The coming real estate boom on the Gold Coast will see some properties triple in value, according to independent finance and broking advisory house Fat Prophets.
Chief executive Angus Geddes said the next Gold Coast cycle would supersede the previous boom.
“The next cycle could prove to be a super-cycle driven by Chinese investment and rapidly growing tourism numbers,” he wrote.
Nothing symbolises the coming boom more than the return of legendary Gold Coast developer Jim Raptis, who after a financial collapse in the early 1990s and again after the financial crisis, announced his third come back this week.
“I think his third comeback will prove just as significant in terms of timing once again,” Mr Geddes said.
Andrew Wilson, the economist at Fairfax Media’s Domain, is also upbeat about the Gold Coast. Over the next year, he predicts prices will rise over 5 per cent and as much as 10 per cent, as the market recovers and the strong local economy, the strongest in south-east Queensland, drives further gains.
Mr Geddes is a believer in playing the property cycles. He is sitting out the latest boom in Melbourne, Sydney, London and Auckland. “I would not be touching them at current elevated levels with a barge pole,” he said.
But he buys in the wake of a bust. “The bigger the bust, the bigger are the opportunities,” he said.
“I was very active on the Gold Coast a few years ago and built up a residential portfolio of well-located, quality apartments at a fraction of the underlying replacement cost. If one can buy at a steep discount to replacement cost, then over time value must return at some point for well-located real estate.”
Today, the gross running yield on the portfolio is “well north of 10 per cent”. But he is not selling yet. Capital value prices are yet to move significantly, but quality stock at the right place is now very hard to find.
“I have found that tightening supply is a typical precursor to a significant upward move in prices or a full blown property boom. We saw this Sydney and Melbourne 18 months ago,” he said.