A caravan or campervan is built every five minutes during the working week. It’s the fastest growing vehicle category in Australia. In 2017, 51.9 million nights were spent in caravan parks and that number continues to climb.
AN EVOLVING SECTOR
The caravan park industry is evolving, with different types of parks catering for various levels of short stays and long-term occupation - tourists, permanents, or a mix of both.
An increasing range of facilities is also being offered: powered and unpowered sites, ensuite and drive-through sites, camping, cabins and motel-style rooms. Modern holiday parks now feature amenities such as water playgrounds and cafes.
The permanent sector has seen the growth of Manufactured Housing Estates (MHEs), more akin to gated communities where residents own their own manufactured home and pay site rental plus metered utility costs.
SOLD IN ONE OF THREE WAYS
Parks are usually offered for sale in one of three ways. Freehold Going Concerns are parks where owner and operator are one and the same, responsible for everything from bookings to refurbishment. No rent is payable and they collect all profit after covering operating costs. Many parks, however, provide two distinct opportunities – the leasehold business and the freehold investment.
LEASEHOLD BUSINESSES
The caravan park lease, usually starting with a 30-year term, is sold to an operator (lessee) who conducts the day-to-day management of the business and often lives onsite. They aim to maximise occupancy, tariffs and net profit, are responsible for all operating costs, and pay the owner annual rent for the use of the land and buildings. While lease documents vary, generally the lessee is responsible for the supply and upkeep of all ‘chattels’ needed to run the park.
FREEHOLD INVESTMENTS
The land and buildings are owned as a Passive Investment by a commercial investor (the landlord) who is responsible for all structural repairs and is expected to maintain the standard of the property for the duration of the lease.
They receive an annual rent from the lessee that, depending on lease terms, generally increases annually by CPI, or may be subject to a rent review clause.
Caravan Parks in any form are considered strong investments, with banks happy to lend on all models. For the latest information on returns and lending ratios to expect in the current market, contact ResortBrokers on 1300 665 966 to speak with a specialist broker.
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