CLIENT LOGO TO APPEAR HERE RESEARCH AND ANALYSIS REPORT HOTEL SALES 2017 An analysis of hotel sales in Australia by Colliers International Accelerating success.
2017: a year in review Following the three strongest years on record, hotel sales volumes across Australia eased back in 2017, reaching $2.02 billion on 47 sales tracked by Colliers International. Whilst moderating, volumes remain well above the long-term average of $1.25 billion. Some of the notable trends evidenced through the year include: Victoria topped the nation with 45% of total hotel sales by value, compared with 23% in NSW. sales in Melbourne included the Hilton Melbourne South Wharf (the year s largest transaction at $230 million), Sheraton Melbourne and the Mercure Melbourne Treasury Gardens. Mercure Geelong represented the largest transaction outside of the Melbourne CBD. After dominating activity over the past few years, NSW was very subdued in 2017, with only eleven transactions in total and none in the core Sydney CBD. A number of large metropolitan hotels transacted, notably the InterContinental Sydney Double Bay and the Mercure Sydney International Airport. There was significant activity in relation to new turnkey developments with hotel development deals totalling $394 million, almost one quarter of the total volume. The limited level of existing inventory being offered is pushing investors into the development and turnkey space. Key development transactions included the W Melbourne, Four Points by Sheraton Central Park Sydney and Quest Penrith. Offshore capital continued to dominate, accounting for 62% of the total sales value but with a notable broadening of the capital base with purchasers from Japan, Singapore, USA, Hong Kong, Vietnam, Germany and the UAE. Chinese investors dropped from 40% of total sales in 2016 to just 9% in 2017, as restrictions on outbound capital slowed activity. Strong growth in Australian tourism is attracting more diverse investors to the sector. Origin of Purchasers by Value ( >$5 million) $3,750 $3,500 $3,250 $3,000 $2,750 $2,500 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 Benchmark Passing Yields of Transactions 10% 9% 8% 7% 6% Millions 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Australia Hong Kong Other Singapore USA Japan China Source: Colliers International Based on the availability of yield evidence, the past four years has seen a continued compression of yields; from over 9% in 2013 to just under 6% in 2017 and approaching the level of the last cyclical low in 2011. 5% 4% 2007 2008 Source: Colliers International 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 is likely to see similar patterns to 2017, with limited opportunities in Sydney and Melbourne, as owners in those markets continue to enjoy strong cashflow. More activity is likely to occur in the metropolitan markets and other State capitals, as owners capitalise on limited inventory in the market. The robust pipeline of new hotels should see activity increase again over the medium term. Yield Ranges - 2017 Transactions 12.00% 10.00% 8.00% As always, we welcome your thoughts and feedback. Gus Moors Head of s Australia Yield Range (%) 6.00% 4.00% 2.00% 0.00% Sydney Melbourne Brisbane Perth Other Capital Cities Non CBD Locations Source: Colliers International Source: Colliers International
NSW $3,250,000 $3,400,000 $6,000,000 Cooks Endeavour Motor Inn Blue and Conference Centre Quality on Olive Motel Motel 21 24 61 $154,762 $141,666 $98,361 Tweed Heads Katoomba Albury $29,400,000 $105,000,000 $32,000,000 Quest Penrith (under construction) Intercontinental Sydney Double Bay Airport Sydney International Motor Inn May 2017 May 2017 Serviced Apartments 108 140 120 $272,222 $750,000 $266,666 Property under construction. This price reflects hotel component only Penrith Double Bay Mascot sales in Australia 2017 3
NSW $15,000,000 Ibis Sydney Thornleigh $145,000,000 Four Points by Sheraton Central Park (under const.) $76,400,000 Mercure Sydney International Airport May 2017 105 $142,857 Jul 2017 297 $488,215 Nov 2017 271 $ 281,919 This is a development site transaction. Thornleigh Sydney Wolli Creek $17,500,000 Quest Nowra Sep 2017 Serviced Apartments 81 $216,049 Nowra 4 sales in Australia 2017
NSW VIC $220,000,000 $9,000,000 $230,000,000 W Melbourne (Collins Arch Development) Best Western Plus Brooklands of Mornington Hilton Melbourne South Wharf Feb 2017 Feb 2017 294 53 384 $748,299 $169,811 $598,958 This is a turnkey transaction. Mornington Melbourne Melbourne $15,000,000 $24,200,000 $19,700,000 Camberwell Serviced Apartment Mercure Geelong Flagstaff City Inn Apr 2017 Serviced Apartments 28 138 42 $535,714 $175,362 $469,048 to be demolished for redevelopment. Hawthorne East Geelong West Melbourne sales in Australia 2017 5
VIC $27,100,000 $36,200,000 $24,000,000 All Nations Backpackers Morning Star Estate All Seasons International Bendigo Backpackers Jun 2017 Jun 2017 Aug 2017 Backpacker Resort 50 20 77 N/A N/A $311,688 Melbourne Sale price includes management rights. Facility has 100 gaming machines. Mount Eliza Bendigo $70,000,000 Circa $135,000,000 $43,000,000 Mercure Melbourne Treasury Gardens Sheraton Melbourne Adina Melbourne Oct 2017 Nov 2017 164 174 65 $426,829 $775,862 $661,538 Sep 2017 to be demolished for redevelopment. Melbourne 6 sales in Australia 2017 Price reflects hotel component only. Melbourne Melbourne
$55,000,000 $7,750,000 Royce Dec 2017 100 $550,000 Melbourne Mercure Warragul Dec 2017 47 $164,894 Warragul NSW QLD NSW VIC $140,000,000 Sheraton Grand Mirage Resort $7,100,000 Heron Island $16,000,000 Peppers Airlie Beach Resort Feb 2017 294 Island Resort 115 May 2017 Resort 59 $476,190 $61,207 N/A Sale price includes management rights. Gold Coast Gladstone Airlie Beach sales in Australia 2017 7
QLD $6,000,000 $16,500,000 $6,150,000 Kingsford Smith Motel Hamilton New Inchcolm & Suites Paradise Inn Motel Jun 2017 Jun 2017 Jul 2017 Motel Motel 36 50 35 $166,667 $330,000 $175,714 Redevelopment Site Brisbane Spring Hill Gold Coast $23,750,000 $77,000,000 $36,180,000 Nobbys Outlook Mercure & Ibis Brisbane Emporium Brisbane Sep 2017 Dec 2017 Dec 2017 Motel 37 412 102 $641,892 $186,893 $354,706 Largest beachfront parcel of land available for redevelopment - can be redeveloped for 3 storey property. Gold Coast 8 sales in Australia 2017 Brisbane Brisbane
ACT & VARIOUS $17,000,000 Sundown Motor Resort $16,000,000 Quality Woden $55,000,000 Byron Bay & Apartments, Ibis Canberra Apr 2017 Motel 100 N/A Sale price also included the sale of 88 manufactured home sites. Aug 2017 57 $280,702 Aug 2017 208 & Serviced Apartment $132,212 Combined purchase. ACT, Canberra ACT, Woden NSW & ACT Byron Bay & Canberra SA $43,000,000 Mercure & Ibis Styles Grosvenor $7,050,000 Adelaide Royal Coach Nov 2017 245 $175,510 Apr 2017 Motel 49 $143,878 SA, Adelaide SA, St Peters sales in Australia 2017 9
TAS $4,450,000 $15,550,000 $16,000,000 Villa Howden Hanlon House at Stanley Cape Wickham Links May 2017 May 2017 Jul 2017 Boutique Boutique Motel 10 6 16 $445,000 N/A N/A This is a golf course transaction. TAS, Stanley TAS, King Island $73,500,000 $50,000,000 $12,500,000 Novotel Langley Crowne Plaza East Perth Aire West Perth WA TAS, Hobart Region Aug 2017 Serviced Apartments 256 189 64 $287,109 $264,550 $195,312 Jan 2017 Mixed use project under constriction WA, Perth 10 sales in Australia 2017 WA, East Perth WA, West Perth
WA $11,000,000 Sebel Mandurah $8,427,000 $12,650,000 The Royal Palms Residences and Resort Indian Ocean Scarborough Jul 2017 84 $130,952 Jun 2017 Motel 24 $351,125 Jun 2017 59 $214,407 WA, Mandurah WA, Busselton WA, Scarborough sales in Australia 2017 11
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DARWIN Tony West Director +61 409 422 458 BRISBANE Neil Scanlan National Director +61 437 700 007 Baden Mulcahy National Director +61 439 034 033 Leo Carne Executive +61 439 736 861 SYDNEY Gus Moors Head of s +61 404 005 066 Karen Wales Director +61 405 227 152 Nigel Greenaway National Director +61 431 288 677 Michael Thomson National Director +61 412 053 598 Chris Milou Director +61 413 615 398 Robert Bird Assistant Valuer +61 419 124 533 Denise Kirk Analyst s +61 414 708 112 MELBOURNE Guy Wells Associate Director +61 405 612 416 sales in Australia 2017 13
Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one-way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. 14 sales in Australia 2017