Yield hungry southern state investors set to drive Darwin real estate

Media release - 26 February, 2016

Residential real estate sales volumes are expected to return to 2013 levels this year as a consequence of stronger interstate investor activity, according to Glenn Grantham, General Manager, Raine & Horne Darwin.

“There’s already increased interstate activity at the coal face and this is translating to more contracts,” said Mr Grantham.

“Darwin, however, is a small capital city property market and we still need one more major announcement relating to the economy, an infrastructure development or more government jobs, to attract even more investors from the southern states.”

Vendors should be mindful that Darwin’s relatively stronger rental yields are already attracting investor interest, according to Mr Grantham.

Yields for houses in Darwin are 5.3%, compared to the combined capital city average of 3.4%, according to CoreLogic RP Data. In relation to apartments, Darwin’s average yield of 5.1% also contrasts favourably with the combined capital city average of 4.3%.

“These are just averages too – there are opportunities to generate stronger yields from off-the-plan properties in the Darwin CBD and the inner northern suburbs such as Coconut Grove, which are closer to 6%,” said Mr Grantham. Coconut Grove is located halfway between the Darwin CBD and the retail precinct of Casuarina, and is also just 3 minutes to Darwin Airport.

Raine & Horne Darwin recently won the government contract to market 30 brand new, architecturally-designed two bedroom apartments in a 2-storey residential development, Eclipse, located at 15 Musgrave Crescent, Coconut Grove. Two bedroom, two bathroom apartments in Eclipse start from $460,000.

Eclipse is backed by the Northern Territory Government under the umbrella of its “Home Buyer Initiative” that provides investors with the opportunity to purchase properties aimed at increasing the territory’s pool of affordable rental properties.

“Through the Home Buyer Initiative, the government guarantees investors a head lease rate starting at $550 a week. It’s guaranteed for 52 weeks of the year for ten years, with CPI increases annually,” said Mr Grantham.

“The scheme is designed to stimulate accommodation opportunities for those working in the NT’s hospital and emergency services sector and to make it affordable for them to live and work here.”

Under the terms of the scheme, the tenant pays a percentage of the weekly rent and the balance is made up by the NT Government.

“If a tenant pays a rent of $450 a week in the first year, the government will top up the rent with an additional $100 to bring it up to the agreed amount of $550,” said Mr Grantham.

Unlike an investment property purchased through Defence Housing, where rents can fall, the returns from a property secured through NT’s Home Buyer Initiative are locked in regardless of what occurs in the wider real estate market.

“In Eclipse, prices range from $460,000 for a ground floor apartment to $480,000 for a second floor unit. Yet the rent paid to the owner will be $550 a week regardless of the floor they choose to buy an apartment on,” said Mr Grantham.

“Eclipse, which comes with all the benefits of modern living such as a pool and gymnasium, was built to be sold through the Home Buyer Initiative. It’s a brand new project, located in a popular suburb, and we therefore expect that the apartments will sell like hotcakes.”

–ENDS–

For further media information contact:

Glenn Grantham, General Manager, Raine & Horne Darwin on 0418 803 222

Andrew Harrington, National Communications Manager, Raine & Horne, on 02 9258 5400