NW WA or Darwin - best places long term?

The genesis of this thread was http://www.somersoft.com/forums/showthread.php?t=54384

Where would be the best place/s to buy/invest in residential properties in the north-west of WA or in the Northern Territory for a good long term return?

Port Hedland has great returns at the moment, but AFAIK seems tied to BHP's investment in the town. That might be under some cloud going forwards with the plan for BHP & RIO to jointly develop assets? As in, there might be more interest in Karratha? Would there be more sustained long term housing demand in Karratha? Or would Darwin, which is well located close to Indonesia be better? Or Geraldton? Or somewhere else?

Regards,

Port Hedland is doing better than Karratha at the moment, but it is very BHP dependant as you suggest. Supply continues to be low in the town though, with little new land coming on line in the foreseeable future. South Hedland is a different market and one that I would not buy in personally.

Karratha has a fair bit of supply coming through currently with the new Landcorp land releases, and prices are nothing special when compared to Port. It is, however, a safer long term bet in some ways as there are multiple corporates invovled (i.e. Woodside, Burrup fertilisers etc). So you're heavily exposed to the energy sector as well as iron ore.

Gorgon may also have a positive effect on Karratha, but no one really knows what the economic impact will be.

Both these markets are about 15,000 people, so Darwin is in quite another category IMHO.

Given that new colorbond houses in Port Hedland are currenty $1.25m plus, it is hard to see much potential for capital gains there. Gross yield 11.6% on a new house in Port Hedland, vs 9.7% in Karratha by my contemporaneous calculations - however Port Hedland prices being even more unrealistic than Karratha ($2800/week rent vs $1600/week), there would seem to be more potential for downside.

Thanks, whitey. So, where would be your first choice for a long term (30+ years) investment?

what about Broome? already a strong market and could be turbo charged if they bring gas ashore nearby. got some nice restrictions on land - mostly held in native title.

I've been thinking about this a bit more the last few days. Port Hedland appeals but it is, for me in my ignorance of the local market & factors, a little risky. Karratha is also unknown. Broome is a small place. They are probably all OK but not for me with my current level of knowledge. So, Darwin seems safer as a long term prospect. The thread was just to canvas opinions from others. I'm not about to go & buy a place anytime soon.

Regards,

Karratha an unkown? seems about as solid a performer as you can get.

although I have heard Darwin builds have been re-rated as category E cyclonic which will add about 30% to build prices. anyone know about this?

Karratha an unknown to me - it is my personal lack of knowledge. I'm familiar with parts of Perth, I am not familiar with Karratha.

yeh fair enough. I know in 1991 when I was investigating the houses up there for... dunno must of been about $100k, everyone told me I was nuts, the rents were only high because it the town could close down any day and there is no capital growth.

of course the same hosue would now be worth $700k or more and rent for $1600pw and would have been paid off in full. "coulda" bought one house and done nothing else with my life and now had a free salary rolling in.

It is those sort of figures that make the idea appealing even today, Ausprop.

Instead of having unused funds in my buffer - buy a property in Port Hedland. I am cautious when I am unfamiliar. Hence my reticence, although it is 'on my mind' a little...

I've put my money where my mouth is... just picked up (SFA) a house and land deal. should be $200k equity on completion and a yield of around 14% gross.

now your turn Pete....

good work john - sharing is caring!!!

Super tempting, Ausprop. I'm not against the idea & the money is sitting in the bank....

Hey Ausprop, can you shed any info on the house and land investment you just made.
I have 1 IP in Karatha already, and not sure if the bank will gimme anymore loot just yet, but I am interested in what the deal was ??

Cheers
Pango.

let me dot a few i's and all will be revealed....

How is the "T" crossing and the 'I" dotting going Ausprop.

Can you pass on any details about the Karratha package you were working on yet?

Cheers
Pango.

yes. approx numbers... land $170k, house say $450k, and val will be $800k+ on completion and will rent for dunno... somehwere between $1600 and $2000pw. Unfortunately, from what I understand, since Gorgon was announced the list of people wanting to buy has ballooned and there wont be anymore land available for some time. apparantly the market up there has ignited but it may not be too late just to get in and buy established, you'll still get high yields.

Thanks for that Ausprop.

Ive got one there, leased to the govt on 5 year lease, so I might just have to be happy with that. Like you, I looked at the market there for about 7 years before I got in. Damn, I coulda been retired by now if I'd had the courage to get in there in the late nineties.

Ive also got a rent review coming up next month. Do you think there might be scope in the market to squeeze it up a little?

Im currently getting $1200pw for my 3 x 2 unit in Millars Well.

Sounds like the Gorgon news has excited the IP investors out there too, which will put pressure on anything coming to market!

Cheers.

dunno $1200pw sounds cheap.

don't get me wrong I am not new to karratha, I am the fool that took profits. Ive sold dozens of blocks and built a house that I sold for a song. On one occasion I sold 4 house and land deals to a client... all in price $320k each. Now worth $800k or so each, renting at $1800pw. Whats $1800pw x 4 on an investment of $320k x 4? It's about $250 to $300k free and clear cashflow per annum in a high growth low risk area. hindsight!

come on full doc....!

Blue Card! said:

come on full doc....!

Click to expand...

huh... why? just low doc