Following the announcement of some major boosts to the state economy, could Tasmanian property emerge triumphant in the year ahead?
When Utah lawyer Martin Polin sized up Tasmania’s central plains area he had what some would call a case of mushroom clouds on the mind.
The mysterious American, who died in 2007, bought an 18,000 hectare property in one of Australia’s most pristine wilderness areas to escape the nuclear threat of the Cold War.
Released on the market in January this year, his wilderness estate constitutes the biggest sale in Tasmania since Gunns sold more than 28,000 hectares of native forest to discount retailer Chickenfeed’s owner Jan Cameron in 2010. The deal has gone one better than the Gunns deal – it includes an underground bunker.
The sale is a show of changing times for an island where property values have been in a cold war of their own. With an economy unexposed to Australia’s resources boom, and where an ailing retail sector sits alongside the highest unemployment rate in the country, there’s been little for investors to be excited about.
The Polin estate is one sign of baby steps heading in a positive direction. The land, being offered as 23 properties and estimated to be worth more than $10m, has piqued the interest of tourism and conservation investors. It has shown that even in the most remote wilderness areas, demand is showing signs of picking up.
More good news for Tasmania came with the announcement of billionaire investor Richard Chandler’s injection of a massive $150m into forestry company Gunns.
The deal is still waiting approval from shareholders, but New Zealand’s private Richard Chandler Corporation confirmed in February that as part of a $280m capital raising scheme, it would seek to catalyse the long planned $2bn Bell Bay pulp mill.
RCC senior advisor Alan Kelly says that the pulp mill project is expected to create over 3,000 jobs, significant bio-energy power generation and strong export revenues.
It is also expected to inject approximately $1bn into federal and state tax coffers.
Mixed signals
Change has been a recent theme for the Apple Isle. After a tough 2011, the property market defied the expectations of a number of economists when November Real Estate Institute of Tasmania sales data showed an 8.3% increase for the month.
December was less rewarding for real estate agents, which REIT chief executive Mark Berry explains was the worst December selling period since 2000. However, sales bounced back in January.
“It’s been a mixed selling season. After a disastrous December, many agents are saying January was one of the biggest months they’ve ever had,” says Berry.
Much of the latest change has been led by Hobart, which the RP Data- Rismark Hedonic Home Value Index shows was the only capital city other than Sydney to see an increase in property prices over the December quarter. Hobart’s 1% seasonally adjusted rise in prices shows a return to form for a city where prices went backwards for much of 2011.
With affordability concerns mounting in Sydney and Perth, another positive is that Tasmania remains Australia’s most affordable market, with state-wide prices hovering around the $300,000 mark. It’s also a market that is a lot more predictable than what is found on the mainland.
“The Tasmanian market typically isn’t exposed to the same highs and lows that would characterise the market in Sydney or Melbourne: things are never as good or as bad,” says Berry.
