18 Apr 2023
Words Todd Warner Informer 106

Up, Up & Away

The Gold Coast is back. The beaches are full, the cafes are buzzing, and the restaurants are pumping. I’m a Goldie local and I’ve never seen the coast busier, especially over this Christmas season just gone.

Every operator I’ve spoken to without exception has told me their Christmas was the busiest ever. And the happiest, too. Having been couped up for so long during the pandemic, holidaymakers were in a great frame of mind because they were out with their families and friends enjoying a terrific holiday. While Covid is still a fact of life, this was the first full-on Christmas we’d had since lockdowns began, and what a belter it was. Even the weather was back to its beautiful best. 

We’ve got record room rates, record occupancy rates, and guests are staying longer and spending more. Operators have come through an extremely challenging three-year period and their businesses are back and performing stronger than ever. A Burleigh Heads client, who operates a 110-key property, told me he’d had the highest grossing December in the 26-year history of the complex. He reaped more revenue in that one month than any other in the entire history of the building. It just goes to show you that the Gold Coast is back, baby!

At the end of January, operators will have a consistent 12-month picture of how their businesses are going because they’ve cycled out any impact from Covid. Talking to operators, valuers and accountants, if you read the signs there’s a lot of management rights businesses who are getting their figures ready for sale. Some of those include operators who were probably ready to sell prior to Covid but were forced to dig in when the pandemic hit. Now, they’re in a position to sell and get the price they’re looking for because they’ve finally got the numbers to back it up. I expect we’ll see a lot of stock come onto the market for this reason. My fellow brokers who cover the Gold Coast with me feel the same regarding their patches. We’re all seeing the same signs that this will be a year of movement across the industry.

All this means there’ll be a lot of choice for buyers. Being a nationwide company, ResortBrokers is able to track listing enquiries across the nation. In 2022, our listing enquiries were up a staggering 52.9 per cent in Queensland, with the Gold Coast accounting for an appreciable proportion of that. 

The migration from down south to premier lifestyle locations like the Gold Coast, and the attraction of being your own boss in a management and letting rights business, is fuelling demand.

For vendors, it doesn’t necessarily mean multipliers will be through the roof, but they’ll certainly continue to be strong. Multipliers still depend on the key fundamentals: your net profit, the length of time remaining on your term, the quality and size of your business comparative to others in the market. There are still healthy multipliers pushing 6x for high net businesses circa $600,000. We’ve got a couple of $1m net clients looking to move on, and once they sell, we’ll have some great benchmarks to compare the current market to for that high-end of town, which has been tightly held for some time.

None of this surprises me. People still see the Gold Coast as a great place to invest. We’ve got both local and interstate investors ready to throw money at the coast. Local tourism is set to thrive for a long time yet while most Australians still won’t travel overseas with confidence. They’re coming to the Gold Coast in droves and certainly are coming back more often. That’s the trend we’re seeing and we’re going to see a lot more of it in the years ahead.

The Goldie’s permanent long-term residential market is also extremely strong. That was the case right throughout Covid. Everyone knows we’re in the midst of a national rental crisis. Vacancy rates for rental housing have dropped sharply and rents are rising faster than incomes around the country. The Gold Coast’s residential market is experiencing the lowest rental vacancy rates in history, about 0.8 of a per cent. In this market, having a residential management rights business is like gold and they are very tightly held. When they do come on the market they go very quickly, and there are a lot of off-market deals happening in this space. That’s probably true with every other market, but none more so than the Gold Coast because we have high interstate migration and a construction and development boom, so there’s a lot of people moving to the coast to rent. What’s more, the value of the underlying real estate has grown through the property boom like everywhere else. So, that’s a strong segment of the market and one that will continue to be in favour with banks and lenders, and in high demand from buyers.

All in all, whether you’re a vendor or buyer of a short-term letting business or permanent residential one, 2023 is shaping up to be an exciting time for the Goldie. Watch this space. END