To You!!
The Good, The Bad and the Ugly for Pimpama!!!

The good, the bad and the ugly for Pimpama

Hi all,

I thought it was time to talk about the elephant in my back yard!
PIMPAMA

In short, it is a fair option, but there have been better alternatives for investors needing pending growth and reliable tenancies – simple as that.

For several years now, you have heard me talk about Pimpama as a possible Investment suburb however I have resisted recommending it as an IDEAL investment opportunity. Why is that?

Firstly, watch this excellent Promotional video from Choice homes. This is part of the ‘GOOD’.
It’s a great story and all very valid.
https://gallery.mailchimp.com/ab63a2646ce53f08b65bcae9d/files/52a83183-ca3a-4ba3-85f2-74f94599b10f/From_farmland_to_Coast_s_retail_mecca___Gold_Coast_Bulletin.pdf

The GOOD about Pimpama is:

  • that it is in the fastest growth zone in Australia
  • Numerous new schools have and are being built
  • Numerous new shopping precincts are being built in a 15klm radius
  • M1 and both Ormeau and Pimpama stations are close by

The Bad is surrounding things that hold back rents and valuations for investors

  • There is a massive amount of building taking place as it says, turning farmland into suburbs
  • Roads infrastructure is way behind (in spite of the comments in this promo). I know this because I LIVE in this zone at Hope Island. Traffic is a nightmare for many residents in Coomera and Pimpama and will not be solved in the near future. Even the changes to exit 54 will not be enough to avoid it being ‘dreaded’
  • New build starting prices have always been well ahead of existing property values and rarely have valuations been able to match contract prices thus making it harder to get loans over the line and more cash required by the investor. Having said that, I have a  friend who has been getting some good results in there but he has had to fight for fair pricing and value from suppliers. It’s rare though.
  • Benchmark value properties are minimal and too far away to be of benefit valuation wise

The ugly is that

  • there is a massive number of rental properties around Pimpama where I have been told it is around 70% investor to 30% home owners
  • Block sizes are small and getting tiny with commonly 300m2 blocks or less in many cases. If you can get 450m2 you are lucky
  • Banks have mostly classed this as a danger zone for investors, now commonly lending only 70% for properties in the area
  • Cultural demographics are that there are a lot of big families renting there who turn the garage into another living or bedroom and leaves significant parking problems where lawns become car parks

The Bad and Ugly tell me that valuations are nowhere near keeping up with new build prices and we are already seeing rents declining with significant over supply in this area over the past 6 months and only getting worse.

Ideally Investors need!

  • Fair value contract prices
  • Larger blocks of land where possible (it’s the land price per m2 that grows after all)
  • Low renter % in the area
  • Nearby higher value benchmark properties
  • Infrastructure that increases desirability
  • Population and Jobs growth

Pimpama meets many of the things I look for in an investment area.
I am still reviewing property options for investors there and have some locations I am happy with and will consider for clients.
Without a doubt, Pimpama region is going to be fantastic eventually with lots of positives for Investors so if you have property there, do not be concerned. Diversify your portfolio and as always, find the best value with most likely safe rental scenario.

If you want to discuss any of the above, please ring me or write for a chat, it is an ever evolving landscape.

Stay tuned as I will be putting out a post budget video in the coming days.

Have a great week

Mike

 

Mike Harvey
Principal Investment Consultant and Author
 0400 098 755
E  mike@onyourside.consulting
W  www.onyourside.consulting