Investors should not shy away from properties on the Gold Coast due to the poor performance of the tourist rental market, according to a leading researcher.
Savill’s national head of research, Tony Crabb, told Real Estate Business that investors need to do their homework since while the sector suffered during 2011, the residential market has remained steady.
“It’s a residential market and it’s a tourism, holiday house market but people often get the two confused,” Mr Crabb said.
“That’s where a lot of the problems lie in terms of the information that runs around and how various assets perform.
“What’s happening now is that the residential market up there seemed to be fine – and that never had any problems to begin with. But the tourism market is in a fair amount of trouble for several reasons.”
The holiday rental market slump may stem from an oversupply of developments, he suggests, while the strong Australian dollar is encouraging Australians to holiday overseas.
“There’s plenty of residential on the Gold Coast and the residential there performs much like everywhere else,” he said.
Mr Crabb predicts the market will not dip much deeper, but neither does he see any growth in the near future in either the residential or tourism sectors.
Investors need to ensure that their strategy is clear.
“Most people invest in the Gold Coast in what they think are residential properties, but they’re not, they’re tourism assets,” he said.
“They’ll buy an apartment in one of those high-rise towers which has all the hallmarks of residential because it has bedrooms and all the rest of it, but it’s a tourism asset.
“Holiday homes are a very different investment proposition from residential homes.”