Port Hedland Australia's iron ore boom town - Aussiehome

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Hot spot | port hedland Port Hedland), the numerous mining contractors and extensive port facilities are on $100,000-plus salaries. These large salaries are a result of the flood of wealth mining companies and their suppliers have enjoyed from booming iron ore prices, the town’s remote and hot location (its annual median temperature is a scorching 33°C) and the fact there is a chronic shortage of workers in Western Australia’s remote ‘resources’ sector. Despite the global slow-down of 2008/09, this acute shortage of mining workers continues unabated. Indeed, the shortage of miners hit its peak in May 2010 according to the ABS, with over 6,200 vacant positions across Australia. Commenting on these statistics, leading labour hire firm Drake Australia said: “The mining shortage never went away. Mining workers are very hard to find. You need critical skills – more than other industries – and you often need them in remote locations.” Another mining recruiter, NES Global, believes because of this shortage, “wages are expected to rise 20% over Median house values for Port Hedland have risen at double the national 10-year average annual growth rate – a stellar 18% the next 24 months”. The net result of this has not only been booming property prices but a consistent gross rental yield of 10% for investors in Port Hedland and (the more affordable) South Hedland. This has been one of the main draw cards for investors, given gross rental yields are more than double the national average. Flood plain limits land supply The first thing most investors say when they hear about the prices of houses in Port Hedland is, “why don’t they just build more homes” If only life was that simple! The ‘available land’ for residential construction around Port Hedland is very limited due to the vast flood plains and salt deposits that cover some 85% of the immediate area around the town. Indeed, Port Hedland could easily be 10 times its current size but for the flood plains alone. While many parts of these flood plains are dry all year round, planning restrictions on residential www.yipmag.com.au 21
Hot spot | port hedland building prohibits construction in areas that may be subject to flooding on a 10 years-plus basis. This safety limitation on residential land will not change, meaning that the only real way to increase housing supply in town is to increase the density of housing. Consequently, it is likely that housing pressures will not substantially abate for some time – if ever. Dramatic fly in/fly out increase An additional element to the housing boom in Port Hedland has been the dramatic increase in the number of passengers at the town’s airport, which has rocketed from 70,000 in 2003 to 210,000 in 2009 (a rise of 200%). This has been driven in part by a large increase in the size of the FIFO workforce associated with the town’s expanding port facilities and mining services companies that support the Pilbara mines. Living in private rentals, companyhired residential properties and short stay accommodation (eg, hotels and caravan parks), these workers have been the ‘icing on the cake’ that has supercharged the property market – given that virtually all of them are on very Table 1: Port Hedland civic projects Project Proponent Value Project Proponent Value Road and bridge works Hedland Regional Hospital Centre Marina and Retail Precinct development Road and bridge works Multi-purpose Recreational Centre South Hedland town centre revitalisation Public amenity enhancement South Hedland Community Centre Hedland Senior High School upgrade Finucane Island Community Function Centre JD Hardie Youth Precinct Federal Gov high incomes. Often they are also crammed into accommodation, with three, four or even six workers per house, operating a ‘hot’ bed system where one worker ‘flies out’ and cleaners replace the bed sheets for the next worker who then ‘flies in’. This FIFO phenomenon is not unique to Port Hedland. According to the Pilbara Development Commission, at least 18,000 of the 30,000 workers in the Pilbara mining industry are FIFO workers. The Town of Port Hedland Authority $160m Managed accommodation for visitors Doric Ltd $138m Marquee Park community facilities WA Gov/ T of PH is predicting the strong trend in passenger growth will continue, with numbers potentially rising another 60,000 in 2010 to a whopping 270,000 passengers. Pilbara Cities Blueprint In November 2009, the Premier of Western Australia Colin Barnett announced the Pilbara Cities Blueprint, which would create “vibrant, major cities” in the iron ore ports and towns of Port Hedland, Karratha, Dampier, Newman, Tom Price and Onslow. Focusing on the two superinfrastructure towns of Port Hedland and Karratha, the blueprint would provide “new schools and TAFEs; hospitals and medical centres; leisure and entertainment facilities; shopping and retail precincts”, and also seek to increase the town’s level of housing density. Premier Barnett said that “the government’s vision is to create a place that people choose to settle on a permanent basis, a place to bring up families with access to high standards of education, health and diverse employment and career opportunities”. Now, for any property investors this type of talk is exciting – revitalisation 22 www.yipmag.com.au $69.8m Cemetery Beach and Koomba Park facilities WA Gov $40m Crime prevention and safety initiatives WA Gov/ T of PH T of PH $8.5m WA Gov/ $8.2m BHP Billiton WA Gov $6m T of PH $5.3m $35.3m Town cycle plan T of PH $5.1m Landcorp $23m Port Hedland GP housing project T of PH $9.6m Iconoic Family Park (Stage 2) T of PH $9.5m Park improvement program WA Gov $9m South Hedland Bowling and Tennis Club development T of PH $9m McGregor Street precinct redevelopment T of PH/ BHP Billiton Chart 6: Port Hedland annual growth in median house values 40% 35% 30% 20% 15% 10% 5% 0 BHPB project FMG project $575m RGP 2 approved $111m RGP 1 approved $30m accelerated expansion approved $564m Area C & PACE expansion approved Source: Residex, BHP Billiton, Fortescue Metals Group $8.7m West End cultural precinct artistic landscaping T of PH T of PH T of PH T of PH $4.5m $3.7m $2.8m $2.4m T of PH $2m T of PH $1.6m Total $562m $2,600m RGP 4 approved $1,529m RGP 3 approved $3,100m Cloudbreak Mine, Rail and Port Facilities approved $3,850m Chichester mine approved $6,800m RGP 5 approved $2,000m in early works for RGP 6 approved $650m Chichester Hub 55 expansion approved 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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