Tourist/Caravan Parks & Manufactured Home Estates – Market Overview

Magann O’Rourke Loader Property Valuers & Consultants undertakes valuations, rental determinations, and provides consultancy advice to the industry on Caravan Parks and Manufactured Home Estates (MHE’s). Areas of coverage include regional NSW and southern Queensland.

The caravan park industry has undergone significant change over the past decade. Historically, both Freehold tenure and Crown leased parks have occupied prime sites within any given locality. Major transformation that has occurred within the industry includes the following:

  • Clear delineation between the permanent and tourist sections within existing parks;
  • Loss of a number of tourist-based parksites to alternate-use development, particularly within high value coastal locations;
  • The progressive conversion of older style tourist parks which provided basic services. The majority of parks now providemajor infrastructure/community facilities, modern and diverse accommodation, and cater for an increasingly discerning tourist market.
  • Emergence of the MHE’s, or Manufactured Home Parks (MHP’s), as a separate asset class within the industry,with the target market being over 50’s;

The market for tourist based parks peaked around late 2007, highlighted by historically low yields driven by corporate sector activity. Corresponding strong demand for MHE’s also ensured record tight yields were being recorded prior to and including this period.

Tourist park market activity and profitability fell away significantly during the Global Financial Crisis and subsequent macro/micro fall-out, with continued subdued conditions being experienced through 2011. There were a number of impaired asset sales within the industry during this period, although the majority of good quality property remained tightly held, awaiting improved market conditions.

Modern Lifestyle Villages generally provide a wide variety of community facilities including swimming pools, tennis courts, bowling greens, community halls, parks, nature trails, BBQ areas and even marina berths in some coastal areas. The manufactured homes have evolved over time to now represent a pseudo fixed building with verandahs, decks, pergolas and carports. The majority of MHE’s were somewhat insulated from the severe downturn in economic conditions experienced from 2008-2012.

There has been a discernible rationalisation of the industry over the past few years, with well located, larger scale tourist parks and MHE’s being highly sought by the corporate sector re-entering the market, private investment groups and significant private individuals. Steady and improving cash-flows, an ageing demographic, significant upside potential in growth and profitability, logistics,and finance have been the dominant drivers within the sector during this period.

Although there have been relatively few recent freehold going concern sales of parks or MHE’s, there appears to be an increase in both enquiry and sale of this type of asset class since January 2012. Leading industry brokers report good enquiry rates, although there have been a number of “off-market” transactions which have occurred during this period.

The most recent going concern sales for good quality tourist based parks and MHE’s that we have analysedconfirm a general yield range as follows:

Tourist Parks 9.8% – 14.0%;

MHE’s 8.5% – 10.5%.

We anticipate strong demand for good quality tourist park and MHE asset classes,and continued market activity within the industry for the foreseeable future.

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