Douglas pokie boom

Monthly Electronic Gaming Machine (EGM) stats for July and while Cairns maintains a comfortable lead in player losses a sustained recovery in Townsville has annual growth neck and neck ay 4.9%.  Ahead of total Queensland growth at 4.1%. This is local council areas ex – casinos:

EGM July2018_1

EGM July2018_2

A curiosity is that growth for Cairns SA4 ex CRC is running ahead of CRC. A quick look through the other local councils reveals Douglas Shire as a standout with in July up 30.1% on the previous year and rolling annual growth now up 17.6%.

EGM July2018_3

EGM July2018_4

The monthly growth numbers are extremely volatile from year to year and Easter again comes into play on that with non-trading Good Friday moving from April last year to March in 2018. However, underlying this is that operational EGM pokie numbers reported in Douglas have increased by 22% since June last year from 145 to 177. Also the inclusion of an additional venue from 7 to 8.

Not sure where this expansion has been with currently listed details of sites and approved EGM’ in Douglas:

BARRIER REEF TAVERN 12
CENTRAL HOTEL (PORT DOUGLAS) 15
COURT HOUSE HOTEL, PORT DOUGLAS 30
IRONBAR 25
MOSSMAN HOTEL 16
MOSSMAN MEMORIAL BOWLS CLUB INC. 46
PORT DOUGLAS & DISTRICT COMBINED CLUBS INC. 30
POST OFFICE HOTEL MOSSMAN 12
Total Approved EGMs: 186

This could make an interesting case study given the region is relatively contained from surrounding competition. A keen punter would have to drive down to Palm Cove Tavern to find the next venue.

The increase in EGM pokie numbers has occurred progressively in a few stages over the past year so there could still be some upside in the 17.6% annual growth as the total increase has still to flow through for a full year.

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Palm Cove: unoccupied?

The equivalent Tuesday of this week in August two years ago was the 2016 census. Among questions that linger is whether there were really 30.1% of private dwellings in Palm Cove unoccupied on census night?

Palm Cove

This isn’t too far above locations like the City and Port Douglas at 26.4% and 25%. It is also almost unchanged from 2011 census at 31.0%. Adjacent Clifton Beach is 15.9%. Typically around 10%-11% of private dwellings are unoccupied in Australia on census night.

Private dwellings does not include commercial tourism accommodation where at this time of year occupancy would be expected to be above these numbers anyway. Perhaps a clue is in the data quality statement:

In some cases, it can be difficult to determine whether dwellings are private (PDs) or non-private (NPDs). For example, blocks of self contained apartments or units may provide a mix of short term hotel-style accommodation (i.e. an NPD) or long term apartment (normally PDs) accommodation.

It just seems like a very high number to me particularly for the seasonal high time of year.

Note: these numbers are for smaller state suburb areas.

RTA Data Review

Posting of the Residential Tenancy Authority rental data for Queensland has been delayed for the June quarter. I did send a query and really appreciate the response from RTA who are reviewing the format and have forwarded the North Queensland data in the current excel file format.

 

RTA June Quarter 2018 2RTA June Quarter 2018 1

Points to note:

No sign of a recovery yet in Townsville.

Mackay continues to recover.

Cairns has been flat as a tack the last year or so.

There is also interesting data in here which I always intend to follow up with deeper analysis but never do. I can’t yet find any positive indication from new bonds lodged in Cairns.

Council rates comparisons

To follow up on the previous post and the Cairns Regional Council rates comparison which can be found here. There is a brief summary of assumptions and a handful of graphs provided the most meaningful of which are these two:

Among those I have excluded here because it doesn’t deserve credibility is an analysis of residential rates comparison at the Cairns median of $177.5k applied across all council areas. This is nonsense and Council knows it is nonsense because I had a productive discussion a few years ago following their first benchmarking exercise. Subsequently the second graph above appeared benchmarking more appropriately against the median for the different council areas.

If you don’t understand this let me go back to retrieved files when I first raised this with now outdated data:

What happens when you benchmark on the median value for Cairns applied across other regions is that what you are actually benchmarking is the difference land valuations between the councils.

There are more complex ways to look at this. Again as above old data from the past applied across the spectrum of valuations:

2018 rates benchmarking 5

This chart is truncated to the right beyond where banding and small numbers of higher value properties come into play around the Cairns ridges and beaches come into play. This is only the general rate component which is relevant for valuations and probably should be assessed separately from specific service components anyway.

A criticism of the CRC benchmarking graphs is summing the totals to include water usage which can distort total comparisons particularly relative to SEQ. Water usage is dependant on different arrangements between regions and beyond a basic requirement is discretionary particularly related to household and property type.

I also didn’t really like the range of regional council comparisons provided so went looking at other coastal comparisons and hit gold in Gladstone: Yes Gladstone Regional Council  also gets it with information on how rates are calculated.

2018 rates benchmarking 6

Yes, that’s how to do it. They haven’t updated this for the most recent year but well done.

Council rates comparisons can be impossibly complex with different structures and concessions. Cairns generally comes up well on any residential rates comparison in regional Queensland. Residential rates comparisons isn’t the only factor to assess a council but the perhaps the one most relevant to voters.

Note: Cairns is the currently only big council area which will not receive a land valuation for three years contrary to previous state policy intentions. Revaluation deferrals have been heavily criticised by the Property Council. I have also said nothing about strata unit rates where there are some critical issues.

Council and Regional Comparisons

There have been successive posts in recent months from Cairns Regional Council on Rates Benchmarking and Queensland infrastructure capex budget. These are both worth a look and while analysis is mostly reasonable some questions remain.

Cap ex Outback

Who could have guessed?

This is state infrastructure capex by SA4. Council analysis has amalgamated Toowoomba and Darling Downs-Maranoa. Qld Outback (which includes Cape York) at 118,318,272 ha is excluded as it is way off the chart to the top right.

To bring Outback into the frame with some kind of context I have cheated and applied a log scale to the x-axis with a linear trend. This probably isn’t really a clever thing to do.

Cap plus Outback

Older Posts last year from here and there: What’s a fair share?, Huge regional disparities in Qld Government capital spending per capita, Is North Qld under-funded by the State Government relative to the South East?

More recently related to the current budget: Inner Brisbane Cross River Rail CAPEX comparable to statewide education CAPEX

Australian Accommodation Monitor

Tourism Research Australia have released the Australian Accommodation Monitor which is for the 2016-2017 year.

This sort of replaces a previous ABS Tourism Accommodation series now ceased which was covered in a previous post Dransfield Hotel Futures 2018 Report

There are some different things in here to look at.

Accommodation Monitor

Previous post from Dransfield provides good analysis of differences between the series  and indicates caution as the STR sample is more weighted to higher end properties than the previous ABS sample.

Hotel market activity

AFR: Mulpha selling Cairns Rydges Esplanade Hotel for $70m, paid $40m in 2016

Malaysian real estate giant Mulpha is hoping to almost double its money on a Cairns hotel, acquired less than two years ago, after riding the recent tourism boom in Far North Queensland. Mulpha, which also owns Hayman Island, the Sydney InterContinental Hotel and the InterContinental Sanctuary Cove, has put a $70 million-plus price tag on the 242-room Rydges Esplanade Resort Cairns, which it bought from ASX-listed Abacus Property Group for $40 million in September 2016.

And

“Cairns has witnessed phenomenal private and public investment over recent years, transforming the city into Australia’s fastest-growing international gateway destinations, with Cairns airport recording its seventh consecutive year of passenger growth,” said Mr Gibson.

Something of an overstatement but never mind.

Soft June at Airport

Cairns Airport numbers continue to be soft with zero growth in June. Domestic +0.1%; International -0.6%; ex transits etc.

Airport June18

Airport commentary:

Sydney, Melbourne and Brisbane experienced fog disruptions which resulted in some flight disruptions and cancellations in June.

Queensland school holidays started on 30 June 2018 vs. 23 June in 2017. This change caused a 5% decline in passenger numbers in the last week of June vs. last year. Passenger numbers grew 2% in the first three weeks of June.

Annual growth doesn’t shift much as the previous June was also low growth.

Source: Cairns Airport

Impact of Chinese flights

Pete has an interesting post at Conus on Chinese visitation with some additional data from the IVS: Details from the IVS show Chinese visitors to TNQ in sharp decline

Some of this relates to the comment in my previous post on a comparison with year to March quarter 2017. This period was a controversial failure around the Chinese New Year and charter flights with much finger pointing of blame. Pete’s numbers still show a decline for the year to this March despite that.

I thought it may be worthwhile to have a look at the direct flight data between Cairns and China. It’s almost impossible to keep up with the constant international route changes but BITRE do provide historical data for scheduled public flights (ex charter) on international routes in a thoughtfully compact 27MB excel file.

Year to March             Passengers
2013                          22,339
2014                          20,390
2015                          17,813
2016                          17,134
2017                            4,976
2018                          23,735

Direct scheduled flights from China have been stop-start and highly seasonal since they started in 2012. I hope I have sorted the BITRE data correctly which indicates there were no scheduled direct China – Cairns flights between May 2016 and December 2017? The sporadic history of direct flights must be a tourism marketers nightmare.

The 2018 scheduled flight data here is only for the 4 month period since direct flights recommenced in December. The direct flight numbers are only a small fraction of Chinese visitation and the significant majority of international visitors to Cairns arrive on domestic routes.

It could though go some way to explaining the anecdotal reports, such as Reef Casino, of a stronger Chinese New Year period in 2018 and how that fits with the IVS data. Something to watch.

Note: This is ex well established Hong Kong route where passenger numbers are much larger and grew by a third in 2016 but have been flat since.