Below are the reasons why you to can be a Darwin Property Investor…
Having been almost entirely rebuilt twice, once due to Japanese air raids during World War II and again after being devastated by Cyclone Tracy in 1974, Darwin is one of Australia’s most modern cities.
The Northern Territory, with Darwin the dominant influence, ranks No.1 in Australia on numerous economic and real estate criteria. It currently has the lowest unemployment rate and is the national leader on growth in building approvals, by a considerable margin. It is also the national leader on growth in loans to owner-occupiers and loans to investors.
Housing demand is high and supply is limited, which is why Darwin has the highest residential rents among the capital cities, both for houses and for apartments – and by a considerable margin. The median house rent for Darwin is now $650 per week, while the typical apartment fetches $550.
Darwin experienced big rental growth in 2012 – median house rents up 16% and apartments rents up 20%, according to Australian Property Monitors – with prices following suit late in 2012 and early in 2013. It is undeniably the market growth leader among the state & territory capital cities. The Greater Darwin Plan, is based on projections that Darwin’s population will grow at least 50% by 2030.
Darwin is the main service centre for industries headed by mining, offshore oil & gas production, pastoralism, tourism and horticulture. The Port of Darwin is the main outlet for Australia’s live cattle export trade into South East Asia. The most important mineral resources are gold, zinc and bauxite, along with manganese and many others. The energy production sector is mostly offshore with oil and natural gas from the Timor Sea, although there are significant uranium deposits near Darwin.
Tourism employs 8% of Darwin residents and is expected to grow as domestic and international tourists are now spending time in Darwin during the Wet and Dry seasons. Federal spending is a major contributor to the local economy as well.
The announcement of the final investment decision for the $34 billion Ichthys gas project in January 2012 has put Darwin on an irrevocable course for growth. The development of the Marine Supply Base adjacent to East Arm Wharf, secures the city’s future as a major oil and gas supply and service centre. For Darwin – strategically placed as Australia’s closest capital to Asia, the growth opportunities over the next 20 years and beyond could not be brighter.
UPDATE: – Figures just in for 2015…
For the Darwin property investor the market has remained stable in 2015 and is continuing to record steady progress.
The Northern Territory and the Darwin property market generally has long suffered from an undersupply of available housing and land. Herron Todd White reports that this scarcity within the Darwin city limits is boosting prices across the city.
Darwin investment property is already relatively expensive considering its small size. RP Data reports there are six suburbs with a median price over $1 million in the city. On the flipside, just 19.2 per cent of properties are valued at less than $400,000.
The most affordable suburb within 10 kilometres of the CBD is Malak – however, the median price in this suburb remains an elevated $585,478, according to RP Data. Anula, Moil, Millner and The Narrows were also identified as cheap compared to neighbouring areas.
To combat the lack of affordability, the NT government has commenced a land release program to introduce 2,000 new properties onto the market. In mid-2015, this project will be half-way completed.
Part of the NT’s funding is dedicated to improving amenities and infrastructure near new estates.
In Palmerston, a $300 million shopping centre is currently in the works to support a new development in Berrimah Farms and Holze.
In the inner city, apartment development has reached new peaks. According to Colliers, apartment sales increased by 58 per cent over the June quarter, with demand driven by investors. As a result, older apartments have taken a hit and are dropping in value.
Through 2015 and 2016, Colliers estimates that 3,000 new units may be constructed.
Herron Todd White reports investors are active in the apartment sector because high tenant demand has led to impressive rental returns.
However, rents are beginning to flatten out as more investors buy into the market, Colliers warns.
Just outside of Darwin, Herron Todd White reports the rural residential sector is seeing sustained growth after a major upgrade to Tiger Brennan Drive. Moreover, although Alice Springs has been in a “period of consolidation”, the valuation firm believes houses under $500,000 should continue to grow over coming years.
Darwin Property Market Overview 2015
The Northern Territory and Darwin traditionally has a buoyant rental market.
Darwin attracts the highest rental return yields of any capital city in the country, according to RP Data.
Darwin Houses offer returns of 5.9 per cent and units up to 5.8 per cent.
However, RP Data warns rents tend to be flat in the city. Over the past quarter, the data showed no change for either house or unit rental rates.
A Herron Todd White report warns unit rentals may falter as more construction projects are completed and stock levels increase. The vacancy rate in the city centre has already increased from below two per cent in late 2013 to 3.9 per cent this June, SQM shows.
In Palmerston, by contrast, availability is tight and competition among tenants is fierce. Only 1.1 per cent of rentals are currently available, according to SQM. Rents have been tracking steadily upwards for several years, with houses increasing by 29.2 per cent since 2011.
Elsewhere in the state, rental conditions are fairly stable, SWM data shows. Alice Springs vacancy rates are at a healthy two per cent. But, in Katherine just 0.7 per cent of rentals are available.
Over the past three years, the median rent in Katherine has been volatile, which could be attributed to the small size of the market. However, since 2011, house rents are up by 24.9 per cent and units by 20.9 per cent.