The second half of 2019 saw increased levels of activity in the residential property market. 2020 is likely to be the litmus test to determine whether we are genuinely into better times or merely experiencing a bubble of post flood activity.
Townsville has a strong pipeline of projects proposed for 2020 including a number of developments around the North Queensland Stadium which is nearing completion (to be named Queensland Country Bank Stadium) including the Cowboys Centre of Excellence, a 166-room Double Tree by Hilton Hotels and pedestrian walkway linkages from the city centre and central precinct to the stadium. The $71 million Marine Tourism Precinct which will include a four-star hotel, new SeaLink ferry terminal, car parking, new ferry berths and two new high speed ferries is another development proposed for 2020. Some other projects include the currently underway Flinders Lane retail development along with a number of proposed mixed use residential and food and drink developments in the inner city and Strand precincts.
The inner city 4810 postcode had a good level of activity in 2019 and this is likely to continue in 2020. Suburbs within a five-kilometre radius of the city centre could see increased interest as inner city projects improve the amenity of the area. After an absence of sales in flood affected suburbs during 2019, we are likely to see these suburbs coming back to the market, providing a better understanding of the impact on value levels following this event.
The balance of the Townsville market will likely remain status quo whilst people monitor unemployment and job security factors. Overall, the outlook for the residential market in 2020 is positive with higher levels of market confidence and improving economic conditions.
COMMERCIAL AND INDUSTRIAL
Broadly speaking, the industrial market in 2020 is likely to be bolstered by the upturn in the mining sector along with construction projects and generally increasing levels of market confidence. Owner-occupiers currently underpin the market in the sub-$1 million bracket. We have seen a number of vacant land sales in the Northern Link industrial estate over the past 12 months, particularly within the 2000 to 4000 square metre land size bracket.
It would appear that this is the land size the market is seeking to construct new small to mid-scale high clearance start-up workshops, allowing enough balance land available for expansion if required. Older stock is typically on smaller land sizes with warehouses and workshops of a lower clearance and therefore in some cases not suitable for some specialist users.
It is anticipated that mining support businesses such as manufacturing and heavy engineering along with heavy vehicle service and support may see some expansion during 2020 on the back of the mining and construction industries.
Woolworths has commenced a major expansion of its distribution facility at Bohle which will reportedly make it the largest food and grocery distribution centre in North Queensland. Given Townsville’s geographic location approximately halfway between Cairns and Mackay and its nexus to Mount Isa, it provides a great strategic location for distribution. Lion Drink and Dairy is also in the process of completing a new distribution facility at Shaw including approximately 4700 square metres of cold room capability.
We are likely to continue to see southern investor interest for big asset industrial property with strong lease fundamentals due to the attractive yields available relative to their home locations with yields in the 6.5% to 9.0% range.
Source: Herron Todd White
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