CBRE Hotels offices around Australia say pubs will benefit in both trade and value from the wave of development activity taking place around the country.
With property sales and developments in Melbourne and Perth reaching new levels of activity, the opportunities and options for publicans have grown, CBRE directors in Perth and Sydney told PubTIC.
“Not everyone’s a publican,” explains Daniel Dragicevich about the purchase of Bruce Solomon’s Golden Sheaf in Double Bay by a low-risk-seeking investor. Brokered by Dragicevich in conjunction with JLL, the agents are under confidentiality, but Property Observer revealed that somewhere over $40 million was paid by Vaughan Blank.
More satisfied to nurse the triple-net leased Golden asset, previously described as one of the country’s most profitable pubs, the freehold-purchasing investor enjoys the lower risk annuity.
While mirroring the Woolworth and Coles trend of sale and lease-back, Solotel freed equity to expand the empire with the purchase of another asset that stands to benefit from the group’s expertise and make better use of core skills.
In Perth David Kennedy reports something of a lack of activity, as the world’s most remote capital city unfurls plans for massive development in coming years.
“This does not suggest there is a lack of demand, but more likely that premises are tightly held,” said Kennedy, who sold the Victoria Park Hotel freehold last year on a tight yield of 5.79 per cent.
The West Australian State Government recently announced the massive developments of Elizabeth Quay and Citylink. The quay area will enjoy public spaces, retail and hospitality facilities, 200 premium hotel rooms and up to 1000 residential apartments, plus ferry and boating access.
Citylink will see development over railway lines connecting Perth city with Northbridge, expansive office space and retail, over 1600 residential apartments, a 120 room hotel, and 4.4Ha of public space.
Kennedy says licensed venues will enjoy the benefits of the inbound tourism as Perth becomes “a truly international city”.
Soon to be constructed are Ritz Carlton’s 5-Star at Elizabeth Quay (due 2018); Westin’s 5-Star in the business district (due 2017); Old Perth Port’s 4-Star in Barrack Street (due 2016); and Pepper’s 4-Star at Citylink and Treasury’s uber-luxury 6-Star hotel in St George’s Terrace, which is nearing completion and likely to open in July this year.
“Perth has been starved of new hotel product, and the addition of the above will increase leisure, as well as corporate visitors to Perth. Pubs and taverns will feed off this,” predicts Kennedy.
The recent easing of certain restrictions in Victoria has opened the doors to developer interest. CBRE in Victoria has recently seen success in the sales of the British Crown, Clarendon, Town Hall, Railway and Duke of Kent.
Dragicevich relays that a lot of development controls have been lifted, and [that] market is “just leaping ahead”.
For more on this article, see the upcoming issue PubTIC Magazine.