Eureka’s $3.5M Cairns Acquisition Hinges on Council Approval for Growth
Eureka Group Holdings has acquired Barrier Reef Tourist Park in Cairns for $3.5 million, targeting strong rental yields and development upside amid regional growth.
- Acquisition of Barrier Reef Tourist Park in Cairns for $3.5 million
- Initial yield of 9.7% with potential to add 24 long-term rental units
- Park comprises 90 sites and 29 cabins on 2.05ha freehold land
- Located in Edmonton, a fast-growing residential suburb with low vacancy
- Fifth acquisition funded by $70.4 million capital raising
Eureka Group Strengthens Presence in Cairns
Eureka Group Holdings Limited (ASX, EGH) has taken a significant step in expanding its residential and tourist park portfolio with the acquisition of Barrier Reef Tourist Park, situated in Edmonton, a suburb of Cairns, North Queensland. The purchase price of $3.5 million secures a 2.05-hectare freehold property featuring 90 sites and 29 cabins, positioning Eureka to capitalize on the region's robust population growth and rental demand.
Strong Fundamentals Support Investment
The Edmonton area is noted for its low vacancy rate of just 1.4% and an impressive 8% rental growth over the past year, underscoring the strength of the local housing market. Cairns itself is one of Queensland’s most populous regions, with a current population exceeding 170,000 and projections estimating growth to over 220,000 by 2041. This demographic momentum is a key driver behind Eureka’s confidence in the acquisition.
Development Potential Adds Value
Beyond the existing infrastructure, which includes amenities such as an inground swimming pool, camp kitchen, laundry facilities, and a manager’s residence, Eureka sees further upside through the potential development of 24 additional one- and two-bedroom cabins for long-term rental. This development opportunity, pending council approval, is projected to deliver a five-year unlevered internal rate of return (IRR) of 19%, significantly enhancing the asset’s income profile.
Strategic Fit Within Eureka’s Portfolio
This acquisition marks Eureka’s fifth property purchase funded by the proceeds of a $70.4 million capital raising, reflecting the company’s strategic focus on residential communities in growth corridors. Eureka already operates two seniors rental living villages in the Cairns region, both maintaining 100% occupancy over the last three years, which bodes well for the integration and performance of the new asset.
Looking Ahead
Settlement of the Barrier Reef Tourist Park acquisition is expected before the close of the 2025 financial year. Meanwhile, Eureka recently completed the acquisition of Burrum River Caravan Park, further consolidating its position in the tourist and residential park sector. CEO Simon Owen highlighted the alignment of the Cairns market with Eureka’s investment criteria, emphasizing the region’s strong population growth, low vacancy, and rental growth as key factors underpinning the deal.
Bottom Line?
Eureka’s Cairns expansion signals confidence in regional rental markets but hinges on council approvals for development.
Questions in the middle?
- Will council approval for the 24 additional cabins be granted, and on what timeline?
- How will the integration of Barrier Reef Tourist Park impact Eureka’s overall portfolio performance?
- What are the risks if rental growth or population expansion in Cairns slows unexpectedly?
