Harvey Norman co-founder, Gerry Harvey has told The Australian that he and his partners are planning to invest a further $100 million into mining accommodation, despite fears that the mining boom is over.
That follows an initial $60 million investment made through Harvey Norman Holdings (ASX: HVN), to build temporary accommodation (dongas) units to service mining companies. Now Harvey is looking at joint-venture mining accommodation investments in high growth areas of Queensland, including Gladstone and Chinchilla.
Mining accommodation builder, Fleetwood Corporation (ASX: FWD) already owns and operates a mining village, Searipple, in Karratha, Western Australia, and has won a contract to build another village at Gladstone, to cater for up to 1,000 people.
Gladstone is the major processing and export hub for a large number of sizeable and diverse resource projects in the region. More than $50 billion is being spent by major resource and energy companies on LNG, coal and aluminium related projects around Gladstone, requiring a large influx of skilled workers.
Santos Limited (ASX: STO) is in the process of building a LNG plant at Gladstone with its partners, while Origin Energy (ASX: ORG) is also developing an LNG facility on Curtis Island, just off Gladstone.
While the move by Gerry Harvey seems strange – after all, it’s a far cry from selling furniture, TVs and white goods in the suburbs — there does appear to be strong demand for temporary accommodation in these high growth areas.
At the same time, Mr Harvey said that he intended to retain Harvey Norman’s $2 billion property portfolio, despite plans by Woolworths Limited (ASX: WOW) to spin off its shopping centres into a separate listed entity. He added that he was also interested in buying quality shopping centres — some are on the market at less than replacement cost — while avoiding commercial property development. Harvey Norman has suffered losses on both of its most recent shopping centre developments.
Harvey Norman to become the next Fleetwood? Unlikely. The next Westfield – maybe.
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