The renaissance of domestic tourism coupled with the cost-of-living pressures has given Australia’s camping and caravanning industry a significant boost. For investors, this means there are plenty of Caravan Parks For Sale that are worth considering.

Insights from the Caravan and Camping State of Industry 2024 reveal that the 30 to 54 age group is increasingly turning to caravan and camping, seeking value for money and cost-effective alternatives to hotels and international travel.

As such, the caravan park industry has experienced notable growth and transformation over the past year, driven by shifting travel preferences and the increasing appeal of domestic tourism.

In 2023, the industry boasted a record 15.3 million caravan and camping overnight trips and 60.7 million visitor nights, with visitor expenditure climbing to $10.7 billion. RV registration figures reached a record 850,000 whilst manufacturers produced 31,289 units, the highest levels since the 1970s.

Stuart Lamont - Caravan Industry Association of Australia

For Stuart Lamont, CEO of Caravan Industry Association of Australia (CIAA), the resilience of the caravan and camping industry demonstrates its steadiness from an investment position.

“Our December National Visitor Economy Report demonstrated the resiliency of the industry, despite rising outbound international travel numbers in the baby boomer market, in both flight and cruising sectors, caravanning in Australia has held its ground,” Mr Lamont said.

“One of the biggest points is the number of families spending time in their caravans or at one of the industry’s many holiday parks. When we look at who is embarking upon drive holidays, we see the 30 to 54-year demographic or ‘family package’ hitting the roads. This speaks directly to the industry’s value-for-money proposition, something the industry prides itself on.

“With parks offering unpowered sites through to high-end luxury glamping and cabin experiences, there truly is something for everyone.”

Caravan parks are a popular choice for both owner-operators and investors looking to capitalise on growing consumer preferences. Discover various Caravan Parks For Sale to find potential investment opportunities.

Andrew Morgan from Queensland Tourism and Hospitality Brokers said: “I believe any park that is well located with future potential is a good investment opportunity right now.

“A simple quote in support of that statement was made to me many years ago by a prominent valuer; ‘If they are not making any more parks, the value of those already in existence can only go up’.

“This applies to caravan parks and the industry in that there have been very few new parks developed over the last ten or twenty years or more, for various reasons. Hence the quote certainly has proven over time to have merit.”

Of significance in the current climate is also the possibility of caravan parks offering longer-term accommodation solutions. ResortBrokers Managing Director Trudy Crooks explained. “Caravan parks are reliable businesses that offer stable and, if run well, often lucrative income to operators.

“In the past, caravan parks primarily catered to holidaymakers, and so were heavily dependent on seasonal tourism for cashflow. However, the caravan park landscape has evolved, with many parks now incorporating a significant portion of permanent or semi-permanent residents. This diversification serves as a buffer against low-season fluctuations, ensuring a relatively stable cash flow.

“Some caravan parks have even transitioned to predominantly permanent dwelling, this ensures a consistently positive cashflow for the incoming owner from day one,” Ms Crooks said.

When it comes to investing in a caravan park, there are differing opinions about what location or region is best. However, experts agree that caravan parks right across Australia are worthy of consideration, with the regions continuing to appeal to holidaymakers and tenants alike.

Managing Director at Tower Business and Real Estate, Ricky Symes said that riverfront properties, oceanfront properties, and popular tourist towns are the most popular with investors.

“Places like the Murray River are very popular and anywhere on the coast, however, that isn't always within budget,” he said.

“Close proximity to Melbourne is always of interest for investors, but this also extends to larger regional towns and hubs.”

CRE Brokers Director Craig Clarke agrees and said no matter the state or location, it is important to consider the park’s proximity to tourist attractions. “All parks in high tourist regions are popular with buyers. Parks being close to major tourist attractions, including waterways are always in high demand, large and small,” Mr Clarke said.

Tourism Brokers Director Michael Phillpot added that buyers should think outside the box and consider parks in more agricultural regions. “Parks near agricultural work areas like Tully and the Sugar Cane Mills through to rural farmlands, and fruit picking regions will also be able to capitalise on housing those workers,” he said.

Leasehold or Freehold?

Leasehold and freehold are two different ownership models for caravan parks. Freehold Property is essentially 'buying' a property completely. That is, you own the land and all the structures on the property.

Leasehold Property on the other hand is, as the name suggests, a lease. If you purchase this type of property you essentially 'own' the land and property for the length of the lease. Any changes you decide to make will need to be approved by the freehold owner as well as be within council regulations.

There are clear benefits to both models and the best choice is the one that most suits the buyer's requirements and budget.

Mr Morgan said the lower capital outlay upfront is a key benefit to purchasing a leasehold caravan park. “Leaseholds are more accessible financially and as the level of borrowing is lower, interest costs on those borrowed funds are also reduced,” he explained.

Mr Phillpot agreed, though said buyers must be prepared to work hard. “Leaseholds are a great starter and if you're prepared to do the work, they are a fast way to get a larger deposit together and expand into freehold parks.

“Leaseholds cost considerably less than freeholds and offer immediate cash flow with a return on investment between 20 percent and 35 percent after operating costs,” Mr Philpott said.

An additional benefit for leasehold, Mr Clarke added, is that the landlord is generally responsible for costs associated with repairs and replacements relating to underground services and fixed buildings.

However, he added that freehold investors do inevitably offer investors more freedom. “There is greater security, and flexibility to make changes over time, without having to consult a landlord,” Mr Clarke explained. “You also have the added benefit of selling off the business at any time in the future and retaining the freehold as a passive investment.”

McDonald Hospitality Brokers Managing Director Dan McDonald said both freehold and leasehold remain a solid investment choice.

“The marketplace for both leasehold and freehold are independent of each other, currently both are independently receiving a high inquiry for the right opportunity,” he explained.

“Leasehold caravan park acquisitions can be a more affordable pathway into the caravan park market in most cases and also provide a higher return on investment (ROI) to the buyer. For this reason, some of our clients prefer leasehold tenure and specialise in the leasehold-only business models across a portfolio of caravan parks.”

However, Mr Morgan added that leaseholds do allow investors to pay down their own debt instead of paying rent. “Utilising those funds to pay down debt is also a key driver for buyers looking to purchase a freehold park,” Mr Morgan added.

“Additional investment into your own property with the addition of more cabins or units, sites, and recreational equipment for example to expand and grow motivates freehold owners to invest.”

As an alternative option, Mr Phillpot said he had recently seen buyers split the leasehold and freehold investment between themselves and another party.

“Freehold parks are generally the preferred way to go if the funds are available, but more often than not we are seeing parks split, with the investment going to one party and the lease to another.”

Manufactured Housing Estates

Another benefit of a freehold park is the opportunity to create Manufactured Housing Estate (MHE) areas. MHE areas are for long-term residents on long-term agreements that are supported as housing by the Federal Government.

Mr Phillpot explained: “Manufactured homes and residential parks put high-quality homes within the reach of seniors, who may be priced out of retirement villages.

“New manufactured homes offer these people a chance to buy and live in a standard of home they may never have enjoyed in the past which is an advantage that has rarely been effectively promoted in the current market.”

MHEs will be one of the largest accommodation growth markets, Ms Crooks believes and will create a huge opportunity for existing caravan park owners. “Australians, whether they’re struggling families or cost-conscious retirees, are looking for more economical housing solutions. MHEs are increasingly stepping into that gap, and caravan parks are virtually purpose-built to transition to MHE usage.

“In the United States, MHEs grew out of the caravan park industry. Australia is following a similar trajectory.”

Amenities and activities

Relaxing and having fun with everything on your doorstep is the hallmark of a great caravan park experience.

Mr Symes pointed to some popular attractions. “Jumping pillows, swimming pools, pump tracks, and splash parks have always been really popular,” he said.

“However, the insurance premiums have jumped so much that buyers are looking for amenities that still engage the kids but don't come with a massive premium. This could look like an outdoor cinema area, games rooms, or mini golf.”

Outside of amenities and entertainment, Mr Phillpot said that guests are still often looking for the basics like vast spaces to enjoy the great outdoors and areas to mingle with other guests.

However, for those looking to break into the industry, finding the “perfect park” may be less important than work ethic and vision.

Mr Symes said: “Investors need to look past the faults and see the opportunities. For instance, if a park hasn't been well-maintained, that's an opportunity to clean it up and improve it.

“The little things still matter and getting the guest experience right is still crucial. The opportunity is sometimes in the little things, not necessarily the big things.”

Tips for success

As with most things, the success of your caravan park investment depends on expert advice.

Mr McDonald said: “Invest in a business advisor or accountant as part of your due diligence and be sure they understand the caravan park business model. Similarly, consider appointing a solicitor with experience in caravan park transactions to represent you as this can also ‘make or break’ a deal.

“Off-market transactions dominate the market at times, so developing a rapport with a broker can assist in your search by finding a park that may not be visible online,” Mr McDonald said.

A final word of wisdom from Mr Clarke is to find an expert in the field. “Make sure you are dealing with a broker that has long-term experience in caravan parks, not just selling, but owning and operating experience,” Mr Clarke said.

“There is no such thing as the perfect park, however knowing and being able to accept any potential issues is extremely important.”