Rental yields higher

TOP TIPS: Clough AMEC general manager Howard Thomas at a business luncheon.
TOP TIPS: Clough AMEC general manager Howard Thomas at a business luncheon. Kara Irving

CLIENT after client both here and at my Caboolture office ask whether investing in property in Gladstone is a good idea.

You tell me. Rental yields are currently nearer the 8% mark than the conventional 5.2% mark, and have been for some time although there are reports of some softening. One fellow I know who lectures students wanting to enter the building game tells me there are about 4000 homes coming on line and that figure doesn't include the high rise units nearing completion in central Gladstone.

In last Wednesday's Observer, I read a review of LNG expert Howard Thomas's lecture to a GEA luncheon the day before. I knew that workers were looking at losing jobs once the construction phase was over but I have got to say that I was gobsmacked at the potential severity of the problem. Apparently Gladstone's LNG workforce will drop from 3000 to just 176 operational staff!

Logically, it would appear that Gladstone is definitely facing a substantial over-supply in rental property in the future. I'm told that the construction phase at the existing LNG plants will continue for up to five years but we'll see a gradual dwindling of site jobs starting in the next couple of months or so. Then there's the reduced investment at Wiggins as well. On the other hand, there should be a bit of a spike when Arrow Energy begins its LNG building project later this year.

There is sure some uncertainty in the air. The inevitable change of government might just see some confidence return to our miners, and as things are, it is they who are generating the big opportunities for Australian workers right now. But the question remains whether Gladstone is beginning to see the end of its jobs boom. Next stop Darwin if you're into LNG. I'm told they'll be dragging gas 900km underwater to feed the new facilities there. I have a friend who has tendered to tile the new Darwin airport - a few years work in it for an expert team!

Topics:  landlords profit property renting

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