Gladstone's mining is booming, but property market far from unified in Queensland hotspot

The Queensland location Gladstone, 100 kilometres south of Rockhampton, is a much-touted mining boom hotspot.

But how much do interstate investors really know about the area?

Gladstone is a mining boom town with a vast number of liquefied natural gas (LNG) and coal projects in development.

Santos and Petronas are developing the multi-billion dollar Gladstone Liquefied Natural Gas project, which will process coal seam gas into liquefied natural gas. The project is anticipated to provide 6,000 jobs during construction.

Australia Pacific LNG is a joint venture between Origin and ConocoPhillips to build an LNG plant at Laird Point on Curtis Island. The project will create an average of 10,300 jobs for each year over the 10-year construction period, reaching a peak of 18,600 direct and indirect jobs.

There’s Gladstone LNG, a plant at Fisherman’s Landing in the Port of Gladstone, capable of producing 3 million tonnes of gas per year. It will hire 150 people during construction and have 36 permanent employees.

Queensland Curtis LNG is developing a liquefaction plant on Curtis Island, just off Gladstone, with an capacity of 7.4 million tonnes per year. Construction of the project will provide 3,00 to -4,000 jobs and 800 permanent positions.

And there are plenty of other project mooted and in the works. Property investment experts are spruiking the area as a property hotspot due to the volume of mining activity. 

The Real Estate Institute of Queensland predicts the population of Gladstone will double by 2031.

ANZ’s Australian Housing Chartbook found property prices in Gladstone increased nearly 16% for the year ending March 2012, outperforming all other areas in the state. In April, Queensland Valuer-General Neil Bray found land values in the area had increased 19% over the year.

In Property Observer’s recent analysis of hotspots touted in 2011, we found Gladstone was one of the only celebrated areas to have lived up to expectations. 

However, the most report on Gladstone from PRDnationwide notes there are a number of headwinds facing investors in the area.

PRDnationwide predicts property and land prices will begin to ease egin to ease once new and more affordable housing projects are completed, such as Devine's $1.4 billion Riverstone Rise community, which is being completed in stages over the next 15 to 20 years.

The project is in Benaraby, approximately 20 kilometres south of Gladstone City, and is being built with the aim of providing an affordable and diverse alternative to the offerings within Gladstone City.

The PRDnationwide report says that high rental yields can still be achieved in the current market, but warns investors to be diligent to not only buy at the right price, but to buy something that has competitive tenant appeal.

“Vacancy rates have been quiet turbulent during the first half of 2012, as investor demand grossly outstrips owner occupier demand,” says the report.

“Uncertainty surrounding rental vacancy is exacerbated by an ever expanding fly-in, fly-out workforce, with many workers vacating to mining/construction campsites.

“As a result, many investors are forced to make sizeable revisions to their rental price expectations in order to secure a tenant on a reasonable lease. Given the current median prices recorded across all markets, there is no doubt that some investors, particularly those who entered the market in 2012, paid a premium on their investment with a heightened expectation of strong cashflow.”

In Gladstone, the residential area is made up of nine suburbs: Clinton, Glen Eden, Kin Kora, New Auckland, South Gladstone, Sun Valley, Telina, Toolooa and West Gladstone.

Source: ABS, RP Data

RP Data has no information on the whole area, but an analysis by Property Observer of all its suburbs indicated median house prices increased 16.5% while units dropped 1.95% over the year.

According to RP Data figures, South Gladstone was the strongest-performing suburb in the city. The unit median price went up 19.2% over the last year while the house median went up 23.9%.

For more, download our free eBook Residential Property Investment Amid Queensland's Resources Boom.