Queensland could soon be the growth engine of Australia as the tropical state is facing a migration boom.
That's the prediction by Deutsche Bank and if its forecast comes to pass, it will have implications for your share investment portfolio.
The broker believes that the meteoric rise in Sydney house prices and stagnating wage growth in New South Wales will eventually force young people out of the state and into their northern neighbour.
"Interstate migration out of NSW has hit a 35-year low. We expect a tipping point soon, that sees interstate migration rise to average levels, at least, over the next 1-2 years," said Deutsche in its latest research note.
Interestingly, Queensland's population is at its lowest level since World War II as interstate migration hit a 40-year low. This begs the question: why Queensland?
The state has a number of things going for it. House prices there are a lot lower than Sydney even if you accounted for the lower wages. In fact, the cost of living in the sunshine state is lower overall.
Further, Queensland offers a shorter commute to work and the broker believes this is a bigger pull factor than many believe.
More importantly, job prospects in Queensland are pretty good. More than half of the nation's jobs are in healthcare, retail, education, public administration, food and accommodation and construction.
The state is likely to need more of these jobs, not less, and a return to average migration will help underpin jobs growth.
The outlook for the state's economy looks pretty solid, in Deutsche's opinion with the falling Australian dollar boosting local and international tourism, while the new casino investment and a ramp up in liquefied natural gas production will bolster state revenues.
Investors had generally regarded companies with a big focus in Queensland in a negative light as big falls in commodity prices, such as coal and energy, threaten local jobs.
You only have to look at the collapse of mining contractor WDS Limited (ASX: WDS) due to its exposure to Queensland coal projects to see evidence of this.
Perceptions could soon change and Deutsche believes the best way to gain leverage to this thematic is to buy stocks like Bank of Queensland Limited (ASX: BOQ), hotel and resort operator Mantra Group Ltd (ASX: MTR), entertainment facilities company Village Roadshow Ltd (ASX: VRL) and fast food franchisee Collins Foods Ltd (ASX: CKF).
I would add theme park and leisure facilities operator Ardent Leisure Group (ASX: AAD) to the list as well.
