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The Smythe boys Mitchell Brown and friends Sgt Rob Smith and Constable Paul Muller csg (L-R) Charlie Swaffield and Friend, Jayden and Eathan Little and Rylee Flint Steve Beale and Chris Dunphy, MIPEC Jo-Anne Burke, DB Scaffolding; Susan McGuire, Mayogroup Sgt Rob Smith and Constable Paul Muller mining Kaleb and Harmoni Mauloni Greg Byrne, Downing; Ian Reed, QNP csg (L-R) Kaitlin Hodby, Leah Thorpe, Layne O'Brien, Brooke Hodby and Maddison Thorpe (L-R) Neve Flint, Brooke Roberts Holly Hill and Isabelle Elms Aboutusgenericimage_3
The Smythe boys Mitchell Brown and friends Sgt Rob Smith and Constable Paul Muller csg (L-R) Charlie Swaffield and Friend, Jayden and Eathan Little and Rylee Flint Steve Beale and Chris Dunphy, MIPEC Jo-Anne Burke, DB Scaffolding; Susan McGuire, Mayogroup Sgt Rob Smith and Constable Paul Muller mining Kaleb and Harmoni Mauloni Greg Byrne, Downing; Ian Reed, QNP csg (L-R) Kaitlin Hodby, Leah Thorpe, Layne O'Brien, Brooke Hodby and Maddison Thorpe

Rural and Commercial property in 2016
NOT many surprises, but some optimism in beef and mining.
Wednesday 14 December 2016  

A notable increase in mining related business activity and confidence since September is the high point in what has been an otherwise flat or slightly worsening year for commercial property in Central Queensland according to Valuers Herron Todd White (HTW).

In line with HTW's predictions twelve months ago, the retreat in the resources sector has led to a significant oversupply of commercial office space across the regions three key cities of Gladstone, Mackay and Rockhampton, leading to falling sales and prices, and depressed rental rates.

“Some new known rentals negotiated during 2016 showed reductions up to about 50% from rentals achieved in peak market conditions, with incentives such as rent free periods and fit out allowances common as part of new negotiations,” HTW said of Gladstone.

“There is one known arms-length transaction of a strata office unit in the Gladstone CBD, which was a leaseback sale to the vendor with a five-year lease term.

“The sale price of $490,000 reflected an analysed market yield of 9%.

“We are advised the sale was to a non-local investor, indicating that investors remain active in the Gladstone market.

"However they are very particular about their purchases and are sensitive to tenant strength and lease terms.”

Rockhampton has again shown itself to be a more moderate economy with prices not reaching the high or lows experienced in Gladstone or Mackay.

“Overall the year has shown the strength of Rockhampton as a regional market, given its ability to maintain a stable market while market conditions in surrounding Central Queensland towns have deteriorated,” HTW said.

“This is a result of the diverse economy of Rockhampton, which includes government, education, resources and agriculture industries.”

The most significant office sale this year in Rockhampton was the NAB building at 39 East Street, which sold for $9.375 million in June at an analysed market yield of 8.43%. Like most property investors in Central Queensland, the buyers were attracted by a strong Weighted Average Lease Expiry (WALE) metric of 5.62 years, which broadly measures the time left on leases held with existing tenants.

In Mackay, it was another depressing year for Commercial property owners with few sales and the market now ranked as being at a cyclical bottom according to HTW. However, there is one good thing about being at the bottom..things can only get better.

“Overall, the commercial office market has been pretty quiet this year,” HTW said.

“The recent rises in the spot price for coal has boosted confidence in the region, and some businesses have begun hiring staff again, and some report that the enquiry level for their services has increased since September.

“However the town is still cautiously optimistic, fingers crossed that this confidence and activity continues into 2017.”

Outside the city limits, HTW says the recent rain has effectively broken the drought in Western parts of Central Queensland and led to some notable sales and stronger prices in the rural sector.

The Tyagarah and Rolfe Park North aggregation just north of Middlemount sold for $17.5 million including stock. Lynorah Downs just south of Rolleston sold for a reported $25 million, and eight sales in an area between Tambo and Winton sold for around $110 to $160 per hectare for better quality Mitchell grass downs and developed Gidgee scrub country.

However, HTW says existing cattle businesses are faced with a new problem after the rain.

“The biggest problem faced by stakeholders in this region is finding and affording stock to take advantage of these phenomenal circumstances,” they said.

“Many of the holdings are currently stocked at well below half of their long-term average and probably closer to 25% of their current capacity.

“At least these low numbers will give the land and pastures a well-earned rest and a chance to regenerate.”

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