Research is predicting 2016 to be another chart-topping year in hotel sales, and agents are gearing up in preparation.
More than $3 billion in pub and hotel assets transacted in 2015*, and expectations for that to continue have seen the expansion of dedicated agents to cater to the demand.
One of the world’s largest agencies for real estate services, CBRE has increased its presence to number 38 brokers across four Australian states in its Pacific hotels team, under joint Asia-Pacific directors Wayne Bunz and Rob Cross.
“We have had a very active past month of sales, with four assets transacting in that time, which will be announced in the coming weeks,” national director – pubs, Daniel Dragicevich, told PubTIC.
“Our view is that the market will remain buoyant for the foreseeable future and having the largest and most experienced team nationwide will ensure our clients are best placed to take advantage.”
Now numbering seven, the pubs team includes the upcoming appointment of Sam Handy as NSW director and Paul Fraser leading Queensland, and the recent return of Ben McDonald to focus on the increasingly sought after NSW regional and coastal markets.
“With a recent shift in the mindset of traditionally metro owners to look further afield in search of opportunities, Ben’s role will be crucial in establishing and maintaining a link between the geographical markets across the State,” explained Dragicevich.
“Sam brings over seven years of pub agency experience in NSW, and will be focused primarily on the sale of assets within the Sydney metropolitan market.”
Similarly growing its hotel offering, Ray White Hotels Australia announced the appointment of Mark Bullock to the role of ‘Director, Asset Management and Advisory’. Bullock leaves a position as director of a portfolio of accommodation properties for Government entity IBA (Indigenous Business Australia) Tourism Asset Management P/L.
Asia-Pacific director Andrew Jolliffe also says he expects the Asia-Pacific market to continue to capitalise over the next 18 months on conditions lending themselves to the strength of Australian assets.
“We find ourselves in a liquid debt market with rates at cyclical lows,” said Jolliffe. “The Australian dollar, whilst enjoying some recent augmentation when pegged against the US, is still attractively priced for both investors and tourism participants alike.”
Following high profile mandate sales including the Gold Coast’s Melbas on the Park and several more Queensland sales it will “soon announce”, JLL Hotels has promoted Tom Gleeson to the position of Associate in its Brisbane office.
National director of pub investment sales, John Musca, notes the continued rise in nationalisation of ownership in pub groups, including today’s announcement of Dixon Group’s acquisition of Beer DeLuxe.
“For the eastern seaboard, the market continues to be the strongest it has been for over a decade, albeit with some level of selectivity, whilst limited asset supply has protected the Perth, Adelaide and Darwin markets to some extent in 2016 so far,” Musca reported to PubTIC.
“Aggressive hotel purchasing behaviour in Melbourne largely reflects supply constraints, and in Sydney a slightly more dichotomous approach to acquisitions sees a circa 100 basis point variation between premium opportunities and hotels in less sought-after locations.”
A newcomer to the Australian industry, American giant Cushman & Wakefield is hoping to provide a “point of difference” to the existing market, drawing on real estate industry veteran David Lyons and hotel die-hard Robert Parrott to lead the charge Down Under.
The pair are already noting the changing face of Australian hotels – away from divergent approaches of gaming-based beer barns and gastro pubs to more broadly balanced businesses.
“We are now witnessing more and more individual hotel owners and hotel groups seeing the need to provide better, modern food offerings, craft beer, boutique spirits and modern and diverse wines at value for money prices, alongside more traditional beers and pub food,” Parrott told PubTIC.
“This can only be positive for the industry and the consumer, as new ‘non-pub’ operators are buying and operating hotels, alongside more classic and successful hotel owners and groups.”
Noting the record $3.87 billion in hotels transactions in Australia in 2015, CBRE’s Pacific President & CEO Ray Pittman describes the hospitality sector as “one of the most resilient asset classes in Australia”. This is demonstrated in the prolific pubs sector, buoyed by groups not shy of State borders, says Dragicevich.
“Having a team with a true national footprint and specialised local representatives is more important than ever as industry groups continue to adopt a more borderless approach to their acquisition strategies.”
JLL also notes the frenetic developer activity around hotels around the country, including recent sales of strategic assets in Sydney’s Hurstville and Penshurst that “echo the benefits of recent changes to planning guidelines” – plus the ever-present allure of ALH-tenanted passive investment hotels, showing “no locational bias” whatsoever.
“The public and private capital markets search for these low-risk, highly protected annuity income streams has seen [these] fast become the retail asset class of choice for astute investors,” acknowledged Musca.
Celebrating recent accommodation-based sales such as Versace on the Gold Coast, Daydream Island in Far North Queensland and Terrigal’s Crowne Plaza, Bullock is tipped to further the “considerable inroads” Ray White has made into this sector and its specialist goals.
“We see Mark’s inclusion into the team as another uncommon feature, which is designed to provide valued and new clients with an experienced team enjoying accommodation skills with greater depth and breadth than a traditional offering,” says Jolliffe.
Cushman & Wakefield says opportunities are rife for vendors, given both the number and quality of buyers in the market.
“We see a lot of activity in the coming months as successful Groups make changes to their portfolio.
“Their aggressive approach to acquisitions will provide a good return for, perhaps, the ‘one-off’ hotelier to divest themselves of their asset at a good price.”
*CBRE’s 2016 Asia-Pacific Investor Intentions report. Survey results found that 14 per cent of investors intend to enter hotel transactions in 2016 – up from only one per cent last year.
