Bowen Basin QLD Mining Towns - Opinion on offer

Hi everyone,

I've just returned from a study tour of mining towns in the Bowen Basin in QLD. This is a massive coal bed inland from Mackay, and the major contributor to QLD's coal industry.

I bought a couple of properties in the area at the end of last year, and wanted to get a feel for the towns.

I visited:

• Nebo
• Moranbah
• Dysart
• Middlemount
• Dingo
• Bluff
• Blackwater
• Emerald
• Capella
• Tieri
• Clermont

I also spoke to a number of REA's.

If you're considering investing in any of these towns, and would like to ask someone who has eyeballed them, ask away...
They are surprisingly different from each other.

Cheers,

Daedalus.

http://www.theproductivityhabit.com

I am looking at investing in Middlemount, what information can you provide to assist with my possible purchase, is their any  potential for capital growth?

Hi lou73,

The majority of houses in Middlemount are owned by one of the mining companies (Capcoal, off the top of my head). They have a couple of mines around the town, but there are also 2 other mining companies with working mines in the area.

Capcoal provides the housing to their workers. Since they own most of the town, if you don't work for them you have a hard time finding a house, either to buy or to rent. A lot of workers around middlemount live in Dysart and drive the hour or so each way to get to work.

Middlemount is a pretty nice town - the mining companies have invested in making it a nice place to live. Nice town centre, shopping centre (small), parks, child play areas etc. It's one of the nicest in the Bowen Basin.

Due to the shortage of supply, you would expect house prices AND rent to be high. This is borne out by the property that's on realestate.com.au at the moment http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104595446&emailsource=emailalert. In Dysart, this place would go for about 330-350K. This is the first existing property to go on sale in Middlemount for a couple of months at least, so you might have trouble getting a bank valuer to agree. Shortage of supply means you'll probably get a good sell price as well, but it's hard to see a 3BR highset appreciating rapidly from that $480K asking price.

There's a new development going on in the town, with prices in the 300's and expected yields of about 700pw. There are about 70 homes in the development, and it's feasible that this kind of return is possible. It's at stage 1, and you can buy off the plan at the moment.

Middlemount is quite remote, so maintenance and property management is quite expensive, so a newer place is probably a better bet. There is talk about improving the road to the northeast, which would make Mackay almost reachable for a day's shopping trip.

Hope that helps,

Daedalus.

http://www.theproductivityhabit.com

I have some relos very keen on Nebo - they have been to investigate and are thinking about a development.

Nebo is a funny one. There are a few mines nearby, but it doesn't have a boom feel to it. It is predominantly a cattle town.

At the moment there are a number of vacant and unsold houses. Some of these are actually leased though to one of the energy companies.

There is talk of Nebo being set up as an 'inland port'. I understand this to mean that they will set up heavy manufacturing and servicing here e.g. they will build and service rail rolling stock for use within the basin. The advantage this would have is that Nebo is already up on the tableland where the basin is. It's another hour or two down to Mackay, and so Nebo would save a lot of hauling up and down the hill. If this comes off, Nebo would change appreciably.

Nebo is close enough to the coast that workers in the local mines often just live in Mackay and drive or bus to work. Some work 5 days/5 days off, and this lets their families enjoy a coastal lifestyle. This would seem to be infinitely more interesting than living in Nebo, unless of course you were born and bred there maybe.

Really nice pub in Nebo though :)

Daedalus.

http://www.theproductivityhabit.com

What about dysart how does this mining town compare to middlemount in regards to facilities and infrastructure

Dysart is a bigger town, and is more central. It services large mines to it's North and South, and accommodates people who work near Middlemount. As a town, it is less 'artificial' than Middlemount. It started life like Middlemount in the 80's, but the mining company has been selling off housing for a long time - so there is a much higher level of ownership by residents and investors. Dysart has grown beyond the Middlemount style, and feels like it's getting it's own momentum. It is still only supported by mining though - no agriculture etc...

The shopping facilities are almost on par with Middlemount - there's an IGA and a few small retail blocks. Middlemount's is better though, which seems strange at first because it's a smaller town. Makes sense when you consider that Capcoal invests to attract workers.

At least one of the mines near Dysart is opening a new pit, and the new project near middlemount means a surge in demand for accommodation. The mines are owned by different companies, so there is some diversification there. It's about 2.5 hours from Mackay, so not too far for a day at the coast.

Note that maintenance is expensive. This is due to a couple of factors including captive market and very high disposable incomes in these towns. This is the reason the rents are high, but it also means other costs are high as well.

For building and pest inspections you are best off to use people from Mackay. I can supply contacts that I've used.

DISCLAIMER: I have a property in Dysart which I bought sight unseen. Now I've seen it and the town I am not disappointed in either the house or the town. My tenant is a construction company, and the rent has been very reliable.

Daedalus

http://www.theproductivityhabit.com

thanks for information, it has assisted me with deciding to invest in a mining town or not !!!

If you are looking at investing in any of these towns, I would go for Dysart. Dysart has grown a lot and has a new mine opening up there. Middlemount has had one of the mines there close down recently.

How do I know, I live in one of these towns.

You shouldnt have bothered visiting Tieri.....it is a closed town, cant by any houses there.

Rent is highest in Dysart and Moranbah.

Dingo, Bluff and Capella are not good options as far as I am concerned.

I agree with your analysis. I wanted to see Tieri to see if the real thing matched my expectation - which it did.

Which Middlemount mine closed? An open pit or underground? I know there are works on 2 or 3 new ones - I'd assumed that they were new pits to replace a pit that had been mined out.

Have you been up there long?

Daedalus

http://www.theproductivityhabit.com

Hello,

I am just wondering if you need some sort of permission to copy an add off realestate.com and make an example of it on your  email below?? As the owner of the property you make comment on I am not particularly happy with this and will be seeking advice as to whether this is allowed to occur....

Thanks
Kristy

Hi Kristy,

The short answer is that I don't know if you need permission, but I doubt it. 

The information (realestate.com.au advert) is in the public domain, so I don't see why it would be immune from comment. I didn't pick on your ad in particular, it just happened to be the most recent one that I was aware of when the post was made.

The post is only my opinion, and I don't see it as particularly imflammatory. This forum is all opinion. If you disagree with mine, put yours up here. That's OK, it's what the forum is for.

I'm surprised it hasn't sold yet, as I said in my post, Middlemount is one of the nicest in the area.

All the best
Daedalus.

http://www.theproductivityhabit.com

what are your thoughts on Ayr and the surrounding areas given the infrastructure/mining going on in areas between there and Townsville?

Hi Matt007,

I haven't been to Ayr or Townsville, so can't really offer an opinion on them.
As I understand it, a fair proportion of Bowen Basin coal goes out through Bowen, and Ayr isn't far away. If there's infrastructure development going on, that's a growth sign though...

Regards,

Daedalus.

http://www.theproductivityhabit.com

I would be interested in any thoughts on furthur South in the Bowen Basin? Around Biloela, Moura, Baralaba etc.
Cheers
Tammy

Hi Tammy,

The furthest south that I got on my trip was Blackwater/Emerald. When I was researching those other areas last year, I found that the yields were lower than further north. At the time I thought this was because they were a bit closer to Emerald which had already boomed, and also a bit closer to the coast.

There wasn't anything that met my investment criteria, so I didn't visit. There is a bit of interesting coal seam gas mining happening in the southern parts of the basin. I'm keeping a casual eye on this.

It still comes down to the investment criteria though.

Good luck,
Daedalus.

http://www.theproductivityhabit.com

G'day Daedalus,
I would like to thank you for putting this very informative post and taking the time to answer people's question.

cheers,

There is no passion to be found playing small - in settling for a life that is less than the one you are capable of living - Nelson Mandela

DISCLAIMER: Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

The new underground mine going in sparked my interest. It is supposed to be the biggest underground coal mine in the southern hemisphere (or something like that).

Daedalus I live and work in these areas in Bowen Basin you speak about.

Nebo has boomed in the last 2 yrs with prices going through the roof.

If you had of visited say 5yrs ago if you blinked you would have missed it. But you are right many are staying in the camps and travelling back to Mackay

I would like to say you are on a winner in Dysart, I just returned from erecting a substation for the Vermont  mine that is just starting to be constructed by Thiess. The Mac camp is fully booked out with no accomodation for the next 12 months. They just extended it by 200 rooms and still booked
We had to rent a small shack for the entire 12 months even though we only needed it for a few months at a time due to no accomodation at approx $700 per week
The motel is virtually booked out constantly @ $150 per night  and the Jollie collier also booked
Vermont coal mine wash plant is about to be erected and another  two more mines starting up nearby.
The dysart substation will be upgraded this year for more expansion in the coal power area with some large residental lots under construction.

If you want any other info you will find me at  www.reao.com.au aka Builder Bob, drop me a pm

Building & Renovating, DIY Projects need help ask here:
http://www.reao.com.au/forum/forumdisplay.php?f=59

Hi Guys,

Just wondering, I am looking at a property at the moment that is in QLD but not a mining town. It appears that the property could return 12% as is, but also has the potential to build another home beside it as it is currently on 2 titles. Just wondering what return should be expected from mining / regional towns. Steve touched on it in his book, that he expects higher returns but didn't really stipulate what is reasonable. I feel it may be a little risky, which requires more danger money!!! Can any one help out with advice?

Tania

It appears that the property could return 12%

I'm guessing it does not have a tenant?
What town/city are you considering as there is lots of BS by agents floating about?

Building & Renovating, DIY Projects need help ask here:
http://www.reao.com.au/forum/forumdisplay.php?f=59