Resource area tipped for longevity
While investing in mining towns is often considered risky, a recent study shows one resource-driven region has more longevity than others.
Research group MacroPlan Dimasi was commissioned to investigate the longevity of the current coal seam gas (CSG) and liquid natural gas (LNG) expansion in the Surat Basin on the Queensland/New South Wales border.
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The results showed that energy companies leading the charge in the Surat Basin are operating on a 20- and 30-year timeframe.
Chairman and managing director of MacroPlan Dimasi Brian Haratsis said a construction boom was underway in the Surat Basin region, led by CSG projects that would feed LNG processing facilities at Gladstone.
“This outlook means that a further wave of exploration and construction works is likely to occur beyond the current horizon of known projects in the Surat Basin," he said.
“The key point is that the long-term operational workforce in the Surat Basin is likely to continue increasing beyond 2020.”
According to SQM Research director Louis Christopher, the most staggering statistics are the growth of rents in the town of Chinchilla.
“This time in 2010, rents for a house were running at about $350 a week, and now they’re right on $600,” he said, noting a 19 per cent rise in the past 12 months alone.
The story is the same for units, with almost as impressive growth.
“Twelve-month change for unit rents has been up 12.9 per cent, and three-year change is 47.3 per cent - so a big change over the past three years,” Mr Christopher said.
One of the few detractors from the town of Chinchilla has been the less than reliable vacancy rate.
According to Mr Christopher, the vacancy rate is quite volatile, swinging anywhere from zero to three per cent in a 12-month timeframe.
The report showed that the Surat Basin was facing a shortfall in the availability of residential accommodation to meet both construction phase and operational workforce demand.
CEO of Surat Basin Property Group Jason van Hooft, who commissioned the report, said the company wanted to ascertain exactly what the current and future demand for the region would be.
“This is the first time that we are aware that a detailed study has been undertaken, which included all available data and direct input by the leading energy companies operating in the Surat Basin,” he said.
"In summary, the demand that is coming down the pipe is far greater than anticipated and the prospective supply of land and housing to cater for this growth is currently inadequate."
MacroPlan Dimasi claimed that even if the housing demand in Chinchilla dropped to just 50 per cent of the current short-term forecasts, “the stock of developable land in the town would need to be expanded by more than 300 per cent to allow for approximately 4,000 dwellings”.
