- Australian hotels sales have risen to almost $2 billion
- Sales boosted by trend towards residential and build-to-rent conversions
- CBRE describe the result as "remarkable given ongoing border closures"
Australian hotels sales have hit a five-year high after surging close to $2 billion, according to a new report by CBRE Hotels.
The data found activity was accelerated by a wave of hotels being sold for residential and build-to-rent conversions, in addition to major portfolio sales.
Some of the sales included the $620 million sale of 11 Travelodge hotels by the Tucker Box Hotel Group, and landmark single asset transactions such as the recent $315 million sale of the Sofitel Wentworth Sydney.
CBRE Hotels’ regional director, Valuation & Advisory Services, Tony Craig said close to one-fifth of the 2021 sales by value had been to buyers planning conversions, with the activity putting this year’s sales tally on track to be in line with historic averages.
“That’s quite remarkable given ongoing border closures, with activity being underpinned in part by purchasers looking at opportunities to reposition existing assets to capitalise on the strength in the residential market and rising interest in build-to-rent opportunities.
“We’ve also seen offshore-backed capital continue to pursue hotel investment opportunities, which has led to prices per room being close to pre-COVID levels.”
The data found the biggest sale this year involved the national Tucker Box portfolio, which was acquired by Singapore sovereign wealth fund GIC, Swiss private equity firm Partners Group and Melbourne-based Bayview on the Park.
Conversions have been the other focus area, with the more than $70 million sale of Melbourne’s Bayview on the Park to Aware Super, the $125 million sale of Vibe Rushcutters for a residential conversion, and $178 million for the Intercontinental Hotel at Double Bay, a combined hotel and residential project.
“Developers are capitalising on the continued strength of the residential market and the interest in build-to-rent opportunities to acquire well-located, fringe city hotels, which will likely have a slower recovery trajectory than CBD accommodation assets and have a higher and better use as residential given their location,” said CBRE Hotels’ managing director, Capital Markets, Michael Simpson.
CBRE’s Hotel Outlook report predicts CBD hotel markets will return to 2019 performance levels in three to five years as lockdowns end and international travel recommences.
“While the RevPAR (revenue per available room) growth trajectory stalled in Australia after a promising start in H1 2021,” he said, “this has provided reassurance that once the Covid shackles are removed pent up domestic demand will quickly translate into increased hotel occupancy, which will sustain and drive average daily room rates.
“Restricted international travel will recommence next month and will gradually increase as reciprocal travel bubbles are initially established, which will inevitably lead to normal international travel routes and activity.”