September Rental Data

September quarter rental data from the Residential Tenancies Authority generally continues recent trends with some recovery from a base in Mackay now evident.

Rents1Rents2

The rental gap between Cairns and Townsville continues to widen.

Rents3

Regional building approvals data was also released yesterday and it finally looks like the initial stage of the proposed Nova development has quietly fallen into the ABS data in August  includes the apartment component of the GA Group development on Abbott St with 110 units approved in Cairns City SA2 with a nicely rounded $50 million building value. This could create some interesting statistical challenges going by this Cairns Post report:

Statistics from Master Builders Queensland shows the number of dwelling approvals leapt 44.9 per cent in three months.
Approvals for houses grew 10.4 per cent over the same time period and grew two per cent over a 12 month period.
In the past year unit approvals dropped 7.9 per cent but over the past three months, they skyrocketed 621.1 per cent.

Apart from Nova GA Group unit approvals so far in the first months of FY18 have totalled four (4) in Manoora. The Post would probably be wise to stick to Conus for the statistical commentary: Building Approvals jump in the Far North

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Corporate action in accommodation

The ASX listed Mantra Group (MTR) has announced an “indicative and non-binding” proposal from French global giant Accor. A combined group would be dominant in FNQ with both groups having a significant presence in Port Douglas, Palm Cove and Cairns.

Mantra branded accommodation properties:

  • Mantra Esplanade (Cairns)
  • Mantra Trilogy (Cairns)
  • Breakfree Royal Harbour (Cairns)
  • Mantra Amphora (Palm Cove)
  • Peppers Beach Club (Palm Cove)
  • Peppers Beach Club (Port Douglas)
  • Mantras Aqueous, Heritage, Village, Inlet and Portsea (Port Douglas)

 

Accor branded accommodation properties:

  • Pullman International (Cairns)
  • Pullman Reef Casino (Cairns)
  • Harbour Lights (Cairns)
  • Novotel Oasis (Cairns)
  • Ibis Styles (Cairns)
  • Reef House Sofitel (Palm Cove)
  • Pullman Sea Temple (Palm Cove)
  • Sebel Coral Coast (Palm Cove)
  • Pullman Sea Temple (Port Douglas)

 

I may have missed some. Accor brands also include Mercure but don’t think there is any longer a presence in Cairns. Accor also has a controlling interest in Reef Casino Trust (RCT) via a joint holding with Casinos Austria. This holding is under review by Casinos Austria.

The non-binding indicative proposal is also subject to the usual conditions and regulatory approvals.

 

Airport Comparisons FY17

Cairns Airport data for August didn’t really provide anything worthy of new comment. So have finally updated some graphs and BITRE data at the Cairns Airport page.

Most recent comparative BITRE data for the top 20 airports is updated to June 2017. Growth leaders for FY2017 are dominated by tourism related destinations along with Canberra and Williamtown (Newcastle).

AirportBlog

The obvious trend anomaly there is Hamilton Island where traffic plummeted in the final months of the year following the impact of Cyclone Debbie. Not sure what the current status is of  Whitsundays tourism and construction recovery.

BITRE have further updated separate city-pairs data for July with Sydney-Hamilton Island down 34.1% for the month and Brisbane – Hamilton Island down 13.1%. However Brisbane – Proserpine is +26.5% and Brisbane – Mackay +4.5%.

Previous declines in resource destination routes will eventually wash through the data. Brisbane – Moranbah (+12.1%), Emerald (+7.8%), and Mt Isa (+6.2%) were all promoted to the city-pair growth first eleven for July.

Katter eats Kairns

No surprises with AEC electoral redistribution for Queensland where Katter’s Kennedy continues to eat into the Cairns southern suburbs.

The Redistribution Committee proposes altering the current boundary of the electoral division in the southern suburbs of Cairns by following Skeleton Creek from the southern boundary of the locality of White Rock through to the corner of Hardy Road and Robert Road in the locality of Mount Sheridan, and continuing west along the Mount Sheridan/Bentley Park locality boundary to Alfina Street. From Alfina Street the boundary deviates north from the locality boundary to take in a section of development in the locality of Mount Sheridan that is connected by road to Bentley Park. The boundary then deviates west to join the Lamb Range/Mt Sheridan locality boundary, following this westward and south then along the Lamb Range/Bentley Park and Lamb Range/Edmonton locality boundaries until meeting with the existing federal boundary in the south‑western corner. The proposed Division of Leichhardt will transfer electors in the localities of Bentley Park, Edmonton, Mount Sheridan, Portsmith and Wrights Creek in the Cairns Regional Council local government area to the Division of Kennedy.

Leichhardt is in the position of sharing a boundary with only one other electorate which is Kennedy. Consequently with demographic changes in recent distributions Katter has successively eaten into the southern suburbs. There probably could have been some expectation that previous annexations of the southern suburbs would provide a population growth demographic to Kennedy to mitigate this trend but apparently not much if anything.

Katter1

Australian Electoral Commission

Comments from Antony Green

 

 

Nova goes for sales incentives

An email from the Nova development on Spence St popped into my inbox today:

Nova City Newsletter
Issue 02 – September 2017
NOVA LIGHT – SPECIAL INCENTIVES
GET FREE FURNITURE PACKAGE WORTH UP TO $33,000!
when you purchase 1 – 2 bedroom units and opt for
2 YEARS RENTAL GUARANTEE @ 5% P.A.
(For limited period only!*)

Developer incentives and rental guarantees to promote sales are generally not regarded as a positive investment indicator. The developer of a Brisbane apartment building was recently even offering a free car.

Previous post: Nova City Valuations

Airport July

Cairns Airport were later than usual with their monthly numbers. July is typically the peak month for the year for domestic.

Domestic passengers increased 2.7% compared to the previous year. This was due to an additional 10,000 passengers (+3.2%) travelling on the combined Brisbane, Sydney and Melbourne routes. A total of 325,000 passengers flew on these three routes in July. All other routes were stable with a 0.3% passenger increase.

No mention of those school holidays this month. However growth in the 12 month moving average for domestic has been slowed somewhat in 2017 with some bumpy monthly volatility after peaking at 5.7% last October.

Airport July

International growth remained solid at 9.8% in July. Positive results for Japan and Singapore routes reported. Negative news on changes to Philippines flights from December. August is typically peak month for international passengers.

Source: Cairns Airport

Reef Spins Result

Something is spinning at Reef Casino but I’m not sure it’s either the roulette wheel or the pokies. The poor half year result announced today has been well flagged at the previous distribution announcement and AGM.

Trading and operating conditions
 The Chinese New Year season was soft for Cairns as a whole
 Our complex faced strong local electronic gaming competition
 Tourism into Cairns was generally softer
 Premium gaming was subdued with less than hoped for volume because of the arrests of marketing staff in China from another Australian casino operator which had a consequential impact on our own premium market.

The issue of the Crown Casino arrests in China a while ago now and premium gaming is a bit curious. Reef really doesn’t play in the genuine high roller market which they have previously acknowledged with lower bet limits to manage risk. Reef is the only listed casino operator which doesn’t provide ‘normalised’ results to adjust for variation from theoretical premium win rates. The reason given in a previous query is that it isn’t material.

Pokie numbers in Cairns Regional Council have increased over the last few years from 1,641 back in 2014 up to 1,809 in July this year. That is down from a 2016 peak presumably related to the Courthouse Hotel closure. Applications for expansion of hours have also been noted at suburban venues.

However a more interesting announcement from Reef today could be this:

Reef Corporate Services Limited ABN 66 057 599 621, in its capacity as responsible entity of the Reef Casino Trust ARSN 093 156 293 (RCT), has been advised that Casinos Austria AG (CASAG), a major RCT unitholder, has commenced a strategic review process which could result in the potential sale of its international casino portfolio including its interests in RCT (Process). RCT understands that the Process is currently at a preliminary stage. RCT will keep unitholders informed, based on information it receives. In the meantime, it’s business as usual for RCT.

 

Sugar charities and NAIF infrastructure

There is a good post from Gene Tunny at Queensland Economy Watch on sugar marketing: PC scathing of Qld sugar industry’s “dependency psyche” & “back to the future” re-regulation

One of the low points for the current Queensland Government occurred in late 2015, when it failed to stop the Real Choice in Marketing legislation advanced by Katter’s Australian Party with support from the Opposition and Billy Gordon. This provided cane growers the extraordinary power to force foreign owned milling company Wilmar and other millers to market their sugar through Queensland Sugar Ltd.

The problem I have always had is that this regulation came after growers had profited nicely from selling their own stakes in the mills. Interesting also that QSL is treated as a charity.

Gene has drawn his post from the most recent Trade and Assistance Review by the Productivity Commission. This also contains assessment of the Northern Australia Infrastructure Fund.

There is good commentary in that section on the investment criteria and specific sectors such as irrigation dams and coal, but without doubt the standout quote is:

The lack of transparency to date and the promotion of certain projects by politicians (in the absence of credible supporting investment data) has raised concerns about the viability of future investments under the NAIF.

No pink in excel graphs

ABS regional labour force data continues to be positive for Cairns: Regional jobs data shows Cairns powering ahead

We know how dangerously volatile the regional data can be. Despite issues with the sample I have always liked to look at the male v female comparison:

boysgirls

This is a 12 month average. Female volatility over time is interesting but the standout is the recent improvement in the male rate and a significant break from previous trends. This is probably the most significant aspect in the data and perhaps not surprising given the obvious construction work underway in Cairns.

How does this look in employment:

boysgirls2

The trend increase over this time has been more weighted to female employment.

Participation rates:

boysgirls3

I always recall the rants of lapsed academic blogger Ricardian Ambivalence that the design of the ABS survey is the unemployment rate. Other data is secondary and reliant on assumed inputs.