26 May 2020
Words Todd Warner, Paul Mueller & Steve Campbell
How The Gold Coast Management Rights Market Is Shaping Up Right Now
The three of us on the Gold Coast thought we'd just give you a market update to discuss what's happening and have a bit of a chat about some of the things were hearing in the industry. We’ve seen some positive signs and the, phones are starting to ring again. Paul, your area is a lot more permanent-focused?
Yep, I’m the northern Gold Coast broker. During the COVID period, I've put two deals under contract, sold and settled, one currently under contract, and another one under offer. So this was all during COVID which is a great, great sign. The two sales were both sold off market. I ended up listing them just to show people, but great multipliers too. They were 5.3 times with $160k net. So they're great.
That indicates that permanent complexes are still in solid demand and I've actually had a lot of interstate buyers ringing lately looking for opportunities in the permanent management rights sector. They're coming from the Sydney and Melbourne markets of high real estate value. They're looking to cash out and head north.
Also, a lot of the inquiry I've been receiving at the moment has been people who have been made redundant through this COVID process, and now they're looking to supply themselves a job, buy themselves a home, and look for the next stage in life.
For these people, they might be looking at the next five to 10 years through until retirement. And the attractive thing to them seems to be the body corporate salary, which is the guaranteed income. So these guys have looked at restaurants, cafes, pubs, and then management rights and they see the obvious value in the guaranteed salary. So there's a whole new wave of buyers coming through on the back of COVID.
Gold Coast is that desirable market still where people want to live, they want to find a business opportunity. I think this difficult time has made everyone reflect about where they want to have a family life and what's important.
I think what's also happened is you've got people who have sat on the fence and now have been forced to make a decision. They've looked at management rights, perhaps they've been toying with the idea for six months to a more than a year.
What about valuations of these businesses? Obviously, we're coming into an uncertain market. We've certainly seen changes when it comes to what information we've got to provide financially and how valuers are going to look at it. So you caught up with one of the leading valuers the other day, Paul?
I did, yes. So the valuer said, "business as usual on the permanent side”. Unfortunately, it's too speculative in the short term or holiday sector. So, everyone can come up with every idea on where holidays are sitting with value. The valuers just don't know and banks are waiting for valuers. So I think there's too much speculation. Everyone has said, “close the books on those”, but for permanents it's business as usual.
Well, that's a good sign. And what about the road ahead? Steve, how do you see things unfolding in the next couple of months?
Well, the Gold Coast holiday complexes haven't even been allowed to accept holiday bookings right through until the 12th of June. So come the 12th of June, people have been locked up and we're in the mid-year school holidays then too. So we think there's going to be a huge domestic tourism boom.
This will drive the market and I think it’s going to be big. The borders may be reopened up, and the Gold Coast often gets a lot of traffic from New South Wales, but it also gets a lot right from out the back of Noosa all the way to Brisbane, Toowoomba etc. So the future's looking bright for domestic tourism on the coast, definitely. Todd Warner:
We just have to be ready to take those opportunities when the restrictions are eased. I guess the key thing is there's a positive outlook and there's some really good signs ahead. It's been a tough time, but we're all here to support you. So if you ever need any advice or just someone to chat with on any level, we'll certainly keep in touch and we look forward to getting out on the road again soon.
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