Australian Property News

Commonwealth Games a golden investment opportunity

Posted on Monday, November 14 2011 at 3:22 PM

The Gold Coast property market is set for a major boost after being awarded the Commonwealth Games, according to property author and founder of Somersoft, Jan Somers.

The Queensland city will host the Commonwealth Games in 2018, after beating Sri Lankan city Hambantota at the weekend. But Somers says property prices could start to improve within the next 18 months.

“It takes a long time for the market to react so if you’re going to buy anything and hope for a positive result, you really have to do it now,” Somers says.

“In a few years’ time, people will have caught on and it will be too late. If you’re going to wait a year to see what happens, it will have already happened. Even if you think you might capitalise on the psychological impact of the Commonwealth Games, you really have to do it now before things happen. You really can’t sit back and wait for a better time, because there’s no better time than right now.”

The positive impact won’t just be in housing either. Somers believes local businesses and shops will now have more confidence and so they might start hiring people, which means there’s suddenly more employment for everyone.

“This will really spill over into all of the economy,” she says.

“It’s a moral lift. A real psychological lift more than anything else. Ultimately it’s that lift and the thought that something exciting is going to happen that gives people the oomph to go out and do something.”

In fact, Somers likens the Gold Coast news to an announcement back in 1987, when the government reintroduced negative gearing for the second time. She and her husband quickly went out and bought properties that year and says by the time everyone else reacted about 12 months later, property prices had already doubled, rising from about $50,000 to $100,000.

“It can take a full year for people to realise that this is a good thing,” she says.

“I think the same is going to happen on the Gold Coast.”

R4 Property Group director Matt Rogers adds the Commonwealth Games will showcase the Gold Coast to the entire world, plus new infrastructure, including upgrades at numerous sports facilities, will start as early as next year.

“Once those jobs get rolled out, people need somewhere to live and obviously they’ll be living in paradise,” he says.

“The market is so cheap and there’s no one buying. I don’t think the market can get any worse and now people will say ‘okay there’s going to be lots of tourism again’.”

Real Estate Institute of Queensland Gold Coast zone chairman John Newlands says investors should also be aware that even once the Commonwealth Games are over, the Gold Coast will be left with lots of new infrastructure, including transport facilities like the light rail.

“I dare say they’ll be using existing accommodation (for the athletes),” he says. “So I don’t think there’ll be an oversupply issue because there haven’t been any new developments on the board. This is the great stimulus the Gold Coast desperately needed and this will be a great confidence builder.”

However, Newlands warns prices probably won’t bounce back to 2007 levels but instead become more stable. He adds it might take three years for property prices to rise five per cent.

Wakelin Property Advisory director Monique Wakelin believes property prices might not be impacted at all.

“When you look back, did the Homebush area in Sydney take off after the Olympics? The answer is no. Did some areas where Melbourne hosted the Commonwealth Games take off? No. So it really won’t happen on the Gold Coast either and 2018 is one heck of a long way away.”

Michael Yardney of Metropole agrees with Wakelin and says it’s important developers don’t go too far, leading up to the games.

“It will create the need of extra accommodation in the short term but if there’s a glut in accommodation, it will dampen the market even more,” he says.