SA Port Augusta

Hi Everyone,

I just want to get peoples opinion on investing in Port Augusta/Port Pirie? I am only concerned about rental income, i want a steady and stable income from my property. My Budget is $100k - $150K, i am not to concerned about CG as it's going to be a 'set and forget' type of thing. What's the rental market over there like? Is there anywhere else i can invest with my budget that will deliver a stable rental income, it doesn't necessarily have to be SA, it can be anywhere.

 

I'd avoid those 2 towns - not enough population / rental demand.

Even if you got say 9% yield, that'd be 13k a year on 150k, minus mortgage, council rates, insurance, PM, etc. It'd be about 4% net. And that's assuming you can find tenants, and the ones you do find pay.

You can get 4% net from shares without having to deal with all of that.

 

Picking up on this thread after almost a year. What a difference a year can make in some property markets.

I've been following Port Augusta for about 6 months. The last year has seen it turn around lot:

- Unemployment reached peaks in 2015 and 2016 due to some non-renewable energy plant closures. In a town of around 14,000; that sort of thing hurts. Since we've has census data now published from 2016, unemployment was 5.9% 2011, spiked to 8.1% in 2015, and now is down to just under 7%. In fact, SA-wide unemployment is at its lowest level now since 2013 (ABC news article from Oct 2017 looking at trend - but this is pre-Holden closure of 950 jobs)
- Another indicator is volume of trading businesses. Around 6,000 in 2011, withered to 5,100-ish in 2015, and is now around 5,750-ish currently.

In fact, I'd wager there is substantial upside for Port Augusta macro-economically and here's why:

- Thermal Solar plant construction-phase jobs growth between 2016-2020 is pretty huge (plant is just 30km away from Port Augusta). Ongoing jobs thereafter are less, sure, but there will be a permanent 50-100 jobs ongoing

- Not only this, but the tower holds two records now: 1) is SA's tallest structure (at around 220m), 2) Is the planet's largest Solar Thermal structure. As such, it is becomming a little tourism booster, with bus tours gearing up from Port Augusta (this will add a lovely trickle of jobs to PA both for tour companies and also in town hospitality). It boosts the tourism interest in the region because...

3)... The Flinders Ranges have always been a little tourism drawcard but now that theres this, and the tower

4) Sundrop farms tomato plant is 12km south east of town. The big Coles contract will see for permanent sustainable employment for PA residents for the next ten years. Sundrop has its strawberry farm further south in the state, but is considering a third farm investment in.. you guessed it, Port Augusta region.

5) Right now, the Ghan and the Indian Pacific tourist trains do 'stop' in Port Augusta... but then they get moving again very quickly, meaning no time for tourists to really get out and spend money in PA town. There is talk that may change in future for some routes (not all) to enable day trips to ranges and other attractions

6) Port Augusta is a port, worth remembering that. The appeal of smart-agriculture such as Sundrop to grow then load ships right next door to the farms is quite enticing. It could create further smart-ag jobs in future for PA if more farms open up. There's plenty of space in great proximity to the port and land values are dirt cheap (pun intended!) all around, adding to the appeal for ag industry investment.

7) There's a chance that mining demand may pick up again in the region, in future. This could add more job prospects.

8) Population tracking. Ok in 2011 it was 13,504. In 2014 it swelled to 14,214, then declined in 2015 massively to 13,306. But, as of end of 2016 population was back up to 13,808. I would be curious to see if it goes over 14,000 again. If things were really that dire (jobs-wise) why havent people fleed the place? In fact, why would it jump about 500 people again flom 2015 to end of 2016?

8) Property prices to me are massively depressed and weakened since previous highs. This is where the opportunity I believe, is. As DT mentioned, one $100k house after costs won't make you rich, but there are some great duplexes and 3-packs/triplexes for sale that present 8%+ gross yields, with low-maintenance (and many non-strata, instead community title = some saving on body corporate need) and sometimes long-term tenancies in place. Tenant quality of course would be something to keep an eye on. But a deal like this then becomes much more enticing.

I don't deny the big risks in investing in small regional towns like this, and I'm not here to endlessly spruik a small town and ignore all of the risks. But to me as far as small regional towns with good prospects go, Port Augusta to me is a worthy contender. I did the same level of research over the last few years (Burnie, Alice Springs, Devonport, Whyalla, Broken Hill ), but none stack up like this one.

 

I don't know C-Mac, I have been keeping a close eye on Port Augusta for a while as well well and there are still houses that have been on the market for a year or more.

All the promises/projects the Govt goes on about just seems to be hot air, i'm still not convinced. Manufacturing is dead, Govt won't allow mining, electricity prices are high and quite frankly all these "green" jobs the govt always go on about never come to fruition. What else has Port Augusta have to offer besides those industries? Tourism? Farming?

 

Already happening, Olympic dam has been recruiting for some time now and has just announced more positions. Alot of the workers at OD live in PA and work week on week off. This has recently changed from 4 on 4 off. This has now made it more viable for some of the guys to now, move back to Adelaide out of PA/OD. The guys drive in/out or take the bus provided for free. Flights from/to Roxby are outlandishly expensive and are only offered to a portion of the work force. If flights ever become offerred accross the board or become reasonable in price, it would have a big impact on PA.

On a side note, there has been an uptick of workers from Adelaide's northern suburbs now gaining employment up there.

 

Olympic dam, How long has that been going on for? was meant to be the biggest mine in the world, was going to have huge expansion and it always gets scaled back due to one reason or another. With the current Govt being so 'green' i don't blame them, maybe after the election if a new Govt gets in and is more mine friendly maybe PA might get a mining boom thing going on but until then i don't see anything short or long term for growth

 

Yes the expansion you are refering to was the cancellation of the ODP1 open cut. The cancelation of this had nothing to do with gov policy, and was cancelled purely based on internal factors. There is currently a huge shutdown in operation at OD with the SCM17 smelter referb and other projects. The place is expanding in both operations and employment, with BHP under assett president McGill making huge investment.

Those looking for employment in this area i can assure there is work now regularly available, and Minning experience not essential.

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Thanks folks for the insight, news, and perspectives on this town.

It reignited my curiousity this evening, so since I happen to have this months edition of YIP Magazine, I flipped to the databanks in the back and below is what I've found on Port Augusta (note, the data seems to sometimes combine the data for Port Augusta postcode with Port Augusta West... make of that what you will). Some of this data supports suggestions above that rentals are tightening (vacancy lowering = higher demand for rentals):

Vacany rate Oct 2016: 2.10%
Vacancy rate Oct 2017: 1.40%
12 month median price growth: 19.60%
3 month median price growth: 4.70%
3 year median price growth: - 5.00%

I understand that in a smaller market like this; with less data volume, metrics above may fluctuate a lot from month to month, because there aren't as many sales every year as say a capital city has. But still, the numbers above don't exactly scare me off, nor seem to reflect the negative sentiment.

The 3 year cycle data above seems to me to be consistent with other data points (unemployment as well as population ebbs/flows over the last few years I cited in my earlier posts in this thread..). I.e. recent market value re-growth off the back of an ugly 2014/15 period for the town.

Again, not trying to spruik this town but rather recognise what its current opportunity and outlook is.

I didnt know about the "BIBO" (I made that up... for bus-in-bus-out!) Workers, thanks for sharing that.

Locals and agents I spoke too have also said that thermal solar wont create many actual permanent jobs in the town itself. That said; agriculture probably will; oh and another masaive employment growth is the max security prison. It has gone up from something like 400 employees to 600. I asked 'what, is the place that rough that it needs a prison for much of its population??' (Half jokingly... half not so jokingly). Turns out that SA Gov decentralised the states prison system away from just Adelaide, to inclue PA, Mount Gambier and other places. Anyway, it is another employment mecca for the town.

 

@Alain ps - yup, farming. Innovation in solar and de-sal has birthed Sundrop farms, a massive greenhouse tomato farm 12km from town. Look it up. This sort of agriculture innovation could help feed the world in the future of climate change. Growing food year round in arid or desert climates is pretty awesome. Spains been doing this for years. Largest fruit/veg agriculture green houses in the world.

 

LOL i will be BIBOing out wednesday, 6 1/2hrs of it back to Radelaide.

 

Is this the same place the locals refer to as Porta Gutta? As David said, wouldn't touch it with a barge-pole, too dependent on tourism/government money. Very little else there.

 

Not sure what tourism.there is
Grey nomads drive through and thats about it
Theres more tourism in coober pedy

 

Oh yeah, the prison is old, but the interesting part is the recent uptick in jobs there.

 

Prisons are also the growth industry in Victoria - Ararat has been lobbying the VIC govt. for a new juvenile justice facility to be built there. I think there's mixed feelings about the prison in Ararat, it already has a special sex-offender facility attached to it. It's also a shame that this kind of thing is a growth industry that regional areas are trying to attract to their towns.

 

Yeah that is a rather depressing thought!

I was watching some US documentary once about a mega prison in Louisiana. Baton Rouge if I remember correctly (or somewhere close to Baton Rouge). During the doco which was mostly focused on the prison itself, they did touch on how much it lifted the regional townships' employment and peripheral business growth (catering/food services, linen, social/psychology/doctor services etc.).

 

Port Augusta, I get the feeling the town is re-inventing itself as a renewables hub, after the closure of its coal fired power stations. The northern power station stack was demolished last week. and the site is to be remediated (cant wait) The davenport power interconnector remains. Various solar, wind and pumped hydro generation projects at various stages of construction/approval. New highway one bridge to be completed by 2022. Increasing number of mining projects/discoveries north of the town. lots of new private investments.

 

Renewables project near Port Augusta.

Nexif hits go on final 86MW of Lincoln Gap Wind Farm, with close of CEFC debt deal

 

don't worry about a prison in port Augusta
Whyalla will be where it's at...
SIMEC Mining Comms - Whyalla's Big Reveal
600m committed to upgrading current facility to 1.8m tonne a year
Commitment to building a 10m a year facility
Plus a host of other projects