Happy campers keep caravan parks in hot demand

The tourism sector has been one of the more active asset classes of the past few years. A strong return to both domestic and international travel has improved occupancy, together with an increase in average daily rates, growing investment demand across Australia. Quality assets have been tightly held and the caravan park market is no exception, recording strong declines in investment activity during the last 18 months.

During 2023, $114.06 million changed hands across the country for caravan assets after peak investment activity in 2022 where over $300 million transacted. The highs in investment demand remain, despite the rising cost of finance, indicative of the long term confidence in the sector as well as the future-thinking of the private investor market. Many transactions often require little borrowing, with long-term land banking in mind given the escalation in residential values across the country. In 2024, sales of mixed use holiday parks, which offer cabins as well as caravan sites, have already exceeded $100 million. Northern NSW was a key location of interest together with smaller offerings in Queensland and Western Australian regional markets.

Yields for these assets are mixed, with the quality of the asset and land potential (beachfront, regional centre, development approvals) all factoring into value. This year, transactions have ranged from as low as 6.0 per cent to upwards of 9.5 per cent, with private investors, family offices, and operator/occupiers the most active buyer groups.

The attraction of caravan parks as an asset class is understandable, with limited start-up and ongoing maintenance required, the asset can operate on limited resources and can offer high returns. The drive holiday market grew in popularity during the pandemic as travel movements were restricted. Post-pandemic we continue to see strong occupancy levels with the flexibility and relatively low cost attractive to many travellers. A growing “grey nomad” sector in Australia has seen many retirees increase visitor nights, together with remote workers, however, couples and families still remain the largest occupier group with the ability to bring pets an added bonus.

During 2023, the total visitor nights saw a minor annual decline nationally, representing 59.84 million (down from 60.30 million nights). Despite this small fall in the number of nights, visitor numbers were up at 15.72 million with expenditure reaching $10.72 billion, the highest spend on record. Results across each state were mixed with NSW and Victoria the only markets recording visitor night growth, collectively accounting for half of all paid nights. Occupancy has also been high in April achieving 59.8 per cent in NSW and 64.9 per cent for Victoria, down from January highs of 73.7 per cent and 71 per cent respectively.

Some of the smaller markets have also seen quality results, Tasmania seeing occupancy reach 80 per cent earlier this year, while both Western Australia and South Australia saw occupancy around 60 per cent this last month and set new highs in revenue per site.

Supporting the growth in occupancy anticipated for these destinations, has been the continued uptick in caravan registrations. In 2023, 765,150 caravans were registered in Australia growing 5.3 per cent in the last year, campervans also growing registrations by 4.9 per cent highlighting the ongoing requirement for holiday facilities such as caravan parks.

By Vanessa Rader | Head of Research