Published on October 9th, 2012
Development projects for Darwin
Real estate in Darwin is at a critical juncture where billion-dollar developments are taking place and hotels are looking to invest in the city through developing new 200-room complexes to address the shortage of accommodation.
Such is the shortage that low-quality rooms can still cost up to $300 a night.
Possibly two hotels of around 200 rooms will be built in the next few years in an attempt to ease rates on Darwin.
The investments in Darwin are having an effect on amount of rental accommodation available, as those who are hired to work on these projects are renting in the Darwin area. As a result, rental accommodation is scarce with a vacancy rate of 0.5 per cent in the Darwin district. As a comparison, Sydney's rental vacancy rate rose to nearly three per cent in the month of August.
As a result, house prices as well are slowly climbing and vendors who would normally consider selling are choosing to rent out their homes instead. This is because the amount of rent that can be derived from a property is greater in terms of percentage than what could be obtained if they decided to sell.
Chris Deutrom, the general manager of Elders Real Estate in Darwin, said that this is in stark contrast to previous years where rental rates were in line with house prices.
"A few years ago, a three-bedroom house in the northern suburbs of Darwin would fetch $600,000 in a sale and $600 in rent per week. Now rent can fetch $750 per week but there's no way that home would get $750,000 at auction.
It's hoped that infrastructure projects and the building of hotels will bolster the population of Darwin and through that, the creation of new properties.