Resources boom – and Emerald property price rises – just beginning: Terry Ryder
Rumours of the death of the resources boom have been greatly exaggerated. But media chatter to that effect has penetrated the psyche of some investors who have started to fret and delay decisions.
A message that “the boom is over because China is slowing down” is typical of the simplistic twaddle peddled by economists suffering from limelight-deficit syndrome and repeated by lazy journalists.
One lukewarm press announcement by BHP Billiton and suddenly the chooks are running around clucking about the end to the good times.
In reality the resources boom is only just starting. Brisbane property adviser (and national buyers’ agent of the year) Simon Pressley says we should be calling it “the resources revolution”, and I agree. The global change inspired by new growth nations like India and China will extend decades into the future, as will Australia’s role in the process – though not without hiccups along the way.
Rio Tinto says it sees no slowdown in overseas demand and is full steam ahead with its iron ore expansion plans. Ditto Fortescue Metals, Hancock Prospecting and the companies that are advancing the mega gas projects.
Hancock, headed by Gina Rinehart, who has been branded our wealthiest individual, has strongly advanced its two biggest ventures in the past week or so. The $7 billion Roy Hill iron ore mine in Western Australia has won the right to import skilled workers from overseas, and the $6.4 billion Alpha coal project in Queensland has won state government approval.
Apparently Rinehart hasn’t been informed the party is over.
The job of property investors is to tune out all the background static from the chattering economists and grandstanding politicians and focus on the end game, with a long-term perspective.
Ignore all the “white noise” in the media, look at what’s really happening and try to see where the opportunities lie.
The Alpha coal project has won government approval. It involves a major coal mine and a 495-kilometre rail link to the Abbot Point export facility. It will create 3,500 jobs. It is one of three multi-billion-dollar projects focused on the Galilee Basin, which is shaping as the nation’s new boom mining province. Rail links are planned by each of these entities, plus new export facilities.
Where lie the investment opportunities? Is it the tiny town of Alpha, the nearest settlement to the mining action? Is it Bowen, where Rinehart’s rail link will join up with the Abbot Point export terminal, which is rapidly expanding? Is it Mackay, a key regional centre with export facilities (also to be expanded) a little to the south?
Or is it Emerald, one of the most fortunately located towns in regional Australia?
Emerald is a regional centre of almost 20,000 that services agriculture and mining. The well-established Bowen Basin coal-mining province lies to the east and north-east, while the new Galilee Basin is to the west.
Emerald already has a very busy airport, with lots of fly-in-fly-out traffic, even before the mega mines of the Galilee Basin crank up. Residential vacancies are miniscule and the median house price rose 12% in the March Quarter alone.
Its long-term capital growth rate is 13% a year and rental yields above 7% can be found.
It sounds like a place of opportunity – unless you’re hooked into the boom-is-over mentality.
The Mark at Sydney's Central Park
It’s scary, really, how little people know as they consider spending hundreds of thousands of dollars: Terry Ryder
To succeed, you have to go deeper, look behind that shallow analysis of economists and property research firms, and understand what’s happening at a more micro level.