2.5 BILLION REASONS WHY AUSTRALIAN HOTELS ARE HOT
18 September 2015, Written by David Simmons
AUSTRALIA's hotel market has become one of the hottest in the Asia-Pacific region, with sales hitting more than $2.5 billion in the first half of 2015.
Only Hong Kong managed to prove more attractive, with an estimated $3.5 billion in transactions over the period.
A report compiled by CBRE shows a robust appetite for hotel property across the country.
Wayne Bunz, senior director of CBRE Hotels, says offshore capital continued to target Australian hotel assets, with investors seeking quality assets in both primary and secondary locations.
"Foreign investors continue to inject capital into Australia's hotel market, seeking out quality assets in major locations such as Melbourne and Sydney, as well as other capital cities that offer attractive and less-competitive opportunities," Bunz says.
"The Four Points by Sheraton sale in Perth for $91.5 million is testament to the growing strength of the Australian market and its continuing appeal as a sought after destination for hotel investors."
CBRE's Rob Cross says many Asian investors take a broad view of Australian hotel assets which they see as attractive investments with favourable returns compared to their local markets.
"Chinese are looking for long-term generational wealth creation when acquiring substantial freehold land banking opportunities, he says.
"As highlighted by the recent flurry of activity, Australia remains a sought after market, with investors attracted to its relative economic stability and high growth returns."
The report shows that Chinese capital was the most active during the first half of 2015, with all offshore investment activity from China injected into Australia during this period.
CBRE Research also shows how sustained growth in Australia's hotel sector will further fuel growth in the investment market, leveraging its appeal on the global stage.
Bunz says the upward momentum in Australia's hotel sector would continue to underpin a strong appetite for well-positioned assets in the nation's gateway cities.
"This wave of offshore capital is showing no signs of abating, with investors continuing to focus on large mature markets, which offer secure investment opportunities, as well as the smaller, regional markets, which also offer attractive returns," Bunz says.
In the first six months of 2015, Sydney and Melbourne achieved the highest hotel occupancy rates in Asia Pacific alongside Singapore, Hong Kong, Tokyo and Osaka.
CBRE's Robert McIntosh is optimistic about the outlook for Australia in the second half of 2015.
"Strong operational trading will continue to be underpinned by the continued economic growth of almost 3 per cent per annum on average, the economic transition from mining investment to export production, the weaker Australian dollar, the increase surge of Chinese tourists and the dominant domestic tourists," McIntosh says.
Author: David Simmons