Location and population | Inside Franchise Business

Location and population insights are crucial

ifbadmin

The last two years have seen many changes in how and where Australians live. Population insights can help you decide on the best places to invest in a franchise.

Will the flight to the regions continue as 2022 progresses?

Peter Buckingham, managing director at Spectrum Analysis, says: “We have to remember there have been offsets Australia-wide and the long-term position is a drop in the population forecasts that are currently in place from the ABS.”

Location and population

The fifth Intergenerational Report came out in June 2021. In 2020 there was a basic reduction in population caused by net migration. The figures show 97,000 more people left the country than arrived, mainly due to restrictions on immigration. 

“We normally see around 160,000–190,000 p.a. immigrants settled in Australia, which basically hit zero in the last year,” Buckingham says. “The expectations are to reach an immigration level of 235,000 p.a. as the long-term target.

“With all the economic and policy settings in mind, the expectation is for Australia’s population to reach 38.8 million by 2060–61. This is lower than previous projections – by about six years, though it could still be adjusted upwards by immigration.”

He adds that predicting trends around tourism is an enigma. “All we hope for at present is for tourism to return to pre-Covid rates,” he says. “Assessing the amount of accommodation and comparing it to a ratio of total population can provide some guidance, but there are caveats.”

How do you evaluate the location?

Buckingham points out that often, in areas like Byron Bay, people become over-enthusiastic because they judge the area on the dollar value of homes, or who is moving in there. But the truth is the static population of the town is quite small.

“Most of the tourists are backpackers – with little spending ability,” he says.

He cautions that tourism data can also be over-represented. A high number of visitors to a tourist attraction may arrive and depart directly to and from a hotel by bus. This means they have no opportunity to spend in the local community.

Is there room for risk assessment in this or is it all data driven?

“Data and models should be used to support or disprove what you feel is what you wish to do,” Buckingham says. “If you like an area, having the modelling and data support that view makes for a much easier decision to proceed. If you like an area and the modelling or data says it’s rather ordinary, then that’s the time to either support your view with logic and reasoning or concede and switch your search to another location.”

Most of us have lived most of our lives in one city and probably get it quite right in there. “But we all struggle in cities we haven’t lived in,” Buckingham says.

He believes franchisees looking in unfamiliar areas benefit from a data-driven approach.

“The data can focus your mind so you don’t need to react to what real estate agents or others are saying,” he says.