Australia’s Caravan Park Property Market: Trends, Growth, and Outlook for April 2023

The Australian property market has experienced significant changes over the past few years, with various sectors, primarily residential and commercial, entering a period of correction. The Covid-19 pandemic and rapidly changing monetary policy environment have contributed to these market changes. 

According to a report by Acumentis, they have reached out to national industry participants to provide insights into the going concern property space, discussing general market trends in the hotel (pub), accommodation, and caravan park industries with active national agents in these specialist markets.

The caravan park industry in Australia is a significant contributor to the tourism industry, boasting more than 2,500 parks across the country. Although Covid and economic conditions have caused some variations, the industry has experienced an increase in revenue over recent years. 

Caravan parks have adapted to market demand by developing modern family cabin and villa accommodations, as well as facilities designed to serve large motorhomes and caravans. These improvements include infrastructure enhancements like resort-style swimming pools and water parks.

Caravan parks also provide alternative housing options for long-term residents and casual holiday accommodation where permitted. This industry growth has led to a substantial increase in the market for caravan and tourist parks, with rising property values, declining yields, and strong institutional demand for larger, well-located, and well-operated parks. 

“The current institutional demand for caravan parks has created a two-speed economy, where demand and transactions for large, well-located properties have seen record prices and record low yields. The balance of the market – ‘mums & dads market’ remains active and well-priced,” said one industry participant.

However, recent monetary policy changes seem to be softening demand from the larger players in the market. Institutional demand has shifted, with recent going concern yields in the sector for well-located and operated facilities as low as 7.5% being increased by approximately 1-2% to reflect the cost of finance. 

Operational issues within the sector, such as labor and insurance, mirror those of hotels and other accommodation providers and hold significant importance.

Regional Australia’s recent climatic conditions have placed significant pressures on operators, adding to their recovery from Covid trading conditions and now interest rate movements.

Delays and cost increases in the construction sector have hindered the caravan park market in terms of transportable cabins and residences being delayed, with price increases requiring increased feasibility scrutiny.

For RV park owners and operators, these trends within the caravan park property market have direct implications. Owners can look to capitalize on the increased demand and potentially sell their parks at record prices, while operators need to remain adaptable to market trends and consumer demands. 

Implementing modern facilities and catering to long-term residents can help attract and retain customers, resulting in continued success for their parks.

The caravan park property market remains strong, though it may experience a slowing at the upper end of the institutional sector. As one industry participant noted, “Good quality properties will always sell in this sector.”

It is crucial for both RV park owners and operators to stay informed about market trends and adapt to the changing landscape, ensuring the continued growth and success of the industry.