Media release – Date BROOME PROPERTY MARKET STRENGTHENS FOR 2012 Brenda Griffiths from First National Real Estate Broome expects the region’s property market to rise, following a moderating market in the last six months of 2011. “This is contingent upon Woodside getting environmental approval for its activities,” Ms Griffiths said in the First National 2012 Property Market Outlook released this week. “Improving market conditions and the market bottoming out will underpin the Broome property market for the coming 12 months.” The key challenges in 2012 are seen by Ms Griffiths as higher costs of living, a struggling tourism sector with numbers and forward bookings at eight year lows, political decisions impacting on live cattle exports and the pearling industry in care and maintenance as there is a number of years’ supply available. “Ongoing regional investments such as the James Proce Point Gas Hub once it receives environment approval and a Final Investment Decision in mid 2012, along with offshore oil and gas industry commence drilling programs are significant factors that will contribute to stimulating market activity,” Ms Griffiths said. “And the economic events in Europe and America are expected to impact on buyer confidence, as the market reacts to constantly changing news and every nuance being reported in the media.” According to the Outlook, property prices for all sectors, houses, apartment/strata and land in the Broome region are expected to trend downwards, with decreases of up to 5 per cent. Movements are a result of an oversupply of stock, reduced demand and selective bank lending options. “Land prices could potential remain relatively flat even with a lack of competition because the high costs of development are unable to absorb any land price decreases,” Ms Griffiths said. The rental market should see vacancy rates in Broome flatten in 2012, as the strong resources sector will offset a under-performing tourism industry. Weekly rents are expected to head upwards, increasing by between 5 and 10 per cent due to increasing building costs placing upward pressure on rates to ensure ongoing supply. Ms Griffiths expects investors will spearhead growth activity in the Broome property market, with increases in investor activity expected to be between 5 and 10 per cent, contingent upon Woodside proceeding. “Offshore oil and gas projects will drive demand for rental accommodation, and investors will be keen to capitalise on prime market conditions,” Ms Griffiths said.
Interest rates are expected to decrease by up to 0.5 per cent which should strengthen the Broome property market by stimulating activity, particularly among investors. “There could be an increase in mortgage defaults if key significant resources projects do not proceed,” Ms Griffiths said. The impending introductions of the Minerals Resource Rent Tax and Carbon Tax represent further challenges for the Broome property market which may jeopardise some resources industry and offshore drilling projects. “These projects are essential to offset what is forecast to be a continued major reduction in visitor numbers as capacity is taken up by fly in/out workforce to the detriment of holiday travelers,” Ms Griffiths said. Cost of power will increase significantly with the carbon tax and locations like Broome are a high consumer of energy for freight, refrigeration and air conditioning. “The tax will add to the cost of room rates and restaurant costs that will not be offset,” Ms Griffiths said. “Government departments and government funded agencies are now the single biggest consumer of office space and residential property in Broome, and as the transport hub for the region, this growth area will continue.” On the Commercial property front, there is an ever increasing demand for industrial premises and office space in Broom, from companies wishing to take part in the offshore oil and gas industry that is being developed in the Browse Basin. “National and international logistics providers, sub-sea equipment and service providers, engineering firms, employment agencies, construction services and contractors are just a few of those that are leasing or purchasing property,” Ms Griffiths said. “With the approval for the proposed gas processing hub, it is expected companies other than just Woodside Energy will register their interest in establishing their presence in or about Broome.” Commercial property values in the first six month of 2012 will b very much dependent on projects proceeding. The cost of development of new subdivisions and land releases may see prices rise by up to 10 per cent. Sales are expected to increase in the commercial property market in 2012 as a result of jobs growth and new business in the region. Heavy industry is the sector of the commercial property market which will show the most growth over the coming 12 months. -
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Issued by: First National Real Estate For further information or to receive a copy of the 2011 Property Outlook, Brenda Griffiths, from First National Real Estate Broome, on 08 9192 2000.