Is now the time to invest in mining areas?

The billion dollar Carmichael thermal coal mine will comprise a number of open-cut and underground operations.

A risk analysis company has warned that investing near the Adani mine would be very risky. But a local agent said with risk, sometimes comes reward.

RED flags have been raised for property investors planning to cash in on the back of the Galilee Basin.

Despite the perceived attraction of investing in a region set to boom, an independent risk analysis company has warned of the risks that come with investing in fluctuating mining regions.

RiskWise Property Research CEO Doron Peleg said investors should be careful before entering mining markets, particularly in Clermont, the closest regional hub to Adani's controversial mine site.

READ MORE: EXPLAINED: Future of nine major new mines

The billion dollar Carmichael thermal coal mine will comprise a number of open-cut and underground operations. The mine will produce 10 million tonnes per annum, which will be exported via its 200km railway linking the mine to the port.

The number of jobs created by the mine has been widely speculated, with estimates between 100 and 1800 ongoing jobs. Clermont residents have lauded the mine's approval as a lifeline for the town and the wider region's economy.

RiskWise found property investment in mining towns across the country was strongly correlated to movements in the commodities market.

Mr Peleg said the company's research found many mine 'hotspot' areas significantly underperformed when in-depth risk-return approaches were applied.

A statement from the company said mine-fuelled investment in these areas lead to poor economic growth, a weak job market, low population growth and poor capital growth in many "hotspots" in Western Australia and Queensland.

Citing a "huge decline" in dwelling prices, and a 29 per cent drop in home prices over the past five years, Mr Peleg said RiskWise classified Clermont as a highly risky place to invest.

"You... have to also consider that Clermont is really in the middle of nowhere and far from employment hubs," he said.

"The closest is the city of Mackay and that is 500km away.

"This does not set it up for good property fundamentals and consequently increases the risk for negative capital growth, despite the Adani mine getting the go ahead."

REIQ Mackay zone chair Peter McFarlane said any small town supported by a single industry posed investment risk.

"But with risk, there is sometimes reward," he said.

"What happens in these areas is there is strong rental returns but they can suffer substantial ups and downs.

"The bigger the city the least amount of up and down turbulence and the smaller the industry the more volatile it can be."

Mr McFarlane said the long-term lifetime of the Galilee Basin indicated the Clermont region could prosper in the long term.

"There is good forward projection. People like Adani and people like GVK Hancock are going to open up the Galilee Basin," he said.

"The industry in the area will be sustainable for a long period of time. (Those companies) will be exporting coal out of those areas for the rest of our lifetime."

Originally published as Is now the time to invest in mining areas?