Property Investment Strategies for the Gold Coast
Long-stereotyped as a tourist and retirement destination, the Gold Coast is undergoing a rapid evolution into a dynamic city. By leveraging its position, natural assets and increasing size, the Gold Coast should continue to outperform most parts of Australia. But how do you, the strategic property investor, take advantage of this? The Gold Coast has seen tremendous expansion rising from almost nothing in the 1960s to a city of over 500,000 today. But this path has been littered with the wreckage of investors, who, out of ignorance, greed or both, have misjudged the market and paid dearly for it. To avoid these mistakes, and to make sure you buy a property that enjoys the kind of growth the Gold Coast can offer, I've discussed three strategies for property investors on the Gold Coast. First, however, let's look at some important trends that I believe will drive the Gold Coast's economy in the future:
What's driving growth on the Gold Coast?
Lifestyle. The Gold Coast has always offered an enviable lifestyle, built around its moderate sub-tropical climate, stunning coastlines, and its lush, volcanic hinterland. This is increasingly being matched by dining and cultural options. The growth in the food and drink scene on the Coast in the last 3 years alone has been dramatic; innovative new cafes and restaurants are opening almost daily in both the traditional tourist areas as well as the suburbs, powered by the migration of talented restaurateurs from the capital cities. There's even a burgeoning craft brewing scene, including Burleigh Brewing Co, Balter Brewing and Black Hops Brewery (the GC might also ambitiously claim Byron craft heavyweights Stone & Wood). The Gold Coast is home to major sporting teams in both the AFL and NRL. Critical mass has brought a level of sophistication for those who want it, without sacrificing the amenity or affordability of the Gold Coast relative to the capital cities.
Dining and cultural opportunities on the Gold Coast have steadily increased as the population has grown. Photo Courtesy of Destination Gold Coast.
Accessibility. It's never been easier to get in and out of the Gold Coast. The coast is an hour's drive or train ride from Brisbane. Gold Coast airport is constantly adding capacity, domestically and internationally. Regular direct flights are available from Sydney, Melbourne and Adelaide, and international routes include Singapore, KL, Tokyo, Hong Kong, Wuhan (China), Auckland, Wellington & Christchurch. It maintains a substantial cost advantage over capital city airports, which means cheaper fares. It's arguably quicker to get the Sydney CBD from the Gold Coast than it is from parts of Western Sydney. The coast's strategic location puts it under 3 hours flight from 80% of Australia's population, making it the most accessible year-round holiday and lifestyle destination in the country.
The Gold Coast Airport is rapidly expanding, servicing 6 million passengers per year.
Evolving Work Patterns. This significant trend brings together the three elements I've discussed here, and has the potential to supercharge the Gold Coast's growth over the medium-term. The Gold Coast has always been a beautiful place to live, but for most people it was a lifestyle that was unachievable. A lack of high-paying work and job stability have limited opportunities for meaningful employment on the Coast, particularly compared with Australia's capital cities, and have constrained population and economic growth. This is changing. The relentless march of technology is transforming business and the workplace. Entrepreneurialism is flourishing, while fixed working hours and locations are diminishing. Capital flows to the best ideas, not just to the traditional centres of business, and small business is more agile and capable of seizing opportunities. The Gold Coast has Australia's highest percentage of entrepreneurs per capita, and its desirable mix of lifestyle and accessibility should continue to attract a level of talent and ideas disproportionate to its size.
The Gold Coast has always been a home of entrepreneurs, and is benefiting from technological changes which have made small business more competitive. Photo courtesy of WOTSO Workspace.
So how do we benefit from these trends to make strategic investment decisions? Here's three broad options for the property investor looking to make money in the Gold Coast property market:
The balanced investor
This strategy will benefit from solid capital gains and well as good cash-flow. It targets the critical market on the Gold Coast - the owner-occupier - to ensure a strong, consistent demand for your asset.
The bottom line: The Gold Coast has enjoyed strong population and economic growth in its history, although this has occurred in quite volatile cycles. We are seeking locations accessible to work, transport and lifestyle, and properties that are flexible and in price-points affordable to most buyers. By sticking to owner-occupier focused properties at low-risk price points, we ensure more consistent returns and reduce the effects of volatility on your investment.
Locations: We are on the hunt for established, well-located suburbs, with low future supply but consistent demand. Suburbs with good access to infrastructure, job and service centres, and lifestyle attractions such as beaches, parks and entertainment precincts are best.
There are a range of suburbs away from the traditional tourist strips with good services, infrastructure and amenity, which appeal to those wanting to live on the Gold Coast.
Properties: Depending on your budget, you can buy units, townhouses, duplexes or houses - but flexibility is key here. The Gold Coast is not an enormous market, and you can get caught out by going too specific (Big houses or 1 bedroom apartments come to mind). You can buy units, but I'd recommend at least 2 bed/2 bath, great design, services and lifestyle attractions nearby, and in small complexes with affordable body corporates. Don't buy in a high-rise, a complex with lots of holiday rentals, or anything with the words 'over-50s' in it. Townhouses and duplexes are solid choices, with a premium on design and location when comparing it to a house for an equivalent price. 3 Bed/2 Bath is a good configuration. Houses are a great buy on the Gold Coast - look for features that will enhance rental return such as multiple bathrooms, undercover parking and covered outdoor areas. Buying something you can add value to is ideal, but avoid bad design like the plague - unless you can fix it for a reasonable cost. The Gold Coast is a lifestyle-focused market and has lots of contemporary properties, and your ugly duckling will wilt in comparison, particularly if the market gets tough.
The Growth Investor
If you're looking to maximise your returns from the Gold Coast property market, then buying and holding well-located land is the best way to do it. This will generally come at a cost in terms of cashflow, so you need to be sure you can afford to hold the asset, through both good times and bad.
Locations: The best action on the Gold Coast, is, unsurprisingly, on the coast. This is the scene of most of the development and most of the commercial activity, and there is also inbuilt scarcity in the supply of land. Suburbs along the coast all have excellent historical performance - the suburb that's right for you depends on your budget and what opportunities are available.
Properties: You want a property that has a high component of flexible, well-located land that can have value-added to it over time. This doesn't mean buying a block and hoping that a developer will one day want to stick a high rise on it - this is pretty rare. It means finding a property in a great location, and that can be improved or developed into the type of property(s) that best suits the demand in the area. This might be very-well located but older unit or townhouse in a small complex, which can be renovated. It might mean an older house in a coastal suburb which can be demolished down the track to make way for a duplex pair, or a small townhouse or unit complex. Again, I recommend steering clear of land that, because of its location, zoning or price is too specialised in its use. Examples of this include land designated for large unit complexes (particularly in marginal locations away from the beaches), or land in resorts and lifestyle communities. You want flexibility to safeguard you against the inevitable volatility of the Gold Coast market.
There are numerous properties on or the near the coast which are ripe for renovation or re-development. Photo Courtesy of Destination Gold Coast
The Cash-flow Investor
The commercial property market on the gold coast is often overlooked by the investor. Nonetheless, it can offer very strong cash-flow , and with the correctly-chosen asset, consistent capital growth.
Locations: The key here is scarcity. We want a location which has consistent demand from business, but only has a limited pool of commercial properties. Zoning is important here. I would be cautious of major development areas such as Southport and Surfers Paradise, where you'll have lots of competition regardless of what type of property you buy. I'd concentrate on areas with limited commercial zoning, generally in established suburbs further south or inland, with better access to the M1 and the airport.
Properties: If it seems like I'm harping on about flexibility, then I'm starting to make my point. The Gold Coast is a constantly evolving market, and trying to pick winners purchasing very specific property types is fraught with danger. Whether you choose to buy office space, restaurants, retail, medical, warehouses or industrial sites, the ability to accommodate a wide variety of businesses is important. I'm personally wary of office space and traditional retail on the coast - from experience these can sit vacant for a long-time, and there are regular issues with oversupply. If the property already has a tenant, then the quality of the tenants and leases is critical. Not every business is a multi-national company on a 15-year lease, but if you're going to have a new business without a director guarantee leasing your property, I'd also like to have other quality tenants in the property to secure your cash-flow should it go pear-shaped. Sites which allow multiple tenancies are clearly very helpful in this regard.
Well-located commercial properties on the Gold Coast are benefiting from quality tenants, and are providing high yields and good capital growth for the investor.
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Gold Coast Property Investment
What are we buying on the Gold Coast?
Need help developing an investment strategy for the Gold Coast? Book in a free consultation with our independent Property Adviser, Andrew Wegener. Andrew has built his business on the Gold Coast, and has a deep understanding of the property market. He can help you identify the best areas and property types to focus on, and his advice is completely independent and free of conflicts of interest.
