Suburb review: Kawana Waters, QLD (plus case studies!)



(This is a cut-down version of the suburb review we wrote for the April-May 2014 issue of Property Wise magazine.)

When looking for a property investment location, two of the factors investors consider is the how attractive the area is for renters (do people want to live here?) and the potential for capital growth. Facilities, infrastructure and other projects are often key drivers of both the rental market and growth in an area. For this reason, Kawana Waters in Sunshine Coast is reaping the rewards brought by the construction of the Sunshine Coast Public University Hospital, the recent opening of the Sunshine Coast University Private Hospital, the planned expansion of the Maroochydore airport and the development of the Maroochydore city centre as a commercial and cultural city precinct.

Phew, that’s a lot of projects!

In this article we’ll take a detailed look at the suburbs of Kawana Waters from a demographic perspective.  We’ll look at the infrastructure and facilities based projects occurring in the area and we’ll look at the property investment opportunities available.

As always I love to recommend great suburbs but do so with a disclaimer – not every suburb or every property or even every investing strategy will be the right one for you.  So remember to look at your own investment goals first and ask yourself ‘what is it that I want to achieve and over what timeframe?’  Asking these questions first will help you to determine where and what you should be looking to buy.

The Location

Kawana-Waters-Map

Kawana Waters is actually a group of suburbs located to the Southern end of the Sunshine Coast between Mooloolaba and Caloundra and includes Minyama, Buddina, Parrearra, Warana, Bokarina, Wurtulla and Birtinya.  At around 94km from Brisbane the area is commutable and many do make the commute, however, this is certainly not a sleepy seaside town and all the facilities and services required are here.

The demographics

Screen Shot 2014-03-03 at 7.49.31 PMPopulation

  • Majority of Kawana’s residents belong to the 40-59 age bracket (nearly 27%). This is followed by the 20-39 age bracket (27.5%). Median age was 40 years.

Marital Status and Family Composition

  •  Half of people in Kawana aged 15 years and up were married whilst nearly 30% are single.
  • Couple family without children (45%) outnumbered those who have kids (38%). Of couple families, 17% were both employed full time whilst 20.9% had one partner employed full-time and the other working part-time.

Country of Birth

  •  Around 78% of people living in Kawana were born in Australia. Most common residents of the area were from England (5.5%), New Zealand (5.4%), South Africa, Scotland and Germany.

Occupation

The labour force in Kawana Statistical Local Areas is mostly comprised of professionals (18%), technicians and tades workers (16%), clerical and administrative workers (14.5%). Others are managers and sales workers.   The main industries of employment are education, food services, building and construction and hospitals.

Housing

  • Properties in Kawana are mostly standalone houses (76%) with 3 bedrooms; followed by 15.5% of semi-detached, row or terrace house/townhouse types of property then 7.7% units/apartments.
  • Most of these properties were owned (35%) whilst 32.6% were being rented. Around 29%, meanwhile, were owned with a mortgage

Mortgage and Rental Payments

The median weekly rent in Kawana Statistical Local Areas is $365, higher than that of the state average which is $300.   Median mortgage repayments were also higher at $2000 per month compared to that of state average of mortgage repayments in Queensland.

The Numbers

Let’s take a look at the numbers on the suburbs around Kawana Waters:

Kawana-Numbers-Units 

Kawana-Numbers-Houses

The Facilities

facilities 

  • Kawana Shoppingworld, located on the main arterial road that connects Mooloolaba to Caloundra, is a major shopping centre in the region
  •  The largest shopping centre of the region is the Sunshine Plaza at Maroochydore, located 10 minutes from Kawana
  •  Parks are sprawled around Kawana—there’s Stockland Park and Quad Park in Bokarina, Boardstone Park and Lake Kawana in Birtinya, Neisler Park and Espanade Park in Warana, and Lauri Hutchison Park in Wurtulla.
  • Other attractions and facilities include Kawana Aquatic Centre and skate park, Lake Kawana Community Centre.
  • Hospitals in the area includes Kawana Private Hospital in Birtinya and nearby health centres are Mooloolaba Medical Centre (3 kms), Caloundra Private Hospital . The Sunshine Coast Private Hospital is 11 kms away.  The new Sunshine Coast University Hospital opened with an initial capacity of 200 beds in November 2013.

The Projects

It’s clear to see this area is growing and contributing to the growth are three major projects: The new Sunshine Coast University Hospital (SCUH), the Sunshine Coast Airport expansion project, and the Maroochydore City Centre

 The Property

Kawana-Waters-Property

Given that we are dealing with quite a group of suburbs in this area, the property opportunities here are wide and varied.

Suburbs like Birtinya offer new style apartments and houses close to the hospital precinct and property investors are definitely being targeted by developers and investment companies promoting the benefits of investing in new apartments and new houses in this location.  There are a lot of ‘off the plan’ deals being promoted here as high cashflow and high depreciation opportunities.  There are some properties that have been built already and to be honest, sometimes, it’s hard to tell the difference!  (Hint: Look for the artist impressions images and the references in the advert to ‘soon to be built’ and the like!).

Of course, off the plan is not for everyone and there are many options for established housing, both new and old and in a variety of budgets in the various suburbs around Kawana Waters.  As always, it’s a matter of working out what your particular goals are for this property within your overarching investing strategy and then finding the property that will meet those goals.

My advice on established property is to look at property at or below the median value of a suburb when you are looking to invest.  I’d also stick with your ‘meat and potatoes’ style of property, unless your strategy is to get into high-end executive rentals.  I would rather own several meat and potatoes style properties of different types in different locations than to put all of my money into one prestigious property.  This is in line with that wise old investment principal of diversification.

The Case Studies

Given that the options here are quite varied, I’ve presented two investment options to consider as our case study properties.  The buy and hold newer style apartment close the hospital precinct and the older, established property on the beach side of Nicklin Way in Warana.  Let’s look at how the numbers play out.

1. New style apartment

Birtinya-Apt

Our first case study property is a newer style 2 bedroom apartment in Birtinya overlooking Lake Kawana.   The property is very close to the new health precinct and would suit an individual or professional couple working nearby.  The property is attractive and has a nice outdoor balcony.  This sort of property offers a pure buy and hold strategy with depreciation benefits.

Let’s take a look at the numbers (note that we have made some assumptions here including 100%LVR, interest rate 6%, marginal tax rate 38%):

Birtinya-Numbers

As a long term buy and hold the property sits at just over 5% yield. Being a newer style apartment there isn’t really any add value potential in it and there will be body corporate fees, however the depreciation benefits will assist with cashflow.  Overall it’s a passive buy and hold for capital growth.  The question is, will there be capital growth to justify this property as a good investment?

2. Established house

Wurtulla-House

This property is an established 1980’s brick 3 bedroom, 1 bathroom, double car garage property on the beach side of Nicklin Way in Wurtulla.  The property is in a great location being an easy walk to Currimundi

The property is on a decent 600m2 block with side access for a boat or trailer and is in original but neat and tidy condition.  The property could be easily rented as is but also offers some good potential to add value through some cosmetic renovation and even a conversion of the double garage into more living area or additional bedroom space.

Here’s our numbers based on 3 different scenarios (note that we have made several assumptions here, including 100% LVR, interest rate 6%, marginal tax rate 38%):

Wurtulla-Numbers

As a long term buy and hold the property sits at just over 5% yield, even without doing any work to the property.  With some minor cosmetic work, the yield improves to 5.7% and then if you were willing to do a full renovation on the property including converting the garage to a bedroom, ensuite and walk-in-robe then we see a dramatic improvement in yield, not to mention the increase in property value.  This investment is a more active investment if you choose to implement the add value strategy to manufacture some growth and increased yield.  The location also shows some promise for long-term organic capital growth.

Summary

The Sunshine Coast, like other coastal locations in Queensland did experience a slow down over recent years following earlier boom times.  Within the last twelve months, however, we’ve started to see the money flow back into this area and the current list of large scale infrastructure projects on the Sunshine Coast demonstrates the extent of population growth and development there is to come in the region.

With the large scale hospital precinct development, the airport expansion and city centre development around Maroochydore we are seeing favorable conditions for investors and the volume of sales throughout the coast is further evidencing that property is back on the coast.  There are many types of properties to look at, with houses and apartments, big and small, new and old.  The hardest question to answer for investors is which type of property should I be looking to buy to give me what I need in my portfolio?

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