COASTAL CULTURAL MODELS – OMMODITY PERSPECTIVE

Robert Thompson in his 2007 paper in the journal Coastal Management (v.35, 211-237) states quite bluntly that the community model has no place in the commodity model. Why is that so? He characterises the commodity model as focussing on “selling for the highest market value”. It is one in which the coast is viewed by investors through the prism of making investment-based decisions to return a profit, or in the Australian world to make use of the tax benefits that may accrue through negative gearing.

As pointed out by Stocker and Kennedy (Coastal Management, 2009, 37, 387-404), central to the commodity model of the coast “is the idea that land can be owned and traded freely and that this process theoretically puts property to its greatest use”. It is based on the ability to have surveyed boundaries and property laws that enable land to be held, registered  and transferred in a legal and portable way. Thus it is possible for someone to buy a property at say Noosa and use it for a variety of purposes: to rent out, to use as a holiday home or as a principle place of residence. The investor may have no interest in the values placed on the location of purchase by the community; in words quoted by Thompson the purchaser may be one who is “hostile to localized social life”. Of course, this is not always the case. But the commodity model identifies those who will place investment expectations above those of other perspectives. Under those circumstances, the commodity model will compete/clash with interests of those endeavouring to enact some of the other cultural models.

Without delving into the statistics, it is apparent to me on my travels around settled areas of the Australian coast that there are many properties that appear to be part of an investment portfolio. They may be around lakes and estuaries and along stretches of the open coast. In some states investment in properties that form part of canal estates is seen as one type of property that has the potential for making good returns. The real estate industry in coastal areas has generally flourished on the basis of attracting investors seeking a return either through capital gain or through rental income.  Such activity also has various economic benefits to governments such as through increased rate income, stamp duty and capital gains tax, and many individuals and corporations seem to be able to obtain tax benefits. It will continue to be encouraged especially as population grows along with demographic changes leading to more sea change growth and/or use of accumulated wealth to diversify investment portfolios. There will also be those who will invest in coastal locations in order to continue to provide services but in so doing may see that investment purely in economic short term and not as an investment that reflects longer term community values.

One aspect of the commodity perspective relates to value of properties. From an investor perspective the advantage is hoping to secure increased property value. But over the years economic downturns have caught many investors short. The recent Global Financial Crisis was an example of such an impact. Thus within the commodity model there is a certain element of risk. Financial institutions are aware of such risks although longer term increase in prices of coastal land in many areas continue to be the norm. However, there may be more clouds looming on the investment horizon. Insurance is not easy to obtain in some coastal areas potentially subject to inundation. Banks may also make life more difficult for those seeking to build or rebuild in land subject to coastal hazards. We have already seen examples of valuation of land decreasing in places where coastal erosion is a possibility. However, despite these forebodings, people will continue to be attracted to coastal lands and buying and selling coastal properties will remain attractive to many and be strongly encouraged by those with an economic interest in real estate. This leads to potential social conflict unless the newcomers appreciate and respect community and other values.

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Words by Prof Bruce Thom. Please respect Bruce Thom’s thoughts and reference where appropriately: (c) ACS, 2016, posted 5th October 2016, for correspondence about this blog post please email admin@australiancoastalsociety.org