Investing in the Northern Territory’s capital city may be tough, but there are many reasons why it’s worth it – especially right now
It’s a no-brainer why investors might be spooked about Darwin at the moment.
For one, mining investment seems to be slowing, particularly since the $34bn Ichthys LNG project is due to be completed in 2016. According to the latest Deloitte Access Economics Investment Monitor report, this will place significant pressure on pipeline projects such as the $13bn Greater Sunrise Gas Development and the $4.6bn Bonaparte floating LNG project to fill the void.
And arguably Darwin has already had its growth spurt, as it’s been one of the most rapidly developing markets in Australia over the past decade.
But according to the most recent Herron Todd White report, the market seems to have stabilised, and with its proximity to Asia and persisting opportunities from the resources sector, it should still be considered a good investment option.
“If you need an investment property to help lower your taxable income, then any new unit in the greater Darwin area will do the job nicely,” says the report.
Further good news is that a recent confidence survey by the Australian Property Council and ANZ Bank shows that the Northern Territory was one of only two states or territories to have seen an increase in overall positive sentiment. This is linked to its high employment levels, growth in wages and strong gains in household spending.
And it’s also getting a helping hand from the influx of temporary workers looking for short-term housing. This is just one reason for its strong rental yields compared to other capital cities.
Australia’s gateway to Asia?
The Minister for Infrastructure and Transport, Warren Truss, recently released the Green Paper on Developing Northern Australia, and it’s very clear that Darwin is set to play a larger role in boosting Australia’s economy in coming years.
“Darwin is shaping up as Australia’s gateway to Asia – one of the fastest growing regions in the world, which will soon be home to half of the world’s middle-class by 2020,” says Truss.
“The Northern Territory has one of the lowest unemployment rates in the country and investment activity is set to increase by 7% in 2014-15.”
In particular, 55% (or $121bn) of Australia’s exports are shipped from the northern ports. And according to the Bureau of Infrastructure, Transport and Regional Economics, the value of exports through Darwin’s port has increased with an average annual growth rate of more than 12% a year over the five years to 2012-13.
“And there is potential for increased exports from current and new mines in the Northern Territory, LNG from the Browse Basin and growing live cattle and beef exports. A new abattoir able to process up to 200,000 head annually is under construction south of Darwin,” adds Truss.
Suburb to watch
Stuart Park
Stuart Park boasts all the benefits of being just 2km from the Darwin CBD but still manages to pull off a laid-back vibe, largely thanks to the ocean and leafy surroundings. The suburb offers a mix of large family homes and modern classy apartments, and this is just one of the factors why it’s popular with the young, old, singles, couples and families. There are excellent schools in and around the suburb and parks are in abundance. Within the suburb there are a few basic shops here and there, but that doesn’t really matter because it takes less than 10 minutes to walk to the city (or less than three minutes to drive).
There is a high demand for units in the area, as the auction clearance rate is a tidy 100% and there are a healthy 46 people searching per unit property. Gross rental yields are an excellent 6% and it’s also relatively affordable compared to other surrounding suburbs. Indeed, the median unit prices in neighbouring Parap and Bayview are a whopping $590,000 and $680,000 respectively.
Some apartments on Duke St have stunning panoramic ocean views, which are very appealing to tenants (especially young and wealthy professionals). And as with anywhere in this part of the Northern Territory, air-conditioning and a swimming pool are also highly desirable.
