According to Jones Lang LaSalle Hotels, last year’s prediction that Australian hotel sales would…
According to Jones Lang LaSalle Hotels, last year’s prediction that Australian hotel sales would reach an all time high during 2004 has been confirmed true.
During 2004, the Australian hotel market witnessed 36 major transactions worth A$1.56 million. This exceeds the previous record of $1.36 billion which occurred in 1994 and is almost double the value transacted during 2003.
According to Mr David Gibson, CEO Asia Pacific Jones Lang LaSalle Hotels, “Trading upturn, low interest rates, competitive debt environment and a significant amount of product on the market resulted in hotel sales reaching a record high during 2004.”
The tally was boosted by three significant portfolio sales, including P&O Australian Resorts, Principal Hotel Group and Travelodge Hotel Group.
Assisted by a strong local economy, domestic investors dominated the action, accounting for 65.2% of buyers and 39.3% of vendors. Malaysian interests, mainly through Mulpha’s acquisition of the Principal Hotel Group were also active purchasers. As has been the recent trend, vendors were more varied, although Australian owners did account for the majority of sales.
On average, investors paid $189, 000 per room for hotels across Australia. This varied from $112,000 for 3-3.5 star hotels to $239,000 for 5 star hotels.
In light of investors’ expectations of future trading growth, competition for deals and the high proportion of upper tier hotel sales, average initial yield decreased from 2003’s 7.7% to 6.7%.
“For the first time since we have tracked sales, the majority of sales occurred in Queensland, rather than New South Wales,” said Mr Gibson. The sale of the Brisbane Sheraton twice and Hayman Island contributed to this dominance. Although most states witnessed some acquisition activity, sales remain concentrated in Queensland, New South Wales and Victoria.
Looking to 2005, Geordie Clark believes the favourable conditions for purchasing hotels will continue. “However, limited stock may send domestic investors off shore, to Asia, he said.
