29 December 2014

Two Airports Call for Townsville; Conflict of National Security for Existing Air Transport Facility

Townsville's real estate industry is an instrument of calibration and diagnostics for the broader economy.

So the current limitations placed on Townsville's most strategic economic asset being controlled by national security interests or constrained by federal budget priorities is a subject worthy of further investigation and reporting in this article because of the impact on property and investment interests in the City.

The real estate industry is one of the most critical arteries that carries the economic life blood of capital and cash flow to the businesses and employees of the City. In fact the real estate, rentals and hiring sector is the highest contributor to the Gross Regional Product (GRP) in the Townsville economy.

As proposed by the Townsville Real Estate Blog (TREB), facilities development will be critical to achieve immediate economic stimulation and sustainable development for the City over the next decade.

The rejection of Townsville's bid for direct international air traffic carrying passengers and goods draws attention to a potential conflict of interest between border protection priorities and Townsville's business and property interests.

Conflicts of interest or fragmented decision making posses a direct threat to the short term creation of jobs and long term growth plans for the City. The security and commercial interests of Townsville's garrison city raises serious questions for town planners and political leaders.

The bid by a fledgling group of local private investors to buy the lease rights to the Port of Townsville under a State government initiative to reduce government debt is an example of the depth of feelings in the community to control such a regionally strategic asset.

As this strategic shipping facility shares parallel commercial and military functions like the Townsville Airport, it too is most likely to have similar uncertainties for investors that are inherent where ring fencing of government and national security interests is a punch line in today's environment of intense governance policies.

For decades the federal government's military and security assets in the garrison City has been attributed to Townsville's reputation for growth, stability and relative certainty. Achieving the status of being the Capital of North Queensland and a legacy of strong population and economic growth over the past 20 years are proud credits for a relatively conservative community in regional Australia.

The findings to the Taskforce on the Development of Northern Australia did no feature Townsville as some people may have expected. The focus of infrastructure and centres of business development instead is directed to a greenfield site in the Northern region of Western Australia.

One of the findings in the Green Paper, Joint Submission to the Northern Australia Taskforce, identified that "Governance arrangements across the various jurisdictions and regions of northern Australia are fragmented and require streamlining and/or collaboration. Land and water use arrangements are crucial examples of these governance challenges which are central to future development opportunities.", the Green Paper considered.

The Green Paper also identified that "Stagnation can only be overcome with new investment targeted at new markets and offering new experiences. Several proposed integrated resorts in the Cairns region (Aquis Resort and Ela Bay Resort) exemplify the type of large-scale investment that may be required to reignite tourist demand.

Townsville Enterprise claimed to be stepping up their lobbying efforts to secure international air services following the Australian Customs and Border Protection Service's decision to reject the proposal by Air Asia to launch direct services from Townsville to Denpasar.

The decision by Customs and Border Protection Services has suggested the rejection of the international carriers proposal was attributed to resourcing of security processing equipment and personnel.

One has to question the viability of strategic national security assets and commercial private sector assets operating in parallel on military controlled land and government controlled transport infrastructure such as the Townsville Airport, and to a less extent, the Port of Townsville.

Tourism has an economic impact less than real estate, rentals and hiring in Townsville. The Australian Customs and Border Protection Service's decision to reject direct services from Townsville to Bali is a massive limitation to the City's ambitions to develop a broad-based economy. Such a decision has heightened sensitivity in a region where unemployment is sitting at record levels, and tourism is a critical pillar in maintaining a comfortable balance for an economy retracting after a recent downturn in the mining industry.

The military priority of the Townsville Airport is a menace to sustainable economic development. For the people of Townsville, leveraging the airport is a passionate interest to facilitate international trade directly into the Capital of North Queensland, especially for the largest City identified in the federally proposed Northern Development zone.

Could the growth of Townsville's air transport economy mean that commercial and military traffic have access to separate dedicated facilities? Does Townsville now plan for an international airport to the west of the City?

During World War II, Townsville accommodated multiple airfields. One of which is still operational today used for amateur aviators near Woodstock only 30 minutes West of the City.

The Australian Defense Force has budgeted for an extension to the Townsville runway to accommodate larger logistic aircraft being added to the Royal Australian Air Force (RAAF) fleet. The extension of the runway could also accommodate larger international aircraft. As the runway extension is driven by RAAF imperatives, consideration for parallel commercial traffic could not be confirmed by local RAAF Command.

Townsville Enterprise confirmed a strong interest by international tourism operators for direct services between Townsville and Bali. Townsville Enterprise Acting CEO said; "This is an issue affecting Townsville North Queensland that will continue to undermine attempts to properly develop the city and achieve the economic potential of Northern Australia. International air services are critical in connecting the north of Australia to a global market which is vital to the growth of the region.

The Acting CEO continued to report that "Townsville residents remain disadvantaged due to the Federal Government’s policy regime that proposes significant additional costs for passengers using Townsville International Airport, which is the 11th busiest airport in the Nation. No such charge is imposed on passengers using any capital city international airport in Australia."

"Townsville Enterprise, Townsville City Council and the Townsville Chamber of Commerce have been leading a united charge on this issue over the past few months. The issue was at the centre of a number of Ministerial meetings in Canberra last month and correspondence is ongoing.", the Acting CEO commented.

In the context of heightened sensitivity for national security, a strengthening global free trade framework with developing countries, and a local economy entrenched with tourism services, could these conflicting elements mean a extended period of frustration and struggle for a clear passage for international traveller markets into the Townsville region?

This potential "Cold War" between federally controlled security assets and local commercial tourism and property investment interests could be the catalyst for broader debate about a second airport with international specifications for the Townsville region.

Townsville's economic ambitions are dependant on the direct link to international trade through increasing air traffic, shipping and ecommerce activity.

A federal government centred over 2000 kilometres from Townsville facilitating a conflict of interest contrary to the interests of the people of Australia's 2nd largest regional economy could again be called to action at the next ballot box should the community find the observations of TREB worthy of further comments and debate.


Townsville Real Estate Blog
Townsville Enterprise website
Townsville Bulletin

23 December 2014

Wishing You and Your Family a Merry Christmas and Happy New Year

Reflecting on 2014, the Townsville real estate market experienced significant challenges with record unemployment, higher vacancy rates for rentals than the City has ever experienced in recent history, and a slowing economy with record low business confidence.

Reductions or even a correction in median prices for houses and units available on the rental market has caused anxiety for landlords and investors alike. This year has been a favourable period for consumers, both renters and buyers.

Strata unit median sale prices have reduced by 12 percent while house prices increased by 3.5 percent. Economic conditions contracted to levels of unprecedented low confidence for business while the national fiscal framework left the cash rate on hold at 2.5 percent for record consecutive periods.

The article "ready the spinnaker - the winds of fortune" provided some important insight for investors in the prevailing conditions in the market. For those investors seeking an indication of cycle timing and favourable movement in the market, this article offers some valuable direction.

Townsville Real Estate Blog (TREB) broke a leading story about a Gold Coast based building contractor having their licence withdrawn by the newly established QBCC. Contractors and investors experienced the trauma of financial losses linked to southern spruikers promoting boutique residential investments in the City. The story was picked up by main stream media including ABC national radio.

December 2014 brought the introduction of streamlined legislation for real estate professionals, both agents and auctioneers, that deregulated commissions for residential sales. The Property Occupations Act 2014 brought down the curtain on decades of formulated commissions.  

An opinion piece highlighting the role of residential land and unit development moguls in the City impacting the over supply of housing attracted interest that propelled the readership of the TREB to over 12,000.

The TREB now boasts a profile and position in the content creation community for real estate professionals that is second to none. We are now the most popular independent blog recognised for grass roots research and dependable commentary about the Townsville real estate market.

We look forward to bringing you more facts and opinions about the Townsville real estate market, the players and risks, opportunities and threats that we trust will assist you with your own research, planning and decision making.

Townsville offers an extraordinary opportunity for investors to place their wealth creation assets in the City. Citizens enjoy a tropical lifestyle and family friendly community desired by many people across the globe. We live in a beautiful and resourceful part of the world for which we all can be grateful.

TREB wishes you and your families, friends and loved ones a wonderful Christmas. Be safe if you are travelling over the holidays. We look forward to a more prosperous 2015 for our readers and supporters.

The TREB would like to thank our readers for their support this year and hope for continued support in 2015 with greater interaction and contribution from our readers.

It is a privilege sharing exciting and interesting stories with you about the Townsville real estate market.

14 December 2014

Threat to Fixed Fee and Free Advertising Real Estate Agents; Queensland Commission Rates Deregulated

Queensland Real Estate professionals have feverishly been updating their knowledge, systems and processes to transition from the repealed Property Agents and Motor Dealers Act to the new Property Occupations Act, and for agents carrying trust monies, the Agents Financial Administration Act 2014 effective from the 1st December 2014.

The key changes include the replacement of seven separate agent appointment forms with a single standardised form;

  • deregulating the maximum commission rates for real estate sales and property management
  • removing the requirement for agents to disclose to a buyer the commission the agent is receiving from the seller
  • extending the statutory limit on lengths of appointments for a sole or exclusive agency from 60 days to 90 days to better reflect market realities; and
  • abolition of a separate Form 30 Warning Statement which will be replaced by a short prescribed statement included in the relevant contract.
The real estate industry has responded positively to the changes because of the reduction of "red tape" with simplified forms allowing agents to spend more time and energy servicing clients needs instead of filling out forms and worrying about paperwork.

Although the Property Occupations Act deregulates commission that agents can charge clients, Townsville Real Estate Blog has observed that agents are not increasing their commission rates for residential sales at this early stage in the new regulations regime.

Instead agents are reluctant to charge higher commissions in the Townsville market due to the strong competition for new listings. So clients, both sellers and buyers, find themselves in a strong position to negotiate with agents on the commission rate and marketing budget.

However, clients are cautioned not to seek open quoting on price. Service-centric agents are unlikely to quote in an open tender process where price is the main driver for the client enquiries because service quality is the corner stone of most agents' reputation in the industry.

When to negotiate commissions with agents is behind closed doors in person. Either as part of the agent's pitch for your service (if you are price or costing saving focused) or after the pitch for your service. Choosing your preferred agent wisely is born from purposeful research of the solutions being proposed by the agents.

To the surprise of some sellers or buyers agent consumers, price cutting is not a solution to the real problem of achieving the highest possible price within a reasonable time frame. Keeping the marketing costs to a minimum such as advertising, communications, etc. is a project specific factor in the solutions package. But marketing should not be associated with the effective management and leadership of the solutions package. The typical analogy described in the service industry for this misunderstanding is that "you pay peanuts and you get monkeys".

Finding the right agent is therefore synonymous with finding the right solution! Selecting the right solution is finding the right leader in the industry of which there are many. The decision is not easy. Recruit the right team of suppliers coordinated by a lead agent and you will give yourself favourable opportunity to achieve your objectives accompanied by personal satisfaction, exhilaration, joy or overwhelming relief when the job is done.

Beyond the appraisal and price prediction phase, asking the right research questions centred around the agents solutions such as the team, suppliers, schedule or time on market, target market reach, technology, innovation examples, and Townsville Real Estate Blog believes perhaps the most important, is the passion, enthusiasm and posture shown by the agent for the product and neighbourhood in which the asset is located.

Ask until you are satisfied even if it takes an hour or more. If you sense the agent struggles to answer  unscripted questions, then perhaps the leadership suitable for your marketing project is unsuitable and the package of solutions is unworthy of your business.

The agent commission rates should be the very last question you ask once you have chosen the right leader for your marketing project. If that means paying a commission above the average commission rate in the market, then take the risk within your appetite (what can be tolerated as an acceptable loss) and make the investment. Remember most agents in Townsville have a 'no sale, no charge' proposal so agents that have a tendency to give their time and wisdom in good faith, are more likely to treat your asset with respect and a hunger for success.

Townsville Real Estate Blog will continue monitoring the prices agents are charging over the coming weeks and years. The commission rates may increase in the short term for projects that are resource intensive such as marital separation matters and other resource intensive projects where a proportionate sale price is less than the viable profit for an agency. Such projects could include land sales, rural and remote properties and low end unit and house sales found in small markets.

As market confidence expands, and niche selling and buying opportunities manifest in the market, commission rates may increase on a project by project basis. By and large most agents will seek to keep their cash flows moving and therefore be open to negotiation on their commissions.

Full fee agents, those agents that have not set their commissions on a fixed price under the old legislation, are likely to fight for commission based on a percentage of the sale between 2.5 to 3 percent for residential sales.

Remote, rural and regional areas are more likely to find agents charging higher commissions because of limited competition between agents and the maturity of the asset price points in these markets. Agents that have positioned their brand and reputation on free advertising could also find greater competition in that alternative agents could simply offset the risk of supplier overhead by increasing their commission rate.

Full service agents may seek to neutralise fixed price and free advertising agents by offsetting agent-paid marketing risk with higher commissions.

Evidence of agents increasing their commission rates cannot be substantiated in the Townsville market at this time. We may see movement in commission rates in the future when the market has an appetite for a change in culture.


Townsville Real Estate Blog
REIQ website
Local Townsville Real Estate Agents