A prominent city fringe freehold going concern has come to market, with a range of potential upsides likely to test market potential.

The Royal Exhibition Hotel is in the heart of Surry Hills, adjacent to Central Station, and significantly, outside the lockout zone.

With a 24-hour licence and four-star accommodation atop two bars, a bistro and a unique 5am licensed beer garden, it is certain to attract a range of strong operators to explore potential.

It is being marketed by JLL Hotels, and national director John Musca notes infrastructure projects that will no doubt further add to its value in the future.

“The new light rail stop in front of the hotel and the Central to Eveleigh Urban Transformation Program is expected to produce 56,000 new high density residents and generate up to 13,000 new jobs extending to this area of Surry Hills, so this arguably be the most exciting hotel business opportunity we’ve seen for a while.”

Currently only 12 of the 22 EGMs are within a ‘smoking solution’ area, and the bistro operates under lease, which could bring more opportunity to the right publican.

The Hotel also enjoys very high occupancy rates in its 14 four-star ensuited rooms, as inner-Sydney short-stay accommodation continues to be in demand.

The amazing run of pub property sales this year has produced something of a shortage of prime assets on offer, and Musca expects the Royal Exhibition’s sale by Public Tender will see a sharp yield.

“We’ve seen hotel transaction yields dip below nine per cent on a number of occasions in Sydney over the past quarter, for near-city hotels in quality property locations like Clovelly, Mosman, Paddington etc. So a further yield compression is likely into Q1 and Q2 of 2016 for hotels in the very best precincts,” said Musca.

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