Contents. Appendix Gladstone Media. Gladstone Media

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2 DISCLAIMER Altum Constructions does not provide advice on investments. All interested parties must rely on their own research before making any investment decision and should seek advice from a qualified financial planner or similar professional. The information contained within this document has been compiled from various sources to assist you in conducting your due diligence. Please ensure that you validate all information contained within this document. All sources for information within this property summary will be disclosed at your request. Altum Constructions will not accept responsibility for inaccurate information from external sources or third parties. As part of your due diligence, it is the purchaser s responsibility to seek a legal opinion of the contract and any additional terms or clauses. You must adhere to the terms, conditions and subject clauses contained within the contract of sale. Altum Constructions has made a number of assumptions when preparing this analysis these assumptions have a material impact on the financials and, therefore, should be assessed carefully by investors. Details regarding development specifics and inclusions are subject to change and you should refer to the sales contract for final details and conditions.

3 Contents 1.0 Gladstone Region 2.0 Gladstone Economic Drivers 2.1 Gladstone State Development Area 2.2 Coal 2.3 Liquid Natural Gas 3.0 Gladstone Housing Demand 4.0 Gladstone Summaries 5.0 Gladstone Infrastructure Projects - Summary Appendix Gladstone Media Gladstone Media 1. Decades of Wealth from boom QR National coal miners to build $900m rail line Boom set to blast off Australia pacific LNG takes FID on first phase of two train project Citi Cooper Basin likely to have enough gas for GLNG T Queensland Wide Time for the other harbour city to shine Golden age of gas to pipe in $38bn to Australian economy The next Golden State Dev Rev Matrix September Arrow LNG Plant June Gladstone Economic & Industry Dev Board Current Industry Information undated 13. Two new Power Stations Ipswich & Gladstone TRUenergy powers ahead with $3.6bn station investment Matusik Market Overview Report July Japan gets on board Queensland LNG Juggernaut Historic LNG Contract is a $13bn boost to Fitzroy Region Deal sealed for Coal Port Gas Power Station for Gladstone Getting into Gladstone Aust Property Investor Rents up, hotels down in two-speed state Gladstone Top Investment Location

4 1.0 GLADSTONE REGION Gladstone is a thriving port city on Queensland s Capricorn Coast, some 550 kilometers north of Brisbane and 1,100 kilometers south of Cairns. A deep water harbour and excellent transport links close to the massive coal reserves of the Bowen Basin has made the city a strategic industrial hub of central Queensland, and arguably the state s economic engine room. The Gladstone regional council is the local authority who presides over the total estimated population of 62,660. Gladstone is a well established industrial city with a number of companies choosing Gladstone to locate their large-scale resource processing businesses and associated industries. Gladstone s industrial giants operate around the clock, employing thousands of workers. The region s major industries include: Queensland Alumina Ltd (QAL) - One of the world s largest alumina refineries; Rio Tinto Aluminium Yarwun Alumina Refinery - The world s first Greenfield alumina refinery to be constructed since 1985; Boyne Smelters Ltd (BSL) - Australia s largest aluminium smelter; Cement Australia - Australia s largest cement kiln; Gladstone Power Station (NRG) - The largest power station in Queensland; Orica - The world s largest industrial grade ammonium nitrate plant, a world scale sodium cyanide plant and a chloralkali plant; The newly announced multibillion dollar Liquefied Natural Gas (LNG) projects are based on processing coal seam gas (CSG) from the Surat and Bowen basins. The proposals include piping CSG to Gladstone or Curtis Island, liquefaction of the CSG to produce LNG and export of LNG to international markets. Potentially, the LNG industry could involve a private sector investment of more than $60 billion, the export of over 50 million tonnes of LNG per annum, which would provide significant economic benefit to Queensland including an increased Gross State Product of over $3 billion and the creation of over 18,000 jobs. These announcements along with the many other factors affecting and influencing growth has flowed through to both the residential, retail and commercial sectors of the community putting huge demands on services, spread across all sectors of the market. The Gladstone Region is also gaining momentum as a tourism destination being the only gateway to the entire Southern Great Barrier Reef. Heron Island lies 72km north east off the coast of Gladstone, where you can enjoy some of the world's best reef diving. Snorkeling, fishing, reef walking and nature walks. Appealing to young singles and couples, Gladstone is expected to experience enormous growth over the next five years. The popularity and its large rental population have encouraged property investors to buy into the area.

5 2.0 GLADSTONE ECONOMIC DRIVERS Australia stands poised to capitalise on an economic transformation unparalleled in the nation s history, with a resources and commodities boom capable of generating $480 billion of exports in the next 20 years and creating 750,000 jobs. (Source: The Australian 12/09/11). A significant and growing contributor to the Gladstone region s economy is mining and mining services. Underpinning the future success of this industry are positive global demand drivers. 2.1 GLADSTONE STATE DEVELOPMENT AREA The Gladstone State Development Area (GSDA) was established in The purpose was to secure and protect a large area of suitable land with ready access to deep water port for large scale industrial development over a year time frame. The result of this development area is a thriving 21st Century Industrial base served by one of Australia s busiest ports, the port of Gladstone. A major industrial cluster where economic competitiveness is underpinned by the 22,000 hectare State development area which offers a range of development ready sites, established infrastructure and growing possibilities for economic development to drive the regions sustainable growth. With recent and continuing investment in the LNG & Coal industries Gladstone s strong industrial growth looks set to continue. 2.2 COAL Australia is the world s fourth largest coal producer and the world s largest net exporter due to a relatively small level of domestic consumption. The majority of the resource is located in Queensland and New South Wales. Within Queensland this resource is almost entirely from the Bowen Basin. Global import demand for coal is expected to be strong in the medium term. To satisfy the global demand for coal there will be additional operations from new and existing mining operations. Gladstone has recently reached a major milestone on the way to becoming a world class coal port. In addition to Gladstone s existing coal loading facility the first stage of Gladstone s Wiggins Island Coal Export Terminal has signed up the finance for the first stage of the development, which will handle 27 million tonnes a year. The employee intensive project involves the funding and construction of a new coal export facility which will be situated just west of the existing RG Tanna Coal Terminal in Gladstone Harbour. The Terminal will be located at Golding Point on land leased from the Gladstone Ports Corporation within Gladstone State Development Area. There are a number of coal producers from the Surat and Bowen Basins that will use the Terminal to export their coal. These coal fields are situated to the west and south west of Gladstone.

6 2.3 LIQUID NATURAL GAS (LNG) Australia is poised to become the world s largest producer and exporter of liquefied natural gas by 2020, earning 36 billion annually by then (source: The Australian 07/06/11). Liquid Natural Gas (LNG) projects are further transforming the growing mining industry in Queensland. The below LNG plants have started civil construction works. The core of the work force is expected to start entering the Gladstone market in first and second quarters Queensland Curtis LNG $15bn development creating 5,000 construction jobs and 1,000 operational jobs; 2. Gladstone Liquefied Natural Gas Project (GLNG) - $16bn development creating 5,000 construction jobs and 1,000 operational jobs; 3. Australian Pacific LNG - $14bn development, creating 3,300 construction jobs and 175 operational jobs; In addition to these plants Arrow Energy is planning an LNG plant which will require a peak workforce of 3,500 people during the construction phase. Arrow Energy is anticipating starting construction on the LNG plant in 2013.

7 3.0 GLADSTONE HOUSING DEMAND The resource endowed state of Queensland is expected to experience nation leading population growth as a result of Australia s two speed economy. With the significant amount of employee intensive works existing, under construction or planned in Gladstone there will be an ongoing requirement to provide suitable accommodation in the region now and in the future. Workforce migration as a result of employment creation, coupled with underlying population growth, is expected to create significant underlying demand for new dwellings in the medium to long term. Modelling undertaken by the Queensland government office of Economic & Statistical research, projects the Gladstone region will require 21,093 new dwellings during the period 2006 to These projections are depicted graphically in the chart below. HOUSING AND DWELLING PROJECTIONS TABLE

8 4.0 GLADSTONE SUMMARY During 2010 Gladstone Region Attracted US$16 billion of Foreign Direct Investment (FDI), more than any other city in Australia and comprising a staggering 44% of total FDI into Australia of $US36.68 billion; 2011 there is a further $50 billion committed to projects which have now commenced construction; Matusik reports that there is currently $88 billion in projects that are either under construction, have Environmental Impact Study (EIS) approval or are proposed/pending. See the enclosed summary of these infrastructure projects. Such major infrastructure developments are important employment generators that promote demand for residential property. For example in 2003, the Queensland branch of the Urban Development Institute of Australia commissioned a study which found that for every $1 million spent on new infrastructure, nine full time jobs were created (five of which are directly in the development industry and four generated from flow on effects) across the region in which these new projects were being housed. It is estimated that there are up to 18,000 construction jobs being created in Gladstone from the projects that have started construction this year. In addition to this further jobs will be created as a result of social infrastructure expansion such as hospitals, police, schools, recreation facilities, child care, aged care etc. It is estimated that there will be circa 5,500 operational jobs created once the infrastructure work has been completed. Gladstone makes a significant contribution to the Queensland and Australian economy. In % of Queensland s exports by tonnage carried by sea were traded through Gladstone. Gladstone region has a high resident income profile compared to Queensland with around 26% of individuals in the Gladstone region having a weekly income in excess of $1,000 compared to only 18.5% for Queensland. The majority of Gladstone households (47%) earn over $1,200 per week compared to 39% of all Queensland households. The median house price across the Gladstone region has averaged 10% growth per annum over the last 10 years & 11% growth per annum over the last 5 years. 5.0 Gladstone Infrastructure Projects - Summary Please refer to the attached Infrastructure Projects Gladstone Region for details of projects.

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46 Current Gladstone Region Project Development Review Projects Currently Under Construction Pages 1 3 Projects with Completed Environmental Impact Statement (EIS) Pages 3 4 Projects Pending/Proposed Pages 4 6 Projects Currently Under Construction Queensland Curtis LNG (QGC a BG Group business) Project Outline LNG production facility to process coal seam gas Curtis Island Estimated CAPEX US$15 billion (development program, including a 540 km pipeline network to deliver gas to Gladstone and construction of world scale LNG plant) Timing First cargoes expected early 2014 Employment Construction 5000 peak (various locations) Operational up to 1000 (various locations) Estimated Production 8.5 mtpa initially, with approval for 12mtpa Current Status Queensland Government approval June 2010; Federal Government conditional approval October 2010; BG Group project sanction 31 October Major engineering, procurement and construction contracts awarded: Bechtel (for LNG plant); McConnell Dowell-Consolidated Contractors Joint Venture (for pipeline); Worley Parsons (for gas fields and infrastructure). Rio Tinto Alcan Yarwun Alumina Refinery - Project Outline Stage 2 of Alumina Production Facility at GSDA Yarwun Precinct with the inclusion of a gas-fired cogeneration facility Estimated CAPEX A$2.1 billion Timing Work commenced in third quarter First shipments targeted mid-2012 Employment Peak up to Construction Operational Estimated Production 2Mtpa (Stage 1 was 1.4Mtpa) Current Status Project is 75% complete. Site population is 1350 and will remain around this level until November Calciners are undergoing pre-commissioning for handover to Operations by end June Construction of the balance of plant to continue through 2011 to Boyne Smelters Ltd Project Outline Two new projects: construction of a new baking furnace (CBF4) and upgrade of Reduction Lines crane runway which includes replacement of overhead cranes Estimated CAPEX A$685 million Timing Work commenced June 2008 and is expected to continue over a 3 year period. Reduction lines to be completed Dec 2011 and CBF4 in March 2012 Employment 450 Construction peak in 2011 Estimated Production Nil sustaining of existing operations only Current Status On track to meet completion targets above. Powerlink - Project Outline Infrastructure upgrades and new large network assets proposal which includes Calliope River Substation replacement of the existing Gladstone Substation with a new substation approximately 2km to the west of Black Harry Island. Estimated CAPEX TBA Timing Timing of work is expected to be around 2011 to 2013 depending on other development in Gladstone area Current Status EIS completed November Construction commenced late Page 1 of 6 September 2011 The review is based on information supplied to the GEIDB by the project proponents

47 Projects Currently Under Construction (contd) Western Basin Dredging and Disposal Project Project Outline Capital and Maintenance dredging associated with deepening and widening of existing channels and swing basins and creation of new channels, swing basins and berth pockets. In particular to service the emerging LNG industry Estimated CAPEX Construction of reclamation estimated $343 million over 40 years Capital dredging cost estimate $656 million Timing Stage 1A and 1B - Late 2010/2011 Employment 225 during peak dredging period and expected construction workforce for the reclamation area of people Estimated Production Stage 1 25Mm 3 of dredge material. Commenced late Current Status Project declared Significant Project April EIS completed and CG Report issued July Federal Government conditional approval October Fishermans Landing Reclamation Area Project Outline Fishermans Landing Port Expansion - 153ha of reclamation adjacent to existing Fishermans Landing Wharf facilities by bunding and placing dredge spoil Estimated CAPEX Refer Western Basin Dredging and Disposal Project Timing IAS and significant project status announced Oct EIS released and Supplementary EIS released Feb Estimated Production 153ha reclaimed Strategic Port Land Current Status Coordinator-General s Report released end May Federal Government conditional approval October Bund wall construction commenced late 2010/early 2011 and was completed ahead of schedule in August Queensland Energy Resources Limited (QER) Project Outline Oil shale technology development facility Estimated CAPEX $100m Technology Demonstration Plant Timing Construction underway and commenced commissioning February Employment Construction approx 140 Operational approx 50 Estimated Production Barrels of synthetic crude oil a day. Current Status Construction complete operations commencing. GLNG (Santos, Petronas, Total and Kogas) Project Outline LNG production facility to process and export coal seam gas Curtis Island Estimated CAPEX US$16 billion (including upstream field development, liquefaction plant and associated infrastructure) Timing Commence plant construction First cargoes expected Employment Construction 5000 peak (various locations) Operational Estimated Production 2 trains with combined capacity of 7.8 mtpa of LNG Current Status FID announced 13 January January 2011 Fluor awarded engineering and construction contract for upstream facilities. Financial Investment Decision announced 13 th January 2011 Australian Pacific LNG (Origin and ConocoPhillips) Project Outline LNG production facility to process coal seam gas Curtis Island Estimated CAPEX A$14 billion Train 1 and Train 2 infrastructure Timing First exports expected first half 2015 Employment LNG facility Construction peak LNG facility Operations approx. 175 (Trains 1 and 2) Estimated Production Stage 1: 2 trains at 4.5mtpa each Stage 2 (TBC): A further 2 trains at 4.5mtpa each Current Status Coordinator-General approval Nov Federal Government approval March Final Investment Decision 28 July Major Contractors: Bechtel Oil Gas & Chemicals (LNG facility); McConnell Dowell Construction & Consolidated Contractors (Gas Transmission Pipeline); Baulderstone Bilfinger Berger Services JV (Upstream Facilities Contract. Page 2 of 6 September 2011 The review is based on information supplied to the GEIDB by the project proponents

48 Projects Currently Under Construction (contd) Wiggins Island Coal Export Terminal Pty Ltd (WICET) Project Outline Stage 1 of new coal terminal to receive thermal and coking coals from mines in the Bowen Basin and Surat Basin Estimated CAPEX $2 billion plus Timing IAS and significant project status announced Oct EIS completed and approved. Stage 1 construction targeted for Employment Construction Approx 800 jobs on site plus 1200 others Operational Approx 120 personnel (Stage 1) Estimated Production Stage 1 27Mtpa. Ultimate proposed capacity approximately 80Mtpa when fully commissioned. Current Status Stage 1 early works commencing. Finance of $US4 billion agreed Sept Projects with Completed EIS Arrow Energy Ltd and AGL Ltd (Joint Venture) Project Outline 440km high pressure gas transmission pipeline from Moranbah to Gladstone to serve the proposed Arrow LNG project and the Gladstone region. Estimated CAPEX $480 million plus Timing In 2007 AGL and Arrow jointly acquired Enertrade s merchant gas business from the Queensland Government. Pipeline License has been Granted: PPL 121. Employment Construction - Peak Operational 8-10 Estimated Production PJpa Current Status EIS Completed and CG Report issued 10/2007. Construction TBA. Gladstone Pacific Nickel Limited (GPNL) Project Outline Stage 1 HPAL laterite nickel ore processing plant using Marlborough Nickel/Cobalt deposit in CQ and imported ore from offshore deposits (New Caledonia, Solomon Islands, Philippines and Indonesia) Estimated CAPEX Stage 1 US$3.84 billion (including mine and overseas infrastructure) Timing IAS and significant project status announced Oct Construction is expected to take 2 3 years. Employment Construction (Assuming use of pre-assembled modules Operational Estimated Production Stage 1 63,000 tpa nickel and 6,000 tpa cobalt Current Status Qld State Government approved the EIS for construction and operation of stages 1 and 2 of the project. Potential 2 year delay on project. Change of ownership to majority owned subsidiary of Qld Nickel. Gladstone Area Water Board Project Outline Gladstone Area Water Board (GAWB) has commenced technical investigations on its Gladstone-Fitzroy Pipeline project. The pipeline will run underground from the Fitzroy River via an easement, through the proposed Stanwell Gladstone Infrastructure Corridor (SGIC) and Gladstone State Development Area (GSDA), before finally joining GAWB s raw water reticulation system. Estimated CAPEX Estimated $320 million Timing EIS Completed Nov 2008, and Supplementary EIS June Construction period my take 2 years. Earliest pipeline operation Employment Construction 400 peak Estimated Production Up to 30,000ML of water each year will be drawn from the Fitzroy River Current Status In February 2010, announcement that the CG has signed off on a report recommending the project can proceed as required subject to conditions. Page 3 of 6 September 2011 The review is based on information supplied to the GEIDB by the project proponents

49 Projects with Completed EIS (contd) Surat Basin Rail (SBR) ATEC DVR, Xstrata Coal, Anglo Coal and QR National Project Outline Dawson Valley Railway (DVR) - proposed as a major new 210km railway, the project will connect the Western Railway System near Wandoan with the Moura Railway System, near Banana. Estimated CAPEX $1.2 billion Timing Commencement of operations targeted for 2012 Employment Construction 1000 approximately Operational expected 44 train drivers plus support and maintenance workers Current Status CG Report issued 15 December QR National Project Outline Stage One of the Wiggins Island Rail Project is made up of interdependent projects across the North Coast Line, Blackwater and Moura coal rail systems. Estimated CAPEX TBA Timing Rail infrastructure to be delivered in accordance with staged expansion of WICET. Employment Construction TBA Estimated Production The first stage will allow up to 27 million tonnes of coal per year to be transported from mines via rail to the new Wiggins Island Coal Terminal (WICET) Current Status EIS completed and CG Report issued October Planning underway for first stage of construction in late 2011, subject to final approval. Projects Pending/Proposed Boulder Steel Limited Project Outline Blast Furnace based Steel plant producing slabs, beam blanks, blooms and billets 2 stage project Estimated CAPEX Estimated - AUD$2.5 billion Stage 1 & 2 (plant only) Timing Construction Stage 1 expected to commence If approved construction due to begin Q with hot metal production in Q Employment Construction approx peaking at 2,000 Stage 1 Operational approx 1020 Stage 1, and 1,800 - Stage 2 Estimated Production Stage MTPA slabs, beam blanks, blooms and billets Stage MTPA slabs Current Status Major Project Status announced by Coordinator-General 03/04/09. Terms of Reference for EIS were released 25/11/09. EIS commenced Sept EPBC approval June MOU signed with MCCI and announced on ASX in December EIS expected to be released Australian Inland Rail Expressway (AIRE) Project Outline Establish an inland railway to link Melbourne and Darwin via NSW and Qld Estimated CAPEX $3 billion Melbourne to Toowoomba Timing AIRE is participating in the Surat Basin Rail Project which has potential to link this project and provide a rail link from Gladstone to Melbourne via Toowoomba. Employment TBA Estimated Production Significant transport trade between ports and major centres. Page 4 of 6 September 2011 The review is based on information supplied to the GEIDB by the project proponents

50 Projects Pending/Proposed (contd) Powerlink Queensland Project Outline Infrastructure upgrades and new large network assets proposal which includes 1. Gladstone area 275kV Transmission Reinforcement to cater for the expected future increase in electricity demand in Gladstone due to new major industrial developments 2. Calvale to Stanwell 275kV double circuit transmission line construction of a new double circuit transmission line between Powerlink s existing Calvale and Stanwell substations to help cater for the ongoing load growth in the Gladstone area. Estimated CAPEX NA Timing 1. Planning commenced to allow for future reinforcement of transmission network. Timing depends on the growth in usage or other major industrial development proceeding 2. Based on network demand, construction of the new line is expected to be completed by late Arrow Energy Ltd Project Outline Boyne River Coal Seam Gas Exploration and Appraisal Project 60km south of Gladstone in the Boyne River Valley. Estimated CAPEX $1.5 - $2 million to test productivity of each discovery Timing Application made for Petroleum Lease (PLA 2006) over discovery of some 90 metres of coal. Production wells drilled as a pilot on the field in Q3 Employment TBA Estimated Production Exceptional result from Boyne River 2 core hole at depth of 780 metres 60mcfd & 2200bwpd Balaclava Island Coal Terminal Project Outline The proposed Balaclava Island Coal Export Terminal (BICET) Project is located on Balaclava Island, approximately 40km north of Gladstone Estimated CAPEX Estimated $1-1.5 billion Timing Construction expected to commence 2012 with commissioning of terminal targeted for 2014 Employment Construction approx 800 Operational approx 100 Estimated Production Capacity of 35mtpa with vessels up to 110,000 tonne capacity Current Status IAS issued October 2009 with Major Project Status announced by Coordinator- General April The Project has been referred to the Australian Department of Environment, Water, Heritage and the Arts (DEWHA) and has been declared a Controlled Action under the Environmental Protection and Biodiversity Conservation Act Draft Terms of Reference (ToR) for EIS released February Page 5 of 6 September 2011 The review is based on information supplied to the GEIDB by the project proponents

51 Projects Pending/Proposed (contd) Arrow LNG Plant (Shell and PetroChina) Project Outline LNG production facility to process coal seam gas Curtis Island Estimated CAPEX TBA Timing Export LNG targeted for 2016 with subsequent trains being brought into production according to market conditions. Employment Anticipated 2,500 3,000 during peak construction and 200 to 300 operational at LNG plant and associated facilities Estimated Production Plant designed for maximum capacity of 16 Mtpa in phased construction of up to four trains, each with 4 Mtpa capacity. Current Status IAS released May Declared a Significant Project 12 June Draft Terms of Reference released 3 October. EIS currently being prepared. Engineering design contract awarded to the Chiyoda Corporation; Chicago Bridge and Iron; and Saipem to be carried out over next twelve months. Southern Cross LNG (LNG Impel) Project Outline LNG production facility to process coal seam gas Curtis Island Estimated CAPEX TBA Timing TBA Employment Construction peak Operational Estimated Production Stage 1 Train to 1.3mtpa Current Status IAS has not been submitted Sojitz Corp Project Outline LNG production facility to process coal seam gas Fishermans Landing Estimated CAPEX Stage 1 approx $450 million Timing Commissioning end of 2011 and commercial operation end 2013 Employment Construction 400 peak Operational - TBA Estimated Production Stage 1 500,000 tpa Stage 2 1mtpa Current Status EIS has not been submitted LNG Limited Project Outline LNG production facility to process coal seam gas Fishermans Landing Estimated CAPEX Stage 1 approx US $500 million Timing Development timeline to enable first deliveries of LNG in late Q Employment Construction peak Operational up to 32 Estimated Production Stage 1 approx 1.5mtpa of LNG Stage 2 a further 1.5mtpa Current Status Following the purchase of Arrow by Shell this project is currently sourcing alternative gas supply and early works have been suspended at the site. 28 January 2011 announcement that China National Petroleum Corp to buy 19.9% (pending relevant Government approval) stake in company at approx. $25.6m Page 6 of 6 September 2011 The review is based on information supplied to the GEIDB by the project proponents

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62 10/25/2011 Two new power stations will be built in Ipswich and Gladstone, Premier Anna Bligh announces Co... Courier Mail Page 1 of 6 Business Two new power stations will be built in Ipswich and Gladstone, Premier Anna Bligh announces by: Steve Wardill From: The Courier-Mail October 25, :46AM TWO new gas-fired power stations in Queensland have been announced on Tuesday by Premier Anna Bligh. Ms Bligh told Parliament the power stations would be built at Ipswich and Gladstone and boost Queensland's energy supply by 20 per cent. "They will both be powered by gas from the state's south west," she told Parliament. "This means they will be emitting 50 per cent less C02 than a coal-fired power station. "The $3.6 billion investment in power stations by TruEnergy will create about 1000 jobs in construction from Ms Bligh said it was the first major investment in power generation since the carbon tax and "proof positive" the sector was not being hindered News Queensland. All times AEST (GMT +10). News Latest Breaking Local Queensland National World Technology Weather Galleries Archives The Sunday Mail Tributes MPs bicker as gay marriage jumps queue

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64 Gladstone, Queensland Matusik Market Overview Report July 2011 Prepared exclusively for Portfolio Group of Companies By Matusik Property Insights Pty Ltd ABN Whilst this information has been carefully compiled no warranty or promise as to its correctness is made or intended. Interested parties should undertake independent inquiries and investigations to satisfy themselves that any details herein are true and correct. No forecasts are being made by Matusik Property Insights about potential capital gains. Past information about capital gains or price growth does not imply such gains or growth will be made in the future. We do not accept any responsibility or liability for any loss or damage arising out of reliance on the information in this document. The document is copyright. No part may be reproduced by any process without prior written permission from us. We learn from every market investigation and development recommendation we do through both the research and analysis itself and particularly through the responses and critical appraisals of our wide range of clients. We therefore invite and will welcome your own opinions, and the sharing with us of your insights and experience in relation to our findings. Our purpose is to discover, objectively comprehend and responsibly apply the relevant facts. We will therefore be happy to amend our report in accordance with any relevant new information, without in any way compromising our independence and the professional integrity upon which the reputation we are proudly building depends.

65 Introduction Gladstone City is located 550km north of Brisbane and 100km south-east of Rockhampton. The Gladstone region has abundant coal, gas and natural mineral reserves and the vast majority of businesses in the region support these industries. Several large resource companies including Santos, Rio Tinto, Orica, Cement Australia and Queensland Alumina have major industrial operations in the area. Regular flights into Gladstone are available from Brisbane, Rockhampton, Mackay, Townsville and Cairns. The Port of Gladstone is Queensland s largest multi-commodity port and supports the local mining, resource and manufacturing based industries. As a siginificant coal exporting centre, Gladstone is also a major operations hub for Queensland Rail. In 2009/10, 30% of Queensland s exports by tonnage carried by sea were traded through the Port of Gladstone. By value, this trade represented 20% of Queensland s total exports. According to the Queensland Government, there are currently 26 major infrastructure projects, worth $ billion, underway, committed or proposed across the Gladstone region. These projects are detailed in table 1 in appendix 1 (attached). The Gladstone Economic and Industry Development Board has noted that during 2010, the Gladstone region attracted US$16 billion of foreign direct investment, more than any other city in Australia and comprising a staggering 44% of total FDI into Australia of US$36.38 billion. Such major infrastructure developments are important employment generators that promote demand for residential property. For example, in 2003 the Queensland branch of the Urban Development Institute of Australia commissioned a study which found that for every $1 million spent on new infrastructure, nine full-time jobs were created (five of which are directly in the development industry and four generated from flow-on effects) across the region in which these new projects were being housed. Whilst many of these jobs will be created locally, other management/consultants/government staff would need to visit Gladstone during the planning and delivery of such projects. This, in turn, will require more and adequate rental accommodation. Natural attractions Gladstone is branded "The Gateway to the Great Barrier Reef" as it has access to Heron Island, Lady Elliot Island and other islands from the marina and local airstrips. The Gladstone community has grown dramatically from a "sleepy hollow" township to a major industrial city in less than 20 years, yet has retained most of the charm of a coastal resort setting with an enviable lifestyle. Gladstone has much to offer both tourists and locals alike. Local attractions such as Spinnaker Park provide a small netted swimming area, shelters, and barbecues, and some great walking paths. At certain times of the day it is possible to spot the pods of dolphins which frequent the harbour. From Auckland Point lookout one can get a view the harbour. Established in 1988, the Tondoon Botanic Gardens specialises in Australian native plants, particularly those of Central Queensland. Approximately 8km south-east of Gladstone is Boyne Island and Tannum Sands which have grown in popularity because of their beautiful beaches and relaxed lifestyle. The Millennium Esplanade is a big attraction where there are lots of shelters, barbecues and walking paths, and long stretches of beach. A little further afield (25km south of Gladstone) is Lake Awoonga. The recreation area has free barbecues, swimming, landscaped walking trails, as well as a cafe Matusik Property Insights, July

66 and caravan park. The lake has been stocked with several fish species since 1996, and over 2 million barramundi have been released. In addition to the fishing, Lake Awoonga has many natural attractions, especially the wildlife, with more than 215 species of birds (or over 27% of Australia's bird species) found in the region. Lake Awoonga is also the primary source of Gladstone's water supply. Population growth Based on the latest figures from the Australian Bureau of Statistics (ABS), the area covered by the Gladstone Regional Council had a population of 60,316 persons as at 30 th June 2010, the latest figures available. The population of the Gladstone Regional Council has increased by an average of 2.9% per annum over the past five years, adding around 1,600 new permanent residents each year. This compares to a growth rate across all of Queensland of 2.5% for this period. According to medium- and high-series population projections prepared by the Queensland Government, the population of the Gladstone Regional Council is expected to be between 71,000 and 75,000 permanent residents by the year 2016 and between 98,000 and 114,500 permanent residents by the year This means that the population of the Gladstone Regional Council is expected to continue to grow by between 1,600 and 2,000 new permanent residents each year (on average) over the next five years and by between 1,800 and 2,400 new permanent residents each and every year (on average) between 2016 and Based on current population growth rates, we envisage the outcome will be closer to the high series scenario. Demographic profile According to results of the 2006 Census, household types in the Gladstone Regional Council are as follows: Couples with children 38% Couples without children 29% Single-parent families 10% Lone person households 20% Group households 3% Dwelling types in the Gladstone Regional Council are as follows: Detached houses 89% Semi-detached dwellings 3% Attached dwellings 9% Housing tenure in the Gladstone Regional Council is as follows: Fully owned 31% Being purchased 40% Rented 29% Matusik Property Insights, July

67 Residential sales As shown in table 2 (also in appendix 1 attached), there were 905 detached house sales across the Gladstone Regional Council during the 2010/11 financial year with a median sale price of $399,000. This is an 8% increase from the median sale price in 2009/10 of $370,000 from 894 sales. See also chart 1 below. As shown in table 2, in only four of the past 25 years has the median house price in the Gladstone region declined from one year to the next, despite fluctuations in the number of sales recorded each year. In fact, the annual growth in median house prices across the Gladstone Regional Council has averaged 10% per annum over the past 25 years and 11% per annum over the past five years. Gladstone Regional Council Median sale prices (detached houses) - last 25 years 1,600 1,400 1,200 1, Median sale price Number of sales 1986/ / / / / / / / / / / / / / /1 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/ /11 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Matusik Property Insights, July Source: RP Data/Qld DERM. Settled sales on land sized under 1,000sqm for financial years. Sales for are preliminary only and may be subject to upward revision. Gladstone Regional Council includes the former Gladstone City Council, Calliope Shire and Miriam Vale Shire. $0 As shown in table 3 (also in appendix 1 attached), there were 371 vacant land sales across the Gladstone Regional Council during the 2010/11 financial year with a median sale price of $185,000. This is a 3% increase from the median sale price in 2009/10 of $180,000 from an almost identical number of sales (384). See also chart 2 below. As shown in table 3, in only three of the past 25 years has the median sale price of vacant land in the Gladstone region declined from one year to the next, despite fluctuations in the number of sales recorded each year. In fact, the annual growth in the median sale price of vacant land across the Gladstone Regional Council has averaged 12% per annum over the past 25 years. Gladstone Regional Council Median sale prices (vacant land) - last 25 years Median sale price Number of sales 1986/ / / / / / / / / / / / / / /1 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/ /11 $200,000 $150,000 $100,000 $50,000 Matusik Property Insights, July Source: RP Data/Qld DERM. Settled sales of land sized under 1,000sqm for financial years. Sales for are preliminary only and may be subject to upward revision. Gladstone Regional Council includes the former Gladstone City Council, Calliope Shire and Miriam Vale Shire. $0 As the charts clearly illustrate, sales volumes of houses and vacant land recovered in 2009/10 and 2010/11 from a significant decline in the number of sales during the 2008/09 financial year, although not to the heights reached between 2005 and Matusik Property Insights, July

68 Dwelling approvals As shown in the table below, the number of dwelling approvals across the Gladstone Regional Council dropped substantially in the 12 months to March 2010 but over the past 12 months has returned to its long-term average of around 600 dwelling approvals per annum. New dwelling approvals Gladstone Regional Council Houses Attached product* Total Matusik Property Insights, July Source: Queensland Government (Office of Economic and Statistical Research). Years to end March qtr. Rental market According to the Residential Tenancies Authority, the median weekly rents for dwellings in Gladstone during the March quarter of 2011 were as follows: Two bedroom apartments $280 per week (up $40 pw over the past two years); Two bedroom houses $300 per week (up $50 pw over the past two years); Three bedroom apartments $350 per week (up $40 pw over the past two years); Three bedroom houses $360 per week (up $60 pw over the past two years); Three bedroom townhouses $400 per week (up $20 pw over this period); and Four bedroom houses $450 per week (up $70 pw over the past two years). Median weekly rents have increased by between $20 and $70 per week over the past two years, with most of this increase coming in the last 12 months following a flattening (and in some cases, a decline) in median weekly rents between March 2009 and March According to the Queensland Government, the residential vacancy rate in Regional Queensland was 4% during the March quarter of The industry vacancy rate benchmark is 3%. We suspect this old benchmark no longer applies in today s interconnected and footloose world. The new measure is somewhere closer to 2%, even less. This will result is a much more volatile rental market. Looking ahead, a falling vacancy rate is likely to put further pressure on weekly rents. Rises of between 5% and 8% during the remainder of 2011 are not out of the question. This in turn (with a lag of about twelve or so months), should lead to an increase in property values. Of course, this assumes any future interest rate increases will be modest and that Australia s economic conditions remain favourable. Prolonged downturns in the economies of China or the USA, or significant international events such as war, pandemics or terrorist attacks, may have a detrimental impact on Australia s economy and the performance of residential property. Matusik Property Insights, July

69 Appendix 1 Table 1 Infrastructure Projects Gladstone region Project details Estimated cost Status* Jobs Comments Port of Gladstone Western Basin Dredging and Disposal Project $656 million Under construction 40 construction. Commenced late Reclamation of 153ha commenced 2010/11. Expected completion Fishermans Landing Port Extension $343 million Under construction 225 construction late Queensland Curtis LNG (QGC - a BG business) US$15 billion Under construction 5,000 construction, 1,000 operational Construction contracts awarded. Commissioning expected in Construction commenced March Commissioning expected in Gladstone LNG (Santos, Petronas, Total and Kogas) - Curtis Island US$16 billion Under construction 5,000 construction, 1,000 operational Rio Tinto Alcan - Yarwun Alumina Refinery $2.1 billion Under construction 1,350 construction, 250 operational Construction is 75% complete. Construction peak Construction completion expected between Boyne Smelters Ltd - new baking furnace and upgrade of crane runway $685 million Under construction 450 construction end 2011 and March Queensland Energy Resources Limited - Oil shale technology development facility $100 million Under construction 140 construction, 50 operational Construction of demonstration plant 80%-90% complete. Powerlink - Infrastructure upgrades and new network assets (Calliope River, new substation approx. 2km west of Black Harry Island) TBA Under construction Construction commenced late Expected completion by Boulder Steel Limited - Blast furnance based steel plant. $2.5 billion (stages 1 & 2) Pending 2,000 construction, 1,800 operational Construction of stage 1 expected to commence in 2012 Powerlink Queensland - Gladstone area reinforcement (Calvale to Stanwell double circuit transmission line) TBA Pending TBA Gladstone Airport Runway Reconstruction Project $70 million Funding committed 80 operational Agnes Water Integrated Water Project TBA Funding committed TBA Australia Pacific LNG (Origin & Conoco Phillips) - Project comprising underground gas pipeline, processing plant & export terminal on Curtis Island $35 billion EIS approved 3,300 construction, 1,000 operational Based on network demand, construction is expected to commence by late 2012 Peak construction period planned for FID timing to be determined after consideration of approval conditions. Arrow Energy Ltd & AGL Ltd - 440km gas pipeline (Moranbah to Gladstone) to serve proposed Arrow LNG project and Gladstone region $480 million EIS approved 350 construction, 10 operational Commencement of construction pending. Gladstone Area Water Board - technical investigations on Gladstone-Fitzroy pipeline project $320 million EIS approved 400 construction Two-year construction period expected to commence late Surat Basin Rail - Dawson Valley Railway (new 210km railway connecting Wandoan to Moura) $1.2 billion EIS approved 1,000 construction, 44 operational Commencement of operations targeted for Queensland Rail - Moura Link Aldoga Rail project (upgrading of Surat, Moura & Blackwater systems to meet future demand) $500 million EIS approved 350 construction, 550 operational Operational workforce to peak at 700 by Wiggins Island Coal Export Terminal Pty Ltd - Stage 1 $2 billion EIS approved 800 construction, 120 operational Detailed engineering design underway. Financial close expected midlate Gladstone Pacific Nickel Limited - laterite nickel ore processing plant. US$3.84 billion EIS approved 2,300 construction, 530 operational Potential two-year delay on project due to ownership changes. Construction expected to take 2-3 years. Balaclava Island Coal Terminal - proposed coal export terminal 40km north of Gladstone $1.5 billion EIS active 800 construction, 100 operational Arrow LNG Plant (Shell and Petrochina) - production facility to process coal seam gas (Curtis Island) TBA Preparing EIS 3,000 construction, 300 operational Arrow Energy Ltd - Boyne River Coal Seam Gas Exploration and appraisal project 60km south of Gladstone $2 billion Proposed TBA Pilot wells have been drilled. Southern Cross LNG (LNG Impel) - production facility to process coal seam gas (Curtis Island) TBA Proposed 350 construction, 90 operational EIS not yet submitted. Project Sun LNG (Sojitz Corp) - production facility to process coal seam gas (Fishermans Landing) $450 million Proposed 400 construction LNG Limited - production facility to process coal seam gas (Fishermans Landing) US$500 million Proposed 120 construction, 32 operational Australian Insland Rail Expressway $3 billion Proposed TBA Total $ billion Matusik Property Insights, July Source: Queensland Government, Gladstone Economic and Industry Development Board and Matusik database. LNG projects highlighted. *"EIS approved" means approval has been given by both Qld and Commonwealth Govts. "EIS active" means project has been referred to Commonwealth Govt for its approval. EIS referred to Commonwealth Government. Construction expected to commence EIS expected to be released mid-late Export LNG targeted for EIS not yet submitted hence initial estimate of commissioning end 2011 & operational end 2013 is unrealistic. Earthworks suspended at site. Initial estimate of commissioning end 2012 therefore seems unrealistic. Possible link from Melbourne to Darwin via NSW & Qld including link from Gladstone to Toowoomba

70 Table 2 Median house prices Gladstone Regional Council# No. of sales Median price Annual change $ 46, $ 48,137 4% $ 57,514 19% $ 70,599 23% $ 78,779 12% ,171 $ 76,943-2% $ 97,660 27% $ 107,692 10% $ 101,250-6% $ 105,523 4% $ 103,971-1% $ 105,651 2% $ 106,338 1% $ 107,776 1% $ 112,785 5% ,413 $ 126,100 12% ,420 $ 161,937 28% ,374 $ 192,544 19% ,166 $ 217,985 13% ,457 $ 245,772 13% ,228 $ 307,720 25% $ 372,175 21% $ 360,636-3% $ 370,000 3% * 905 $ 399,000 8% Five Year average annual growth 11% Twenty-five year average annual growth 10% Matusik Property Insights, July Source: Qld DERM/RP Data and Matusik database. #Includes former Gladstone City Council and the Shires of Miriam Vale and Calliope. Settled sales on land sized under 1,000sqm for financial years ending 30th June. *Figures for 2011 are preliminary only and number of sales may be subject to upward revision.

71 Table 3 Median sale prices - vacant land Gladstone Regional Council# No. of sales Median price Annual change $ 14, $ 11,065-24% $ 16,741 51% $ 21,244 27% $ 24,754 17% $ 27,327 10% $ 35,623 30% $ 39,264 10% $ 40,285 3% $ 41,043 2% $ 41,000 0% $ 40,362-2% $ 44,293 10% $ 42,895-3% $ 43,202 1% $ 46,319 7% $ 63,204 36% $ 83,970 33% $ 96,325 15% $ 111,414 16% $ 116,646 5% $ 166,817 43% $ 173,570 4% $ 180,000 4% * 371 $ 185,000 3% Five Year average annual growth 12% Twenty-five year average annual growth 12% Matusik Property Insights, July Source: Qld DERM/RP Data and Matusik database. #Includes former Gladstone City Council and the Shires of Miriam Vale and Calliope. Settled sales of land sized under 1,000sqm for financial years ending 30th June. *Figures for 2011 are preliminary only and number of sales may be subject to upward revision.

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75 Wednesday, 2nd November 2011 REGISTER LOGIN Gas power station for Gladstone Lucinda Ross 25th October 2011 TRUENERGY will spend $1.8 billion to build a gas-fired power station in Gladstone as part of a $3.6 billion investment in Queensland. A 1000-man workforce will be needed when construction begins on the Aldoga site in early The power station will be powered with gas from Queensland's south west gas fields meaning it will emit up to 50% less CO2 than a coal-fired station. Queensland premier Anna Bligh said TRUenergy, who will build another power station near Ipswich at the same time, would increase the state's overall electricity generation capacity by 20%. "The stations will be where we forecast our highest population growth in the Western Corridor and our greatest industrial growth in Gladstone at the centre of our new LNG exporting industry," Ms Bligh said. "These stations will plug us all in to a future that is brighter than anything in our history and investments like this from TRUenergy are just the start of what is on the horizon for our state." Ms Bligh said TRUenergy had commenced the development application process for the power stations. The Aldoga power station, located in the 26,000ha Gladstone State Development Area, will be developed in stages with the initial units sized at around 500MW. It will have a total capacity of up to 1500MW depending on energy demands. TRUenergy's managing director Richard McIndoe said the state needed additional investment by 2014 "to meet the growing needs of households, business and industry".

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81 Appendix 22