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The rising tide of marina investment

The marina industry continues to move into a sustained cycle of recovery with further evidence of increased transaction activity, marina berth demand and, for the first time since the GFC, new development opportunities emerging. This combination of an increase in investor and occupier demand is starting to flow through to developer demand, which is a real positive for the industry.

This unique alternative real estate investment asset class suffered heavily post GFC.  Unlike other commercial assets, marina assets were hit by a combination of falling occupier demand and a readjustment in the way marinas were valued. This saw asset values depreciate significantly. Fortunately this structural adjustment has now flowed through the market, and the fundamentals are now firmly established for a broader recovery.

As outlined by JLL in the Second Edition of the Queensland Real Estate Market Review, Marinas as an investment class are on the rise following the $27.0 million purchase of Abell Point Marina, Australia’s largest marina sale in almost 5 years, and the $11.6 million sale of Port Douglas Marina, both in 2013.  This is set to be followed by the sale of Fisherman’s Wharf Marina in Hervey Bay in 2014.  JLL’s marina advisory and transaction team has seen strong demand for these assets come from a broad base of both domestic and international investors highlighting the increased interest in the asset class.  What has been particularly interesting has been the diversity of international investors, with genuine interest coming from countries including China, Singapore, Malaysia, the Middle East and New Zealand.

This pick up in interest has come from investors seeking good strong cash flows, with value-add opportunities.  Many investors in this sector understand the fundamentals of the boating industry have improved considerably with boat registrations over 8 metres continuing to record solid increases.  Those in the know understand that boat registration growth in this segment has been broadly tracking in line with population growth.  We consider this is a more sustainable pace of growth, particularly as it has occurred during a period of conservative consumer spending and a very high level of household saving.  Coupled with the broader economic recovery that is well underway in Queensland, we expect this growth rate will likely start to accelerate.  Interestingly, throughout the entire period between June 2007 and June 2013, total boat registrations in Queensland increased every year, with registrations increasing by 2.4%p.a. (over 33,000 vessels in total over the period).

Figure 1: Total Boat Registrations in Queensland, 2007 to 2013
qld-recovery-graph-1.jpg
Source: DTMR

The big boys and their boats are back
Interestingly, one of the strongest performing market segments in recent years has been for larger vessels, with boats between 18.1m and 25m showing particularly solid growth. The large boat market recorded a total annual growth between June 2007 and June 2013 of almost 10.0% to 306 registrations.  With many existing marinas having limited capacity for larger vessels, this demand increase is a positive for new investment in marina berth capacity for some marinas.  A changing in mix of boat sizes has also been evident, with the proportion of larger boats increasing over the last 7 years.

qld-marine-recovery-image2.jpg
Source: DTMR

Queensland Enters an Exciting Phase of New Development and Investment Activity
With the fundamentals of the demand for new vessels remaining strong (importantly for vessel sizes that require wet or dry marina storage), and a broader pick up in the Queensland economy, this combined impact has not surprisingly sparked investor and developer interest in new development opportunities. This has been across both existing marinas with expansionary potential and, for the first time in more than 5 years, new marinas.

With most marinas being developed in conjunction with a range of complementary land-based uses, primarily residential and in some cases mixed use and tourism based uses, the State government has moved decisively to provide new opportunities through a number of major initiatives. This has ranged from planning support for new mixed use marina projects, through to the opening up of large scale development opportunities as part of the Integrated Resort Development (IRD) expressions of interest processes. The latter is particularly significant for the State of Queensland as it has supported the planning for several multi-billion dollar mixed use projects including a potential for new casinos, integrated resort facilities, cruise ship terminals and marinas. These include projects such as:

  • The Broadwater Marine Project at Southport on the Gold Coast;
  • Great Keppel Island on the Great Barrier Reef;
  • Toondah Harbour, the gateway to North Stradbroke Island;
  • Weinam Creek, the gateway to the Southern Moreton Bay Islands; and
  • Shute Harbour, centrally located to some of the best parts of The Whitsundays


In insolation, many of these have the potential to provide an unprecedented scale of investment in important recreational and tourist infrastructure for Queensland. Perhaps what makes this most significant is that in combination they will act to create an even stronger network of significant recreational cruising vessel infrastructure; the first such investment of any scale in Queensland in more than 25 years. JLL’s marina advisory and transactions team has worked closely with developers, investors and the Queensland State Government in supporting the continued progression with a number of these major marina and resort development projects and transactions to ensure the fundamentals of these projects are commercially sound and represent strong value-for money for the State of Queensland.  The pipeline of these projects suggests a very exciting time ahead for enhancing some of Queensland’s most important and highest profile tourism assets.

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