Why property investors love Coober Pedy

Warren Andrews, the CEO and director of Andrews Property, knows this town and its environment intimately.

Since he first founded Andrews Property 22 years ago, Mr Andrews has opened an astounding number of offices across Australia’s scorching interior. There are representatives in Roxby, Tennant Creek, Alice Springs, Katherine and, of course, Coober Pedy.

“We jokingly brag that we cover 3,000 kilometres,” Mr Andrews said. “As far as we’re concerned, Australia is our playground.”

Recently, Coober Pedy has been drawing the attention of capital city investors who are bowled over by the affordability of property in the area.

A typical “dugout”, or underground home, will sell for just $250,000 to $350,000 and will attract a range of high-quality tenants, including government workers who provide public services to all the residents between Port Augusta and Alice Springs.

Meanwhile, above-ground homes sell for just $50,000 to $100,000, and are just as popular with tenants, including mine workers, tourism workers and those in the town’s burgeoning film industry.

Mr Andrews explained: “There is huge demand for good-quality rentals in Tennant Creek and Coober Pedy. Good-quality landlords who show interest in their property just get good tenants, and they get good rents and zero per cent vacancies.”

For east coast investors faced with sky-high property prices, Coober Pedy presents unique opportunities.

“We had a couple that sold a house in Brisbane for a seven-digit figure and came and bought a four-bedroom, two-bathroom dugout for $350,000, and absolutely love life,” said Mr Andrews.

“They can’t believe how lucky they are to be able to sell their house in Brisbane and live here in a just-as-big-but-underground house, in a community that they have found a really good niche in.”

For the uninitiated, underground homes might conjure images of rough-and-ready holes in the ground, but Coober Pedy’s higher-end dugouts can be luxurious.

Mr Andrews shared: “We sold one about a month ago which actually had three different levels to it. It had a dining room on one level, a billiard room on another level, and the bedrooms further down.”

“I’ve seen houses with underground plunge pools and spa baths,” he said. “They will just dig another hole in the bottom of that room, line it all, and all of a sudden they’ve got a plunge pool in their dwelling.”

In fact, adding creature comforts is easier than it seems – as Mr Andrews explained, “if you suddenly want a bigger walk-in robe, then you just get a couple of mates with a pick and shovel and you start chipping away at the wall”.

It isn’t only Coober Pedy locals who are drawn to dugouts. According to Mr Andrews, underground homes are sparking “a lot of inquiries from Victoria and New South Wales looking to place money in cheap investments”.

Because the price of houses are so cheap, most investors “don’t just buy one, they buy two or three of them”, with dugouts being particularly favoured.

Ultimately, Mr Andrews concluded that Coober Pedy is a haven for investors seeking positive cash flow properties to fund retirement.

“If people are looking for returns that give them two or two-and-a-half what they would get in capital cities on rentals, I’d love to hear from them,” he said.