Key Points To Consider Before Acquiring A Property Investment In Mining Areas
Posted on August 21, 2014
According to a recent article published on News.com.au, property investment in mining areas across Australia appears to be experiencing a dip, in contrast to the golden opportunities welcomed by landlords in the country’s mining towns just a few years back.
At the height of the boom in mining property investments in 2011, the simplest properties were able to command prices more reminiscent of big city rates, while demand as well as rents shot up to the sky. Today, however, while there a lot more properties listed for sale and for rent in areas like Western Australia and Queensland, there are fewer investments being made — and RP Data’s analysis of figures provided by the Australian Bureau of Statistics points to slowing population growth in mining region-dominated states, and decreased mining construction activity, as the causes of the lower number of investments (http://www.news.com.au/finance/real-estate/are-mining-towns-no-longer-a-good-prospect-for-property-investment/story-fncq3era-1227009797086).
But while recent investment activity in mining towns is dwindling, prospective investors can still take advantage of this opportunity to receive substantial returns — as long as they take a number of important things into careful consideration.
Lauchlan Leishman, provider of expert advice on Australian property investment, shares relevant points that you must consider before channeling resources toward mining properties — being smart about this financial endeavor can lead you toward significant returns.
The type of mining performed in the location
The product being mined in the property can help investors predict future demand and profitability, which will have a major impact on the health of the area’s property market and economy.
The mine’s potential lifespan
You need to be able to gauge the duration of the mining location’s ability to produce an in-demand mineral or gas. And the location’s long-term ability to meet the demand will consequently depend on the resource’s quality as well as its size.
The proper timing
A number of other factors can help investors determine whether they should act now rather than later. These can include the prices of the mineral or gas in question, the demand for it, the size of the workforce employed to extract the resources, the equipment used, and such. Some periods may be more favorable for mining property investment than others, so you need to strike at the right time.
As with any type of property investment, funneling your money into a mining town involves considerable risks. A strong demand for the mining resource today may suffer a severe decline several years down the line, and you may be left with an unmovable asset and no tenants or buyers. Done right, however, your mining property investment can also deliver amazing returns. Because of the different factors and economic drivers in play, it’s best to seek expert advice from investment professionals you can trust.