over the coming decade include increasing its student population by a third to 40,000, making it one of the top three regional universities in Australia. Construction has commenced on the $95 million university campus, with the NSW Government contributing $25 million towards the cost. By 2020, the university expects to have moved its business, law and creative arts faculties entirely to the CBD. Newcastle Airport Stage one of the $80 million terminal expansion, including a new arrivals hall with dedicated customs, immigration and quarantine facilities, was opened in February 2015. The new facilities have paved the way for international flights. Williamtown RAAF Base One of the squadrons created by the Federal Government’s $12 billion purchase of F-35A 58 Joint Strike Fighters will be based at Williamtown. Its facilities will undergo a $1 billion upgrade to accommodate the F-35As with maintenance on the planes creating an extra 250 jobs. The construction work, which began in May 2015, includes a runway extension, new crew headquarters, maintenance facilities, a systems centre and weapons loading centre. The fleet of F-35As is expected to be operational by 2018. Lockheed Martin, US defence plane manufacturer, has also opened a $6 million facility in the Williamtown Aerospace Centre. The facility is expected to employ 70 engineers and technicians in support of various RAAF radar and surveillance programs. BAE Systems, a global defence, aerospace and security company, signed a $126 million contract with the Australian Defence Force in August 2015. The contract involves operational maintenance and training of Air Force pilots to handle the Joint Strike Fighters when they arrive. Hunter Expressway With the completion of the Hunter Expressway in 2014, access between Newcastle and the Hunter Valley, and Sydney and the Hunter region, has become faster and easier. The expressway provides 40km of dual divided carriageway between the F3 Freeway at Seahampton and the New England Highway west of Branxton.
National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 27 Glendale master plan Glendale is likely to become a major regional centre and economic powerhouse with the Lake Macquarie City Council drawing up plans for the area. Covering 106ha, the region is c apable of accommodating 4,000 new homes and 10,000 residents. Council officials believe the town’s position at the geographical centre of the Lower Hunter, available land and its proximity to rail and road transport make it prime for redevelopment. A Council report says the Glendale regional centre has enough zoned land to meet future commercial and residential development beyond 2030. Lake Macquarie City Council also has a $92 million infrastructure plan for Lake Macquarie which aims to cater for an extra 12,500 people by 2025. Lake Macquarie Transport Interchange (LMTI) The LMTI is designed to ease congestion at a crucial intersection and improve accessibility in a key part of the Newcastle region. The LMTI will be a major connection between Glendale and Cardiff and is touted to unlock $1.5 billion of economic potential of nearby industrial and commercial areas, including the Pasminco site ($750 million); Knoll Group land ($630 million); and Stockland Glendale expansion ($120 million). It also has the potential to create 10,000 jobs and bring an extra $332 million a year into the region by 2020, according to a report in the Newcastle Herald in July 2014. Providing heavy road users with better access to the F3 freeway and the Port of Newcastle is listed as another benefit. The project is to be delivered in two stages, with stage one under construction. Funding has been shared by Lake Macquarie Council ($10 million), State Government ($12.45 million) and the Federal Government ($15 million). Stage two, yet to be funded, may include a train station at Glendale.
28 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
The following pages provide an updated matrix of current projects in the Newcastle region:-
ENERGY AND RESOURCES
Project Value Status Impact
Mangoola coal mine $1.1 billion Under Construction. Jobs:
expansion Planned to increase Approved by PAC in 150 operational.
production 30% to May 2014.
Xstrata/Glencore 13.5Mtpa.
Wallarah 2 coal mine, $1 billion Proposed. Jobs:
near Lake Macquarie An underground mine Amended DA 300 operational.
that will take 3yrs to submitted July 2016. Economic benefits:
Korean Resources build. $600 million pa.
Corp
Cobbora coal mine $1.3 billion Abandoned. Jobs:
Expected to mine 20 Site to be resold for 730 construction;
Cobbora Holding Co mtpa for 21 years. farming instead. 750 operational.
Mt Pleasant coal $2 billion Approved. Jobs:
mine expansion near Open cut thermal coal Coal & Allied sold the 500–600 construction;
Muswellbrook mine to provide 10.5 mine to MACH. First 200–350 operational.
Mtpa for 21yrs. production is due in
MACH Energy late 2017.
INFRASTRUCTURE - TRANSPORT
Project Value Status Impact
Williamtown RAAF $1 billion Under construction.
Base upgrade to Runway extension, Work started in May
accommodate new crew HQ, systems 2015. Fleet of F-35As
squadron of F-35As centre, maintenance, is expected to be
and weapons centre. operational by 2018.
Hexham Bypass $600 million Proposed.
15km of new road
State Government between the M1 and
Raymond Terrace.
Further expansion of $1.2 billion Under construction. Jobs:
export facilities, Expansion will double 4,100 construction.
Port of Newcastle capacity at port’s
third terminal.
NCIG (a consortium of
energy/mining firms).National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au 29
INFRASTRUCTURE – TRANSPORT Cont.
Project Value Status Impact
T4, Kooragan coal $5 billion Approved. Jobs:
loader Would expand the Approved October 1,500 construction,
port’s facilities by 2015. 80 operational.
Port Waratah Coal 70mtpa. $12mil in
Services support infrastructure
Port dredging, south $80 million Proposed.
arm of Hunter River Will create 10 new Currently addressing
berths to service bulk EIS concerns.
Newcastle Port Corp cargo.
Duplication of rail $285 million Proposed.
line across the Will remove a rail
Liverpool Range, near freight bottleneck and
Murrurundi increase coal haulage
from the Gunnedah
ARTC Basin.
Inner-city bypass, $280 million Proposed.
Newcastle A 3.4km bypass Feedback on the
between Rankin Park design closed June
State Government and Jesmond. 2016.
Tourle St Bridge and $100 million Under construction.
Cormorant Rd Will improve the link Completion expected
duplication between Newcastle, by late 2018.
the city's airport and
Port Stephens.
Newcastle Light Rail $510 million Proposed.
The rail service will The first tenders were
run from Wickham to called for in Feb 2016.
Pacific Park. To be completed by
NSW Govt late 2018.
Wickham interchange $73 million Under construction. Jobs:
Completion expected 100 construction.
in 2017.
Newcastle cruise $20 million Proposed. Economic benefits:
terminal $15–17 million.30 National Top 5 Boom Town Hotspots 2016 – copyright hotspotting.com.au
COMMERCIAL DEVELOPMENT
Project Value Status Impact
Air Warfare $550 million Under construction.
Destroyer Project Forgacs building 37
components for ships
Forgacs built in Adelaide.
Ammonium nitrate $600 million Approved.
plant, Kooragang Is. Approved in January
2016.
Incitec Pivot
Ammonium nitrate $50 million Proposed. Jobs:
storage and To be leased by 400 construction;
distribution centre, transport company, 50 operational.
Kurri Kurri Toll.
Bulk fuels terminal $50 million Approved.
expansion, Mayfield To be built on the old Community feedback
BHP steelworks site. was sought in April
Stolthaven 2016.
Black Hill industrial TBA Proposed. Jobs:
estate Suitable for freight PAC approved 3,500 direct;
and warehousing. concept plans in Nov 9,000 indirect.
2013.
Trinity Point Marina $388 million Under construction.
project 198 residential lots, Construction began in
250 tourism units, February 2016.
Johnson Property hotel, restaurant,
Group conference centre,
188 marina berths.
Aerospace Centre, $500 million Under construction. Jobs:
Williamtown 89ha: 103 lots for 8,500.
high-tech industries,
plus hotel,
commercial park.
Stockland shopping $100 million Approved.
centre expansion, 50 new stores. Approved July 2015.
Glendale
Mayfield East Village $17 million Proposed. Jobs:
shopping centre Coles supermarket, Plans lodged October 130.
Coles 14 specialty shops. 2015.
Stockland Green Hills $377 million Under construction. Jobs:
shopping centre Work will be carried Construction 1,500.
expansion, Maitland out in three stages expected to be Retail space will double
and includes a new finished in 2018.
David Jones store.You can also read
