The dawn of 2022 is likely to see the continuation – and acceleration – of a trend that has been gathering pace in recent years … the corporatisation of Australia’s caravan parks.
Increased demand for local travel, a burgeoning manufactured housing estate market and institutional appetite for land banking has stimulated investor interest for caravan parks as an alternative asset class.
Experts say institutional investors are rapidly snapping up park assets that may have otherwise stayed in the hands of mum and dads.
HTL Property director, Andrew Jackson, told the Urban Developer publication that heightened investor interest could be attributed to the renewed interest in caravan holidays sparked by pandemic border closures.
“People are gravitating towards regional areas and residential price growth is enormous, and this is extending up and down the eastern seaboard generally,” he said. “This is also flowing over into greenfield development … there’s simply not enough land around and people are recognising the demand for affordable accommodation options in these locations and seizing what they can.”
He told Urban Developer that a recent flurry of sales had confirmed that new capital was trying to gain a foothold in this tightly held and rapidly evolving sector.
“This targeted strategy illustrates the metamorphosis of what has now well and truly evolved from a mum-and-dad cottage industry into being wholly corporatised,” he said.
And it seems that developers aren’t fazed by the fact that revenue decreased by nearly 30% in 2020-2021. Instead, Urban Developer reports that the land grab continues as transactions ramp up across the nation’s 2400 caravan parks.
After a tough couple of years, it seems leisure park owners are keen to cash in, with 104 parks listed for sale across the country as of this month.
According to Angus Strachan, the director of business services at financial advisory firm, BDO, premium parcels of land are hard to come by and prices are extraordinary.
Strachan, who specialises in tourist parks and resorts, told Urban Developer that buyers are seeking freehold premium locations on decent parcels of land in prime locations with the potential to grow and expand in the future.
“Investors are buying premium parcels of land that happen to be a holiday park or existing business that’s doing quite well, with the intention of hanging on to it for the time being until they figure out what to do with it,” he said.
The chief executive of BIG4 Holiday Parks Sean Jenner told Urban Developer that there had been an exceptional level of interest in the asset class.
“Strong sales have been recorded in recent months,” he said. “With buyers potentially paying over the odds of what the market might have seen previously, which is a strong reflection of how much demand is out there and how much of an opportunity investors see in this category long term.”
Mt Jenner said that, while a lot of these corporate investors are investing in properties, they’re also investing in developing and improving the facilities, leading to better outcomes for the broader market.