FIFO accommodation and the rental debacle: Terry Ryder

There was a time when a big infrastructure project was an economic gold mine for the local community.

The proponents hired local people and bought services from local businesses. Expert personnel brought in from outside rented local houses.

How quaint were those days. How very last century. 

Today you fly everyone in from a distance and build a temporary camp to accommodate them. A town can have a $2 billion project happening 5km down the road without any change in the local unemployment rate or the residential vacancy rate. 

In fact, the vacancy rate may well rise if developers build new dwellings in anticipation of increased demand. Gladstone’s influx of tens of thousands of new jobs coincided with its vacancy rate rising from near zero to 10%. Most of the worker stayed in camps on an offshore island.

If you live locally and want a job on the big new project that comes to town, you may need to migrate interstate because big companies prefer to fly their workers in from outside.

Most companies planning big mining projects put out press releases promising to hire local workers and services, but in most cases they’re lying.

And it’s not just resources projects using the modern-day scourge of FIFO workforces and temporary accommodation camps. Now, everyone’s doing it.

In Bundaberg in Queensland, a business that grows strawberries has received council approval for a nine-stage short-term accommodation development to house seasonal workers. The losers will be local landlords and owners of backpackers accommodation. 

In Toowoomba, a 500-room workers camp was proposed by one of the companies hoping to become the preferred tenderer for the $1.3 billion Toowoomba bypass, also known as the Toowoomba Second Range Crossing. 

As it happens the Rangelink consortium didn’t win the tender. But it demonstrates how the concept of mobile workforces and temporary workers camps is taking hold.

The PR for projects like this always put the number of jobs created up in lights. That used to mean local jobs and politicians would gush about the local benefits. Today it’s likely very few of those jobs will be people living locally. 

It’s changed the way property investors need to assess locations worthy of their attention. A big infrastructure development may create some economic ripples in the local community but these events no longer create the property booms of the past.

Today, the big infrastructure projects are more likely to create ghost towns than boom towns. Regional Australia is littered with towns that once thrived from the presence of big industrial developments or mining projects – places where investors enjoyed double-digit rental yields.

Now the vacancy rates read like this: Mackay 7%, Port Hedland 8%, Emerald 8%, Newman 9%, Chinchilla 17%, Miles 24%.

Many would speculate that this is evidence of the end of the resources boom. It’s not. In most cases, it’s evidence of the proponents of major mining or infrastructure projects bypassing the local town and putting up their workers in temporary camps.  

The property market in the WA town of Newman has crashed during the construction phase of the $9 billion Roy Hill iron ore mine. Seven thousand people are working on this project but Newman’s median price has dropped 24% in the past year and rents are about a quarter of their peak levels.

And the core message is that  this phenomenon is no longer just a resources sector scenario. It’s spread to other enterprises.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.