16 Jan 2013
Words Tim Admin

Sunshine Coast on the Move

The remit given to me for this this article was to provide an overview of the market on The Sunshine Coast, in particular the state of the tourism industry and the management rights businesses that support it. I thought the best way to relay this information was to seek input from a number of resident managers and industry professionals who between them are far better qualified to comment than the press reports we often come across. Operators I have spoken with on the Coast have reported strong growth from their traditional drive markets as well as a boost in interstate and kiwi guests. The combination of a prolonged period of stunning weather, the overlap of interstate school holidays and a long weekend thrown in, has resulted in a period of strong performance. Many operators have also reported an increase in advance bookings, through the holiday season and into early 2013. On the flip side, whilst occupancy rates have been rising, some operators have indicated that their yield has been affected due to discounting to keep "bums in beds". However, after years of reports of lower than usual occupancy, supposedly caused by the cheap overseas competition and the strength of the Aussie dollar, it is simply wonderful to see the Sunshine Coast as busy as it is. Driving around on my daily errand (and I drive around a lot) I can honestly say I have never seen so many ‘no vacancy’ signs. Many operators on the Coast are saying it is the best season for years. The latest national tourism figures have provided one explanation to this increased occupancy. There appears to have been a renewed popularity of holidaying at home with the number of Australians taking a Queensland holiday increasing 6% to 7.6 million in the year to June 30. With the recent ‘I Spy’ campaign run by Tourism Queensland and the ongoing RACQ ‘Bring back the road trip’ campaign, we are starting to see a renewed push to holiday at home again. Good on you Australia...I personally think there a few better places on earth to take your holidays than in Queensland. Indications are strong that this trend will continue and take us closer to the goal of doubling overnight visitor expenditure to $30 billion by 2020. After an seemingly lengthy hiatus is also seems that buyers are returning to the management rights industry, albeit cautiously and selectively. Over the last 3 months we have seen numerous sales taking place right down the length coast. Permanent complexes have been a stand out in terms of demand, and mixed complexes with a good mix of permanent and holiday units are also in demand. The strong demand for quality permanent complexes on the Sunshine Coast must be tempered by the fact that the stock of these is somewhat limited. Buyers are still in the main a little wary of the holiday market; however as results continue to improve we are starting to see an increased demand for solid holiday complexes. Personally, I believe now is the time to buy into holiday management rights as I believe the market has bottomed out. Now more than ever, it’s critical for vendors to have all their ducks in a row before going to market. Otherwise it's the same old story - they simply won't attract the attention of serious buyers if they don't. Buyers becoming increasingly well-informed, well-researched and often know the market better than intending sellers do. Those wishing to sell still need to be realistic to market conditions; the old cliché still rings true…. ‘a property is only worth what someone is willing to pay’. We are seeing small buildings starting to sell despite low nets and often poor presentation as the improving housing market is freeing up purchasers who need to sell their house to buy a management rights business. We have also seen a dramatic slowdown of receiverships in the industry with low default rates with lenders. This suggests the industry is underpinned by reasonable performance and in most cases not too over geared. Whilst multipliers in the higher end / higher income properties have held up well, the real estate component in many cases has not. With mortgage stress affecting the real estate market with numerous fire sales occurring over the last 12-18 months, combined with a generally flat real estate market, we have seen values come off from 2006/7 by an average of 20-30% in many cases.