Australia prepares for explosion of hotel investment in 2016

14 Jan 2016 by Jeremy Tredinnick

Hotel investment sales in Australia are predicted to exceed A$4 billion (US$2.8 billion) in 2016 as the tourism boom brings in new investor groups from the US, UK and Europe, according to the Australian Financial Review.

Hotel investment in 2015 hit a new high, with CBRE Hotels reporting A$3.87 billion of hotel sales spread across more than 80 transactions, and in the coming year CBRE director Wayne Bunz said he expects investor appetite to spread beyond the CBD markets in Sydney and Melbourne to areas such as Cairns and the Gold Coast.

Overseas and domestic tourism, along with a weaker Australian dollar, have been the driving force for the continued increase in investment. According to STR Global, luxury hotel occupancy rates reached 90 percent in Sydney and Melbourne and room rates surged above A$300 a night last year.

Sales of note in recent times have included Sydney Hilton and Westin Sydney to Asian buyers, while US private equity company Blackstone, in collaboration with Hong Kong’s Gaw Capital, are considering a bid for the Australian hotel-dominated A$1.4 billion (US$975 million) Ascendas Hospitality Trust portfolio. M&L Hospitality’s Australian and New Zealand hotel arm – which includes the 913-room Fourpoints by Sheraton Sydney, Darling Harbour, and Swissotel Sydney – is also available for purchase, valued at A$1.5 billion (US$1 billion).

Michael Simpson, Savills’ managing director of hotels for Australia and New Zealand, said that more global buyers will be competing for the same pool of assets, which will further drive up hotel values and tighten yields in 2016.

Jeremy Tredinnick

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