09 Dec 2021
Words Kelli Crouch, 312872 RLA Informer Issue 101

The Top End

The Territory is a relaxed and friendly place, yet it also benefits from a robust tourism and overall economy, and the smart money is chasing accommodation assets in this great part of the world.

One of the things most people notice when they drive around the Northern Territory is obviously the immense sense of space, dotted with surreal landscapes. From the natural waterholes in the Red Centre to the sprawling wetlands of Kakadu and Litchfield National Parks, the NT has more diverse landscapes to explore than most countries. Every time I visit, I feel like I’ve stumbled into another world.

Then, when you finally bump into someone, they often have a bit of a story to tell. Sometimes it’s true, sometimes not. Either way, this place is a unique combination of the beautiful and the bizarre and this is helping drive the tourism market.

Like the rest of the country, the past 12 to 18 months have been impacted by COVID-19 but all the statistics are pointing to the fact that the Northern Territory has performed better than other states and territories in terms of tourism. The overall economy is also powering along with several significant projects driving business confidence in the region. 

According to STR data, occupancy rates in the Northern Territory were at 58 percent for August 2021, which is the highest of all states and territories in Australia. 

How did this happen?

Border closures and lockdowns have driven demand for domestic tourism and The Top End has been relatively COVID-free and therefore seen as something of a “safe haven” from the uncertainty of dealing with the most destructive pandemic in our generation.

Australians are embracing the “good old fashioned road trip” in the wake of international border closures and accommodation assets that are located in areas that are relatively COVID-free are benefiting from this as well.

The domestic market traditionally serves as the Territory’s largest source of visitors anyway, including intrastate travel within the NT, as well as from the rest of Australia. NT Tourism is running eight marketing campaigns, including a Drive Campaign, which is aimed at building awareness of the NT as a destination for a drive holiday with a difference. As the rest of Australia emerges from lockdowns and borders reopen, this will turbocharge tourism in this part of the world.

Because of this, I’m now getting enquiries from a really broad range of buyers and investors from interstate who are interested in assets across the Northern Territory and caravan parks, in particular, are in high demand right now. 

I sold the lease to the Hidden Valley Holiday Park in Darwin recently to Lifestyle Villages, which has a large portfolio of similar properties across Australia. This rising demand for parks and resorts is also due to the fact that they often present multiple income streams and produce strong revenue. The cap rates on these regional caravan parks has remained largely unchanged for the past 20 or so years, until this year when they have tightened because of this surge in demand.

As soon as we list a caravan park in the Northern Territory, and especially if it’s good quality, we’re getting serious offers. In the past, parks would often take some time to get sold but now that’s changed dramatically.

Northern Territory Quick Stats

Occupancy rate 58%  |  Down 17% from August 2019

Room rates $218  |  Up 25% from August 2019 

RevPAR $127  |  Down 3.4% from August 2019

This is also down to the fact that over the past 15 years, the NT economy has experienced an ongoing pipeline of major project investments by both the public and private sectors, stimulating the expansion of the NT economy, exports and industries. It benefits from a strong resources sector and also because it is the gateway between Asia and Australia.

One piece of information that really caught my eye recently was a CoreLogic report that showed residential home investor funding in the NT soared by more than 82 per cent in August 2021, compared to the same month last year, as increased mining activity boosted the number of people moving from other states and competition for property.

For me, this really confirms the positive economic sentiment in the NT and also explains why the smart money is following that. END

Words_Kelli Crouch