Overseas buyers targeting Australian hotels

Overseas buyers targeting Australian hotelsThe robust appetite of Asian investors for Australian hotels has precipitated a flurry of sales that have set record yields and price points, according to a new report.CBRE’s 2015 ‘Australian Hotel Market Update’ says competition in the Australian hotel market is strengthening, with sales of “several renowned hotel assets” to Asian investors.Last year, Fu Wah International purchased Park Hyatt Melbourne, and Hong Kong-based Ovolo Group acquired Oaks on Lonsdale (Melbourne) and 1888 Hotel (Sydney). This year, Rydges Darwin Airport Resort & Hotel was snapped up by a Singapore-based private equity group for $84 million.More generally, Asian investors claimed almost all hotel sales greater than $ million in 2014. CBRE Hotels senior director Wayne Bunz said “unabated demand from these groups” prompted domestic buyers – primarily high-net-worth individuals – to target assets sub $40 million.”There is unprecedented foreign interest in the hotel market at present,” he added.”Singapore groups are leading the charge, having invested twice as much in Australian hotel properties than the next most active capital source, Hong Kong, followed by Malaysia and China, respectively.”Hotel transactions across Australia reached a peak of more than $2 billion in 2014. CBRE said the market is predicted to continue its upward momentum, with 2015 sales projected to be upwards of $1.5 billion.Bunz pointed to “Australia’s relative economic stability and security” as a factor in its appeal, making it “a sought-after market, particularly with Asian investors who are looking to acquire a presence in populous gateway cities with attractive growth prospects”. The report noted forecast yields for several recent transactions fell below 6.5 per cent, including Melbourne Park Hyatt (6.2 per cent) and Sheraton on the Park, Sydney (6.3 per cent). “We expect that the yield profile for well-located, major hotel assets within the major Australian corporate markets will continue to tighten, reflecting the investment surge from international investors seeking to take advantage of Australia’s economic stability and favourable growth prospects,” Bunz said.In terms of “investment hotspots”, CBRE said buyers continued to focus on Australia’s most populous areas, with Sydney, Melbourne, Cairns and the Gold Coast being the most attractive markets.Rounding out the competition is the potential entrance of several new hotel operators and brands, according to CBRE Hotels senior director of strategic solutions Oscar Westerlund.In addition, it’s anticipated that Chinese property developer Dalian Wanda will introduce its Wanda Vista brand in its new five-star hotel development at the recently acquired Gold Fields House, Sydney. The InterContinental Group is also on the scene with plans to introduce its Hotel Indigo boutique range and Holiday Inn Express for the business travel market.To read the report click here