Sunday, September 20, 2015

Ig Nobel 2015

The annual Ig Nobel Awards is always a favourite and this year some Australian scientists have excelled themselves with the chemistry prize for developing a process to un-boil an egg. However I think the overall winner this year should go to the biology prize:
BIOLOGY PRIZE  — Bruno Grossi, Omar Larach, Mauricio Canals, Rodrigo A. Vásquez [CHILE], José Iriarte-Díaz [CHILE, USA], for observing that when you attach a weighted stick to the rear end of a chicken, the chicken then walks in a manner similar to that in which dinosaurs are thought to have walked.

The 2015 Ig Nobel Prize Winners

Wednesday, September 16, 2015

Great moments in real estate spruiking on Twitter

Michael Matusik @MichaelMatusik 18 minutes ago
We estimate that Gladstone’s new housing market is now slightly undersupplied by about 5% >
Michael Matusik @MichaelMatusik 1 hour ago
There are currently 2.2k dwellings for sale in equating to a 22 month supply more >
What more can I say?

Wednesday, September 2, 2015

Positive data on international visitors

The latest International Visitor Survey from Tourism Research Australia provides further support for stronger international tourism in the year to June 2015. Commentary as posted at Conus: Great International Visitor Data for the Far North
In TNQ visitors were up a stellar 9.8% on the year to 759,000; a level not seen since Sept 2008. Average expenditure per visitor was up strongly (+7.6%) to $1,318. Clearly TNQ has benefited from the surge in Chinese visitors which rose by 16.1% over the year and accounted for 21.8% of all international visitors to the region (up from 20.6% a year ago). But it’s not just the Chinese; over the year visitors from the US are up 12.8% and the UK up 13.6%. As is the case for the state as a whole, TNQ has seen a dramatic decline in market share in the past decade but we are starting to see some (slow) recovery. TNQ’s share of the total Australian international market now stands at 11.6%; this is an increase from 11.2% a year ago but is still well down from the heady heights of 17% ten years ago.
The ongoing recovery in international at Cairns Airport was supported in July by a very strong month also at the main gateway through Sydney Airport.
July’s international result was driven by higher average load factors (2.8 percentage points) and capacity increases. Inbound nationalities were 9.1% higher due primarily to growth from Chinese (+13.3%), Indonesian (+34.6%), Indian (15.2%) and US (12.8%) nationals. Australian outbound grew 3.3% as a result of school holidays and increased seat supply, particularly to the USA, UAE, Philippines and Singapore.

Hopefully the current market turmoil and uncertainty around the Chinese economy wont impact these trends much.

Tuesday, September 1, 2015

Aquis: drum beats from the circus tent

Despite no apparent real news the past week has seen further drum beating on Aquis at the Cairns Post:
Developer Tony Fung has listed his Aquis Entertainment company on the Australian Securities Exchange and last week announced a $330 million upgrade of the Canberra casino he paid $6 million for last year.

Old mate Nick Dalton reported this $330 million announcement last week. Actual real Aquis announcement to ASX in full which only came yesterday afternoon:

31 August 2015
Aquis Entertainment Limited (ASX: AQS) is pleased to announce that it has now successfully lodged with Invest Canberra its confidential proposal for a significant redevelopment of the Casino Canberra site. This is part of an ongoing dialogue with the ACT Government in relation to the future growth plans of Canberra Casino.

Curiously, I can't find that this, or the $330 million, has yet been reported anywhere else except Cairns? Not even in Canberra? It wasn't even flagged to ASX as price sensitive. The intention to submit a redevelopment proposal was included in the recent prospectus but with no information on cost or how it would be funded. The balance sheet for the newly listed entity has net assets of just $18 million which is not going to fund a $330 million redevelopment absent further capital.

As part of the backdoor listing a few million in further capital was raised via the prospectus at 20c / share. The offer had to be extended twice. With Fung holding almost 90% of shares market liquidity in AQS is going to be very low and the few trades since listing have been below 20c.

Ordinarily an ASX listed entity should have now posted half yearly results. Presumably this is waived and not feasible for AQS given the circumstances and time constraints? Consequently there doesn't appear to have been any trading update for the casino since the accounts for the year to December 2014 were lodged with ASIC in March?

An interesting aspect of the 2014 accounts is an apparent turnaround to profit for the Canberra Casino. However it turns out this is due to debt forgiveness by Casinos Austria of a $6.7 million loan which was booked to revenue. So having been paid only $6 million and then writing off a $6.7 million loan Casinos Austria have virtually paid Fung to take it away. Revenue for the 2014 year was down 10% on the previous year.

Tuesday, August 25, 2015

That airport data again

Cairns Airport has updated for July. International turnaround was the story with a good month. Domestic growth if anything a bit soft in the seasonal peak month at 2.8%.

The international turnaround still needs to be regarded from the context of a low base. However curious on this comment from the airport:
July 2015 set a new record for monthly passenger and July is traditionally the busiest month of the year. Passengers are now up to 55,000 (12%) higher than the pre GFC peaks.
The numbers here seem to be understating growth. There were also some apparent flaws in the airport data around the GFC period where their numbers re domestic and international didn't add up to the extent of deriving a negative domestic number through he international terminal.

Fung supports ASX: market crash stopped (sarcasm warning)

The Canberra Casino finally backdoor listed on the ASX today via Aquis Entertainmen (AQS).

The absence of any trades can only support the ASX on a bloody day as Minsky moment China concerns sweep the world. After "backdooring" the casino into the former Discovery Resources a few million in additional funds was raised at 20 cents. Some interesting names on the pre-listing disclosure ........

Monday, August 24, 2015

Aquis: Waiting for Godot?

Chances of Aquis mega-resort casino project in Cairns starting next year are unlikely

“The government continues to seek an acceptable outcome with Aquis for the provision of an integrated resort development in Cairns,” Dr Lyneham said.
“In May 2015 the government agreed to re-enter negotiation with Aquis to continue the process, subject to both parties agreeing to a process deed that established the basis on which the procurement process could progress.
“A process deed was issued to Aquis in May 2015 and is the subject of further discussions between the parties. Until the process deed is signed, agreed and returned to the government by Aquis, we have no formal agreement to restart the procurement process.
“Due processes will not be bypassed for issuing a casino licence to Aquis. We are continuing to have very positive discussions with Aquis.”
Integrated Resort Development projects chief executive David Edwards said the government was hoping Aquis would “sign and execute the agreement shortly so we can recommence the negotiations in earnest”.

Waiting for Godot

Friday, August 21, 2015

Insurance Taskforce Report

The interim report from the Northern Australian Insurance Premiums Taskforce was released on Monday. This doesn't seem to have generated too much noise or perhaps I haven't been looking?

I haven't had a detailed look but this appears to be getting closer to the sort of report we should have had a few years ago instead of the misguided parliamentary inquiry. There are a number of themes there which have been the subject of comment in previous blog posts. Among those is the false perception of equivalent cyclone risk between Cairns and Darwin.

Submissions in response to the interim report close September 14th.

Wednesday, August 19, 2015

North v South: population by age and sex

ABS has released updated regional population estimates at June 30 2014 down to SA2 level. A quick comparison here of the Cairns-North and Cairns-South SA3 areas by age group shows some different trends for the two:

Cairns-South SA3 has a significantly larger population in total and includes the central city area. Will have to wait for more time to dig down further into some of the detail here.

Saturday, August 15, 2015

Employment: Queensland regions skew south east

Regional labour force data for July was released last week and as always Conus has our regional trends covered: Cairns unemployment rate up; but the headline hides a slightly stronger story

There have been a few posts and comments around that this latest data may be starting to show a stronger story generally for the regions compared to the capitals. That may be so but there can be some big differences between regions. This is employment growth over the last year for the Queensland SA4 regions from the Conus Trend data:

Despite the advantages of the trend data we need to be a bit cautious here about some of these numbers at the outliers. Outback stretches all the way from Torres Strait to Birdsville with not much to connect the economies of those regions. It also has the smallest regional population so a smaller sample size spread across a huge geography. Have no idea how the ABS could possibly get a reasonable representative sample. Having said that the outcome seems to fit with the prevailing narrative re the resources sector and drought in this area.
Despite the surprising performance of Wide Bay it remains if anything the employment and demographic basket case of Queensland with an unemployment rate at 9.1%. Although at last thankfully the participation rate has recovered somewhat from some poor numbers below 50%.
In between those two what stands out is that the regional growth has been skewed by some very strong numbers in the largest population regions of the Gold and Sunshine Coasts. Cairns also is not doing too badly here in a relative sense although perhaps should be doing much better.
The ABS numbers includes the Gold and Sunshine Coasts with Rest of Qld outside Greater Brisbane. To repeat a previous exercise let's strip out the Gold and Sunshine Coasts to combine with Greater Brisbane to form SEQ compared to the remaining Regions with numbers from the Conus Trend:

That last graph should also show why the previous LNP government Queensland Plan for regional population parity with SEQ was stupid bordering on innumerate with regional Queensland failing to make ground even in an historic resources boom. Also note from the top graph that the other regions to post strong employment growth over the past year, Toowoomba and Wide Bay, are contiguous with SEQ: Queensland SA4 Regions Map 
Gene Tunny has also taken this up at Queensland Economy Watch: Big divide between SEQ and rest of Qld in jobs growth

Infrastructure idiots?

An interesting post at MacroBusiness which quotes comments by Peter Harris from the Productivity Commission: Grattan joins PC in slamming Oz infrastructure waste

Mr Harris challenged politicians to justify expensive but low-return projects over hundreds of smaller but more effective options.
“Make the case for why the mega project must be preferred apparently to the higher-return local project,” he said. “All of this is most obvious in roads investment; the last redoubt of the unreformed investment planning process”…
With many big-ticket road projects delivering little more than $1 for every $1 invested, there were usually many more-modest but productivity-enhancing options that could generate returns of as much as $10, such as electronic traffic management systems, he said…
If politicians made their decisions based on hard analysis, they would opt for hundreds of smaller investments over one or two big bang projects, he said.
“We treat consumers like idiots if we don’t publish [cost-benefit studies]” he said…

Thursday, August 13, 2015

Burnt sugar

Falling commodity prices have been the focus of much commentary this year as supply overtakes demand. The trend for sugar has also been among the weaker agricultural commodities:

The weaker $AUD will provide at least some protection for FNQ growers. However, the Brazillian Real, the worlds largest producer, has fallen significantly further.
QSL provide a Daily Market Report. Recent commentary also at ABC Rural. 

Sunday, August 9, 2015

Overseas arrivals: don't stand in front of a trend

The updated ABS Arrivals and Departures data this week featured additional commentary for the year. This time last year Arrivals older and more feminine as female arrivals for the year drew equal with male.

This year for the first time the majority of short term arrivals to Australia were female International Movements 2014 - 2015.
A higher proportion of women than men arrived in Australia for short-term stays in the year ended June 2015. Previously, more males than females arrived for short-term stays. The short-term visitor arrival sex ratio (the number of male arrivals per 100 female arrivals) was 103 males in 2004-05 and 98 males in 2014-15.

The most outstanding cohort remains the 20-24 age group with just 79 male arrivals for every 100 females.

Also recently posted Victoria threatens to overtake Qld in international visitors has now happened.

Only just and while Queensland is in a seasonal upswing at this time of year Victoria recently has moved past Queensland for the first time on the 12 month rolling average for the state where most time was spent by visitors.

Gene Tunny has also recently posted on issues around this at Queensland Economy Watch:
QCA finds multiple policy failures associated with billions in industry assistance in Qld.

Further commentary on the latest numbers at Conus: Arrivals & Departures data shows impact of weaker A$ on foreign travel

Saturday, August 8, 2015

FY2015 Building Approvals

Building approvals data this week was perhaps not as strong as it could have been to end FY2015: Regional Building Approvals a mixed bag
What the Conus Trend data is telling us is that the slide in Townsville continues while Cairns’ recovery remains at a very modest pace (and has slowed sharply in recent months). The Cassowary Coast, coming from a very low base, is also seeing only modest growth.
A look at the regional overview throws up a few points of interest related to Pete's comment on recent softer growth in Cairns:

That softness has shown up mostly on the north side and particularly Trinity Beach - Smithfield with the most recent months well below their average for the year. Trinity Beach - Smithfield still finished the year with by far the highest number of approvals of any SA2 area at 241.
The other point of note is that the stronger data for the last few months on the south side was actually because of a re-emergence of smaller unit developments rather than houses. There were 9 units for Cairns City in June following 14 in May at White Rock. As Rick Carr alluded in the most recent CairnsWatch despite much talk on larger unit developments there is still not much happening on the ground, or in final approvals it would seem.
Another way to look at the data is in the value of building approvals. I have no idea how reliable these estimates from ABS are for values but anyway this graph also includes alterations, additions and conversions for the residential component:
Non-residential will always be lumpy as will the unit component of residential. So I thought I would stick to the house sector and look at the average building value per house of approvals in recent years:

That doesn't appear to indicate any significant inflation trend in building costs. However this is derived from an average based on aggregates and a median would be preferable as with anything property relate as averages can be skewed by a small number of high value houses. Breaking that down further the average for Cairns North is only a bit over $5k above Cairns South for FY 2015.
A suburban breakdown by SA2 for the year shows a far larger spread but again this is where we have to be careful with skewed averages especially in areas with a low number of approvals in established suburbs near the hills and beaches. For what it's worth perhaps we can call this the Snob Scale:
New houses Average value
Earlville - Bayview Heights 4 $496,200
Whitfield - Edge Hill 7 $472,500
Brinsmead 7 $444,571
Kanimbla - Mooroobool 26 $429,146
Yorkeys Knob - Machans Beach 6 $421,550
Port Douglas 38 $420,608
Freshwater - Stratford 9 $384,044
Clifton Beach - Kewarra Beach 52 $370,588
Westcourt - Bungalow 1 $363,600
Woree 9 $351,644
Mount Sheridan 13 $348,808
Redlynch 69 $309,281
Manoora 2 $280,000
Bentley Park 31 $276,494
Trinity Beach - Smithfield 241 $274,979
Gordonvale - Trinity 47 $260,755
White Rock 17 $246,894
Edmonton 68 $244,449

For anyone interested in building costs BMT Quantity Surveyors have an online calculator for different types of buildings and also includes a cost adjustment for Cairns: Construction Cost Calculator

Saturday, August 1, 2015

CairnsWatch: Domestic passengers land safely! Building approvals set for take off?

The latest HTW CairnsWatch for July is out and most noted was that their reported airport domestic trend passenger growth has landed safely from a previously hyperbolic altitude back to a more reasonable 3.7%.  Now uncertain on their trend building approvals for Cairns though which seem somewhat elevated above the Conus Trend: Building Approvals show some improvement in FNQ

Never mind there is otherwise some interesting property analysis in there and also in Rick's recent Cairns Chamber Presentation. Anecdotal feedback has been a busy July around Cairns and Port Douglas with tourism accommodation scarce. However the opening paragraph at CairnsWatch probably remains a good summary of the current state of play:
Cairns is starting 2015-16 in much better economic shape than it started 2014-15. Even so, the economy has not yet become buoyant. Future business indicators such as tourism arrivals and housing construction are good, but they are not filtering through as rapidly into improved job creation and reduced unemployment

Last year I attempted to provide some context to a recovery in Cairns building approvals with a graph of approvals relative to population for the large regional and metropolitan council areas. It looked like this for FY2014:

With a month to go and June data out next week the comparison for 2015YTD to May looks like this:

The dramatic shift there is the move by Gladstone and Mackay from one end of the scale to the other. Relative building approvals above the Queensland average have been entirely in SEQ. Cairns has improved its position but not by much and again it is the volatile unit sector missing so far. If the comparison was just houses Cairns would be close to the Queensland average.

The building approvals trend in Townsville has been lower but appears to have maintained momentum relatively well compared to other coastal regional cities. The median house price comparison in the HTW reports show a stronger trend in Cairns relative to both Townsville and Mackay similar to my recent post on rental comparisons. Townsville median has been trending lower for some time and is now at a multi-year low again indicating a well supplied market on this measure.

Note: Populations are from ABS at June 30 2014. Douglas, Noosa and Livingstone have been re-amalgamated to enable relevant comparison.

Wednesday, July 29, 2015

Quote of the Day

A Nick Dalton classic:

Chamber chief executive Deb Hancock said expansion of the port over time would provide for “sustainable development to growth and prosperity of the region, in pace with the market’s growth”.

Who even among those who claim to understand what she has said  could possibly disagree?

Monday, July 27, 2015

Aquis: the timeline titans

Have been quiet recently on the Friendly Fung Family (FFF) and Aquis. So after some recent distractions updated today developments re the backdoor listing on ASX of the Aquis empire and amazing investment opportunity offered by this investment.

My previous post noted that Aquis seemed to have a problem with timelines: Aquis Entertainment lost in Canberra fog?

I must update this in detail. Aquis have since splurged on a high profile sponsorship of the NRL Gold Coast Titans. Thousands of billionaires have been queueing up to back this sponsorship but were seriously disappointed when they were beaten to it by the FFF.

Never minds the chart looks fantastic:

However. DIS (aka Aquis Entertainment) remains suspended today. A replacement prospectus for the capital raising was lodged last week. This expired Friday. DIS lodged notice of extension only today. There were reasons which will be referred to the video referee at Loose Change.
Given that DIS last closed at 19c after languishing well below that and the capital raising is at 20c one can only presume that Aquis Entertainment has not been knocked over in the rush or it would have been quickly closed? 
Who knows? When it comes to repetitive underperformance on their own timelines, Aquis make their Gold Coast Titans look like premiers!

NT - The Joke State

Predictably, the Northern Australia white paper hype has seen another push for the NT to become a state by 2018. Bob Gosford nails this on his Northern Myth blog at Crikey: Joe Hockey was right – Adam Giles’ push for NT Statehood is a joke
Just in case you might believe this tosh the NT will NOT be getting Statehood by 2018 or anytime soon after. 

Gosford has previously noted:
As [Nicolas] Rothwell notes, the tax-payers of the Australian south-east fork out around $4 billion a year to keep the NT running. Divide that number by the 220,000 people in the NT—-about the population of your local shire council but without the productivity and contribution to GDP—-and the figure is around $18,000 per head.

At least they will have a catchy vehicle number plate slogan all ready to go.

Thursday, July 23, 2015

Adventure Festival boosts Airport

Passenger numbers grew strongly in June with domestic up 6.3% and international up 16% on the previous year. The airport attributed this to a later date for the Adventure Festival with participants arriving in June whereas arrivals the previous year started in May.

School holidays also started a few days earlier and the domestic growth figure also comes off the back of a rare negative growth month in June 2014. The big international growth number while encouraging also needs to be kept in perspective following the slump throughout 1H 2014.

The good domestic growth doesn't reverse my cynicism about the most recent HTW domestic trend growth of 8.2% with only a single monthly number above that or even close since January 2014, although this trend hasn't been updated since their April report.
Elsewhere both Sydney and Auckland airports reported positive international trends in June. Auckland was particularly impressive with international growth in June of 7.2% driven by China and the USA. Their Queenstown Airport numbers are also growing very strongly.

Tuesday, July 21, 2015

The regional rental gap

A few media reports lately on rental trends from property research houses but can't see why the quarterly data from the RTA based on actual new bonds lodged isn't the best data. The June quarterly data for the NQ cities shows a very different story for each over recent years:

In the three largest rental categories Cairns has opened up a significant gap over its southern neighbours in all as a relatively expensive place for rental housing.

Meanwhile, the real estate perma-bears at Macrobusiness have an interesting analysis and warning on the previously high flying Darwin market as the $34 billion Ichthys LNG Project approaches completion: Sell Darwin housing now! ($)
Look out below!