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Hotels are in hot demand as investors splash out record prices

Record price: Sheraton on the Park, Sydney. Photo: SMH Hotels are the hottest ticket in town with sales reported at record levels and significant developments underway across the country.

A forecast rise in tourism, boosted by the signing of the free trade agreement with China and a more agreeable Australian dollar for inbound visitors, has helped increase demand for the bricks and mortar side of the business.

It is expected that buyers will be lining up for the Sydney Hilton property and the rumoured possible sale of the Westin, Sydney, after the record price paid if $463 million by the China based Sunshine Insurance Group Corporation for the five-star Sheraton on the Park, Sydney.

The sale was the largest single hotel asset deal in Australia, previously held by the Four Seasons Hotel Sydney, which sold for $340 million in 2013. JLL’s Hotels & Hospitality Group advised the seller on the sale of the Sheraton on the Park.

It comes as Accor announced the development of a new Pullman hotel near Mascot, Sydney and the Jerry Schwartz planned hotel at Darling Habour, to be managed by the Sofitel.

At its inaugural annual general meeting, the Mantra Group’s chief executive, Bob East, told shareholders that its Sydney central business district properties performed strongly from late September to the first week of October, thanks to a variety of big events.

Craig Collins, chief executive, Australasia, at JLL’s Hotels & Hospitably Group, who led the Sheraton sale said the high price for the Sheraton on the Park has completely recalibrated the pricing of CBD hotels in Sydney.

“International investors are becoming increasingly interested in the Sydney five-star accommodation market due to its strong trading performance, future trading upside and benign supply pipeline,” Mr Collins said.

“Sydney five-star hotels are currently trading at around 89 per cent occupancy, intensifying the already competitive accommodation market and making it very difficult to book a room between Monday and Thursday.”

Mr Collins said that during the past few years groups from Singapore and Hong Kong have largely dominated the market and acquired most Australian CBD hotels. Whilst South East Asian investors continue to have a strong focus on the Australian hotel sector, Chinese investors have only become a major player in the hotel market over the past 18 months.

“Sydney is currently undergoing a significant amount of office construction and infrastructure related development, and JLL anticipates that the increased hotel demand associated with these projects will create healthy trading conditions for the hotel sector over the medium term,” Mr Collins said.

Peter Harper, senior vice president, investment sales, at JLL’s Hotels & Hospitality Group, said in what has been one of the most active years in history, there have been several notable transactions in metropolitan Sydney.

“These include the Chifley Penrith, Sydney International Airport Inn, Vibe North Sydney and Blue Woolloomooloo, Mr Harper said.

“Furthermore, regional hotels have become a renewed and major focus of investors this year. We have undertaken three major hotel transactions alone in Wollongong while the Hunter, Newcastle and the Blue Mountains remain highly sought investment destinations.”

This story Administrator ready to work first appeared on Nanjing Night Net.

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