Darwin Blog

Key points
& Construction and resources firms are leasing properties long-term in Darwin for fly-in-fly out (FIFO) staff and are prepared to pay much higher weekly rents to secure long-term leases.
& To secure the right property some corporates will pay weekly rents as much as 50% higher than prevailing market rates.
& With factors such as a lower short-stay accommodation demand, corporate tenant demand ensures vacancy rates in the NT capital will remain at record lows.

Darwin NT (24 April 2023) Robust demand from larger firms for fully furnished and equipped rental properties is the latest trend to grip Darwin’s competitive rental market and will ensure some landlords can secure investment yields as much as 10% over the next few years.

According to Glenn Grantham, General Manager, Raine & Horne Darwin, construction, and resources firms are leasing properties for their fly-in/fly-out workers and are paying yields substantially above the city’s average of 6.4%ⁱ to lock in properties long-term.

Plenty of work for FIFOs

Projects attracting workers to NT capital include the upgrades to the terminal and the hotels at Darwin Airport. The aerospace Manufacturing Precinct is also expected to deliver hundreds of local jobs as the home of amphibian aircraft manufacturing in Australiaⁱⁱ.

The Department of Defence is planning a combined $472 million upgrade of facilities at Larrakeyah Defence Precinct. It is constructing a new wharf and fuel farm to support naval operations in the Northⁱⁱⁱ.

Mr Grantham said, "To meet the needs of our corporate clients, a rental property must be low maintenance, fully furnished and equipped.

“Moreover, this new market for rental properties has arrived just as the short-term holiday and Airbnb rental market has started to scale back significantly.

"Over the last three years, Airbnb has been a dominant factor in our rental market, contributing to record low rental vacancy rates.

"With international borders closed, many southern state holidaymakers saw Darwin as a safe place to travel to for vacations.

"With international borders opening again, there is lower demand for short-term holiday rentals as more Aussies start to head back overseas for vacations.

Corporates replace Airbnb demand

Mr Grantham continued, "With less demand for short-stay accommodation, we are seeing more properties return to the long-term rental market. This is a fortuitous development for landlords as it corresponds with a surge in demand from corporates for rental housing for their FIFO staff."

While property owners have traditionally enjoyed annual yields of around 10% by renting their properties through short-stay platforms, Mr Grantham confirms that for the right property, corporate clients are prepared to lock into leases that generate substantial returns for landlords.

"If a property was in the Airbnb market, it is usually fully equipped and fully furnished, and this is precisely what corporate clients want for their FIFO staff and will pay yields close to 10%.

"We had an approach from a corporate who wanted 20 properties for its workers moving to Darwin, while another wants 40 properties over the next six months."

Corporate demand centred on Darwin CBD and northern suburbs

Corporate firms are seeking apartments in the Darwin CBD and family homes in the northern suburbs, noted Mr Grantham.
“The upshot of this new market is that talk the Darwin rental market is softening are wide of the mark,” he said.

According to Mr Grantham the sweet spot for corporates are low-maintenance, fully furnished three-bedroom apartments that can potentially house multiple FIFO workers such as 69 McMinn Street, Darwin City^iv that is on the market for $479,000.

“In the traditional rental market, this low maintenance apartments might attract a weekly rent of $600 a week. However, a corporate will pay $900 a week for this property which represents a yield of 9.8%, which investors will find hard to match in any other capital city.”

For all your real estate sales and property management needs in Darwin and Palmerston or
to find out about the auction process, contact Raine & Horne Darwin on 08 8941 8941.

–ENDS–

For further media information contact:
Glenn Grantham, General Manager, Raine & Horne Darwin on 0418 803 222

i https://www.corelogic.com.au/__data/assets/pdf_file/0019/13744/CoreLogic-HVI-April-2023-
FINAL.pdf
ii https://www.darwinairport.com.au/business/planning-buildings/major-projects
iii https://defence.gov.au/id/LarrakeyahBarracks/Default.asp
iv https://www.raineandhorne.com.au/darwin/properties/1-69-mcminn-street-darwin-city-0800-
northern-territory