The commercial and Residential property market in regional Queensland is experiencing a surge of interest from Melbourne investors, as the state’s booming population continues to grow. According to Raine & Horne, Queensland property is becoming more attractive due to factors such as demographic shifts, economic dynamics, an upsurge in tourism and market forces.

The Gold Coast in particular has experienced a large transformation, with the return of tourism to the region sparking new interest in the local retail sector. With long-standing vacant shops now finding tenants, retail vacancies have dropped below 5% and yields are ranging between 5% and 6%.

Raine & Horne also said the industrial market on the Gold Coast remains robust, especially in smaller strata-owned developments which are witnessing high demand for both sales and leasing. They said that older industrial showrooms are undergoing facelifts to align with current trends, leading to higher annual rents. Notably, despite interest rate hikes, sales yields have remained unaffected.

In contrast, the Townsville retail sector has experienced some challenges, with many retailers downsizing or closing due to tightening household budgets and interest rate increases. Furthermore, the ongoing effects of the COVID-19 pandemic have contributed to population growth on the Sunshine Coast, with around 47,000 individuals migrating to the region.

This population influx has led to some big jumps in sales prices for commercial assets, highlighted by the increase in industrial unit prices, where recent units were sold for $4,000 to $6,000 per square metre, up from $3,100 per square metre in previous transactions.

Notably, Melbourne investors are looking beyond their own city to the flourishing regional markets of Queensland. Raine & Horne said that changes in retail leasing legislation in Victoria have encouraged investors to explore commercial property opportunities in the region.

One instance is Hervey Bay, with the market witnessing an influx of interest. Retail yields are ranging between 7.5% and 8%, vacancies at approximately 5%, and rents falling within the $250 to $300 per square metre range.

Mackay is also experiencing a rise in the value of second-hand buildings, primarily due to the escalating costs of construction. Soaring construction expenses have made new developments less feasible and as a result, the gap between new and second-hand commercial properties has narrowed, with the latter gaining value due to easier refurbishment and immediate usability. Industrial rents in Mackay currently range between $165 and $185 per square metre, with yields between 7.5% and 8%.