When economic news from around the world gets all gloomy one sector that always seems to get hit is Australia’s tourism industry.
But there are some travel changes in the wind that could be good for some property markets. And they are probably not the specific real estate markets you are thinking of.
What’s gone on over the last few years?
Fact is – since the GFC we turned from a nation of spenders into a generation of savers.
Today Australians tend to be cautious with their disposable income wondering whether the annual family holiday is such a good idea or whether it’s better to save those extra few pennies.
Add to this the fact that the strong Aussie dollar has until recently bought us far more bang for bucks overseas, and those of us who had a desire to travel suddenly got itchy feet for the likes of Asia, the US and Europe.
This meant that locals in our holiday towns have been doing it tough as they face rising unemployment due to a slowdown in the tourism sector.
And many residents in our holiday locations have been struggling to cope with their mortgage commitment, with these areas recently recording some of the highest rates of repayment delinquencies in the country.
But now things are changing…
You’d have to be living under a rock not to have heard that over the last month the Australian dollar has plummeted from its previous highs now making overseas holiday more expensive for locals and holidays in Australia more economical for foreigners.
That’s the first bit of good news for our tourism industry, but there’s more…
We could become the new playground for Asia.
The rapid urbanization of China and India, two of the world’s most populous countries, has created a new population of potential tourists at our doorstep.
The rapidly expanding numbers of cashed up Asians are choosing to spend their downtime (and disposable income) right here as China and India’s burgeoning middle class start to embrace holidays Down Under.
Interestingly, almost as fast as we ship coal and iron ore to China’s steel mills, the number of inbound visitors to our shores from China is soaring.
A surge in tourism
In the past decade, the number of Chinese tourists visiting Australia has escalated by 13.4 per cent annually, overtaking Japan and Britain.
In fact China is our biggest source of local tourism revenue, with Chinese holidaymakers spending more per person on average than Kiwis or Brits.
In contrast, the number of inbound tourists from the financially flailing Britain has grown by a dismal 0.2 per cent per annum, while the number of tourists from Japan and the United States has shrunk.
With many analysts predicting a rapid expansion in China’s middle class, we will no doubt see this trend continue. In fact some suggest that Chinese visitors will account for a third of the tourism export industry’s growth between now and 2020.
Where do they want to spend their money?
The big question then for Australia’s tourism operators is; where and how do these new Asian jetsetters want to spend their time and money?
In the 1980’s, the priority was sun, sand and surf as Japanese holidaymakers flocked to the Gold Coast and far north Queensland.
But the Chinese have different priorities with a greater emphasis on the attractions offered by urban centres such as Melbourne, Sydney and Brisbane.
While the traditionally holiday hotspots in regional Australian towns struggle, capital city operators are adapting and in turn, profiting.
This is because the average Chinese tourist spends more than two-thirds of their entire trip in the nation’s three biggest cities, but relatively little time in tropical Queensland.
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So what does this mean for property?
Well, like anything, where there is economic viability and demand fed by a number of industries (as there is in our capital cities), there is prosperity to be had.
However regional areas that rely heavily on tourism to sustain their local economies are unlikely to benefit strongly from overseas travellers. However local tourism should eventually pick up as our cheaper Aussie dollar makes overseas holidays more expensive for locals.
In the mean time the economies of our three big capital cities are being strengthened by this new wave of tourism and this can only be good for their property markets.
How can you take advantage of this?
I’m not suggesting you buy tourism related properties, however owning the right type of capital citify property will be a powerful wealth creator and with our property markets moving on, a whole new generation of property millionaires will be created over the coming decade.
However, if history repeats itself, and it most likely will, most people who get involved in property investment will not become financially independent. many will buy the wrong property or at the wrong time or in the wrong location.
With so many mixed messages out there about what type of what makes a good property investment it’s hard to know who to listen to.
It’s hard to know who to trust.
If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.
Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.
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