Are the properties in the minning towns in central Qld a good long term investment or have they had their day? I have checked some out that are for sale,and the returns are good, however, my concern is that one the money has already been made, and if the current mining contract ends, eventhough the mine will still be there, they may not require the rental accommodation thus the rental demand may fall and also the house prices in the area may fall also.
Miners generally aren't buyers in the area that they work (they are itenerate). How long is the boom going to last (until China & India run out of money). Will the mines pack up and go? Yes, eventually. You will need to find out the life of the mine, its viability and whether there are any other industries which will survive without the money from the mines.
In the mining towns I have invested in I researched the $$ spent on infrastructure. Outside of the game, we may find it difficult to make the call on what world coal prices will do, I certainly dont pretend to understand the economics behind it all, HOWEVER, I collect confidence from the confidence of the big players in the field. That is always a good place to start. Yes, mines may eventually close down, that is something that you need to consider. But to a degree, price decline can happen anywhere. Look for a town that has other sources of employment as well.
MickAbout 4 years ago we bought an IP in Mt Isa. We sold it 12 months later, mainly because the property management side of it was a nightmare, but also because prices stopped rising. We thought that the market had hit its peak. Over the next two years prices in Mt Isa doubled and have increased more in the last 12 months.
Who knows what the market is going to do?
But beware management of properties in small towns where there is no real competition amongst property managers. Every month we had to call up to get the rent paid into our account. Every month we were told that the PM didn't have our banking details. Every month we told the PM it was the same account as the previous months. Repairs were undertaken without our authorisation, repairs we authorised were still not done 6 months later, inspections were done that all came back excellent and then two weeks later we were given lists of repairs that cost thousands of dollars.
Capital growth and or rental yields may be great in these towns but at what cost? I lost a fair bit of money in dishonour fees with my bank because the money was never there in time to pay the mortgage. And I nearly tore my hair out several times. Never again.
Cheers
K
Towns west of the coast in Nth Qld in the Bowen basin are probably at there peak almost.
Most of the miners that live there don't pay the rent, there company does.Towns such as Mackay, Rockhampton & Gladstone are where most miners family's live.
Nth Qld has only a small amount of fly in fly out workers as there is a large labour pool in the coast areas.There is still plenty of growth on the coast and less restrictions.
Its almost like a half bet ( Towns like this although growing with the boom are not just reliant on coal )
Where as Moranbah would fall out tomorrow if coal prices drop.Good news… Development and infrastructure is slowly winding down but is still happening. New mines for 08 , 09 , 10
have been moving through feasibility stages quicker as coal prices soar.Have a look at where the state government is spending a large proportion of their infrastructure budget, and you'll find a lot of it is focussed on that Bowen Basin/Ayr/Central Qld region near the Abbott Point Coal Terminal, and the (what appears to be) new Mt Morgan Gold Mine. I know that Ayr has just had a major residential development approved (500 home sites) with more to come. Surrounding areas are starting to notice too now that government has got hold of some huge parcel of land around Abbot Point (in the region of 1500ha or something like that), so people are saying now "gee we may need to be close to all this"..
Depends on what kind of investor you are and what view you take. I personally look at where government is spending millions of dollars on new roads, new transport nodes, new water/power etc. I then look at the mines and energy spending, and then finally look at where the larger develpers are investing their time and money. A combination of those factors will usually (and I qualify that by saying do your own research) suggests that there is a lot of interest and potential growth in an area. Central and North Qld are still emerging in a lot of ways, some sectors have peaked, some are just starting to become interesting.Ultimately its your choice where you go and what you do, but good luck with whatever that may be.
M007Miners generally aren't buyers in the area that they work (they are itenerate). How long is the boom going to last (until China & India run out of money). Will the mines pack up and go? Yes, eventually. You will need to find out the life of the mine, its viability and whether there are any other industries which will survive without the money from the mines.
This is generally the case.
However, there are certain "lifestyle" locations available that allow miners to work and live in the region. Companies such as xstra are advertising for workers in these locations – people buy in these places.
Is the town a pile of red dirt or a proper town with other things going for it????
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi Guys
I live in Emerald In Central QLD, in the centre on the Bowen Basin. Yes, Emerald has boomed and prices has not moved since Nov 2006, but rent are still very strong and demand is not met. Emerald is a Hub Town – population of Approx 18,000 where most miners and other workers buy their own house, after some years of renting. Yes there is a lot of fly in/out workers as well, but people move their families here for the long haul.
I am an accountant here and some months ago one of the mine executives with one of the largest mining companies made the following comment " If people only knew what the mines are planning in the next 5 to 10 years" This mine is currenlty sitting on another 80 to 120 years of coal at current levels of production. If they double the production and don't expand they will still mine for another 50 years. Emerald has an exellent source of water in the Fairbairn dam that supports lot of agriculture, like citrus, cotton, wheat and lots of cattle.
Also look at the following links regarding a new coal mine development in Alpha which could open the Galilee coal basin.
http://www.abc.net.au/local/stories/2008/07/16/2305401.htm?site=westqld
http://www.supplychainreview.com.au/article.cfm?StoryID=35639&SiloID=0
Yes, these are still only in the planning process.
If you have any questions regarding surrounding areas, I will be happy to assist.
Annemarie
If companies spend tens of millions of dollars to set up, I highly doubt that will pack up shop 12 months later if commodity prices fall. For example, if coal was to drop in price by a third, it is still viable for the mines to keep on mining. IMO they will amp up production regardless to keep theyre share price high.
http://news.bbc.co.uk/1/hi/programmes/newsnight/4330469.stmAnd that is exactly why I have invested in rental properties in mining areas. My most recent ones are in the lower Bowen basin where there are several major employers. There will always be more and less risky towns to invest in, it is up to the individual to determine their "risk comfort level" and apply that to their investing.
Is Moura the next Moranbah?
be nice if it is
, you will hear me chear from here!!!ben_113 wrote:Towns west of the coast in Nth Qld in the Bowen basin are probably at there peak almost.
Most of the miners that live there don't pay the rent, there company does.Towns such as Mackay, Rockhampton & Gladstone are where most miners family's live.
Nth Qld has only a small amount of fly in fly out workers as there is a large labour pool in the coast areas.There is still plenty of growth on the coast and less restrictions.
Its almost like a half bet ( Towns like this although growing with the boom are not just reliant on coal )
Where as Moranbah would fall out tomorrow if coal prices drop.Good news… Development and infrastructure is slowly winding down but is still happening. New mines for 08 , 09 , 10
have been moving through feasibility stages quicker as coal prices soar.I'm unsure about your source of info as development and infrastructure is just taking off now in the Bowen Basin area.
Just yesterday I was at Abbot point meeting with Coal Stream alliance, John Hollands and just returned from Collinsville power station upgrade and Dysart area at the new Vermont Coal.As for peaking towns , I see many towns increasing every day.
, you will hear me chear from here!!!
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