Economy

Wish you were here on the Gold Coast: Gottliebsen

SmartCompany /

I’ve just spent some time on the Gold Coast and discovered some trends that will be relevant for other parts of Australia.

Normally, when interest rates rise, the Gold Coast is one of the first areas to go into a downward spiral, but this time, while the residential market is tougher, there has not been a collapse.

The first force holding the market is the region’s population increase, which is causing a shortage of dwellings. Many areas of Australia are also experiencing higher populations leading to dwelling shortages. The biggest source of new Gold Coast residents is young people coming up from NSW to escape the problems in that state.

All indications are that this trend will continue for some years, so both residential and commercial developments are being prepared to cater for the long-term growth. But inland from the Gold Coast, in places like Helensvale, many residents are having great difficulty servicing their mortgages.

But there is a second source of optimism in the up-market coastal areas. Domestic regulations in South Korea now allows its citizens to invest in Gold Coast developments – and they are showing great interest.

The Korean investment will not be anywhere near that of the Japanese in the 1980s, who undertook enormous development on the Gold Coast and then sold out during Japan’s 1990s downturn. The Japanese sell-down lessened Gold Coast tourism promotion and these days Japanese tourism is well down. But South Korea has been rising.

The two other international tourism growth markets are mainland China, Taiwan and the Middle East. The Chinese are only allowed to buy units up to about $2 million under their currency repatriation rules. But they are allowed to buy businesses and, in time, this exception will be extended to property.

Visitors from the Middle East tend to come during the Australian winter months. So far they have not been major buyers, but Gold Coast veterans are optimistic that will change with time, as the Middle Eastern people follow their tourism with investment.

It is likely that South Koreans and later Chinese and Middle Eastern investors will extend their property buying to other parts of Australia.

The widespread shortage of dwellings and enormous sums being invested in infrastructure means that, so far, the Reserve Bank’s engineered slowdown has not been severe on the building industry outside western Sydney and similar pockets.

Where the slowdown is really starting to bite, however, is in small retailers.

This first appeared in Business Spectator

 

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