- Despite its supporters praising it as the cause of an economic boom, property investors have been warned to avoid the high-risk Adani Carmichael project and surrounding areas.
- While mining boom investments are always speculative, uncertainty about the economic benefits the coalmine will actually deliver means it’s particularly risky, analyst RiskWise Property Research said.
- The neighbouring town of Clermont for example has seen house prices decline by nearly 30% and units by more than twice that over the last five years alone.
The Adani Carmichael project may have been given the green light but it’s unlikely to be all smooth sailing ahead for the controversial coalmine.
While the company and its supporters have lauded the number of jobs it will create, the actual economic activity it will create will likely disappoint, according to analyst RiskWise Property Research.
“Our research has found that when you apply an in-depth risk-return approach with a macro-overview, and review this over three years, many ‘hotspot’ areas have significantly underperformed the market,” CEO Doron Peleg said in a note issued to media.
“This has most certainly resulted in many investors losing money, often having negative equity, particularly in regional and mining areas.”
With the Carmichael mine, however, the risks are heightened by the fact that even the number of jobs it will bring to Queensland’s Galilee Basin remains uncertain. Just last year, Nationals MP Bridget McKenzie admitted it would actually only create around 100 ongoing positions in — a far cry from the 1,500-1,800 that Adani originally promised.
It comes just weeks after a forensic accountant warned that the coalmine is on the brink of collapse before it’s even built.
All of those factors mean that investors looking to cash in on a mini-mining boom in Clermont, the 3000-strong town to the mine’s southeast, could be severely disappointed, Doran warned.
“When it comes to Clermont, there has been a huge decline in dwelling prices. According to CoreLogic’s data, over the past five years, house prices decreased by 29 per cent and for units an incredible 65.5 per cent,” he said.
With or without the Adani project, Doran said any investment in the area was “high-risk”.
“You then have to also consider that Clermont is really in the middle of nowhere and far from employment hubs. The closest is the city of Mackay and that is 500km away,” he said.
“This does not set it up for good property fundamentals and consequently increases the risk for negative capital growth, despite the Adani mine getting the go-ahead.”
Consider the example of Gladstone-Biloela, another Central Queensland mining town. Doran cites the fact that despite mining activity, house prices fell by 28.7% and units by nearly 40% in the last five years.
“We need to learn from this and not make the same mistakes made in mining towns in the past,” he said.
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