While Australian hotels may have been slow to transact in recent times, a pick-up in activity is expected in the coming months
SOUTH-EAST Asian investors are starting to scour Australia’s hotel market in the hopes of finding similar value to the hotel investments they made in the mid-1990s. It can be said that Asian investors were net real estate buyers between 1994 and 2003 before turning into net sellers between 2003 and 2006. That sell period was correlated to an improvement in hotel performances, lifting asset values, together with an appreciation of the Australian currency. This resulted in investors realising handsome capital gains when repatriating the funds back to their homeland.
Fast forward to September 2009 and a repeat cyclical trend may possibly be emerging. Indeed, as identified in the table above, all of the major hotel transactions that took place over the last 12 months are attributable to South-east Asian investors including Singapore’s Hotel Grand Central, Thailand’s TCC Land and Malaysia’s TA Enterprises Berhad. Notwithstanding the sale of the Westin Melbourne, hotels have transacted between A$190,000 and A$320,000 (S$234,717 and S$395,313) per room. Based on anecdotal evidence, this would appear to represent an, at times, steep discount by reference to full replacement value (after factoring land cost).
Cushman & Wakefield is aware of a number of hotel properties available to investors, both on and off-market, at the ‘right’ price. While Australian hotels may have been slow to transact in recent times, a pick-up in activity is expected in the coming months. But let us first ask the obvious questions – why hospitality and why Australia? Continue reading
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