QLD MARKET OVERVIEW
QUEENSLAND
Wayne Bunz - National Director, Capital Markets, Hotels, Australia | CBRE
Thank you for your contribution to The Property Development Review publication - to begin, walk us through your sense of the macroeconomic environment relative to the hotel & hospitality market sectors. The macroeconomic environment for the hotel and hospitality sector in Queensland has proven robust, driven by a significant recovery in international arrivals and strong performance indicators. Over the past year, Queensland’s visitor economy has thrived, with international visitor nights exceeding pre-pandemic levels by 7.3%. While New Zealand remains the primary source market, arrivals from China have surged over 400% year-on-year, signalling a rebound in a historically lucrative market despite still being only one-third of pre-pandemic levels. This revitalised visitor economy has sustained hotel demand, particularly in Brisbane, which is leading in average daily rate (ADR) growth and has achieved record revenue per available room (RevPAR) levels. Currently, Brisbane stands out as one of only two major Australian markets surpassing 2019 figures across occupancy, ADR, and RevPAR. The stable cash rate environment and tempering inflation has started to improve lender appetite, and anticipated cash rate cuts will improve investor sentiment. This combination should increase investment activity in the latter half of 2024, contributing to a gradual softening of cap rates before stabilisation in early 2025. And from there, reflecting on 2024 to-date, take us through some of key transactions that have occurred & perhaps the profile of some of these deals in terms of vendor / purchaser, level of buyer interest, yield etc. The Queensland hotel market has seen significant transactions that highlight evolving buyer profiles and market dynamics. The Pacific Hotel Cairns, Ibis Budget Windsor, Amelia Hotel and Rydges Gold Coast Airport Hotel were all acquired by high-net- worth individuals and owner operators seeking to expand their portfolios, underscoring the strong confidence in the hospitality sector. Conversely, notable sales including the Menso Hotel, PA
Apartments, and Barney Beach Accommodation, were acquired by the Queensland Government’s Department of Housing for alternate use. Buyer interest remains solid, with our formal marketing campaigns typically attracting over 100 enquiries. Most of our vendors have been seasoned hospitality veterans capitalising on the buoyant market conditions, either seeking to realise gains or reinvest their capital. Yields for these transactions have ranged from 4.5% to 7%, influenced by factors such as asset class, location, and the potential upside for buyers. This spectrum underscores a competitive landscape where investor appetite remains strong despite broader economic uncertainties. In terms of deal flow, what have been the major trends or themes that you’ve observed over the past three or so quarters. This year’s buyer landscape has been underpinned by high net worth individuals and owner-operators, alongside alternative use groups, notably government entities like the Department of Housing and the Department of Health. Investor sentiment has shifted towards quality assets that offer reasonable returns on investment, particularly in the sub-$60 million price range. Buyers are increasingly focused on properties with potential for operational enhancements or other upside opportunities. In Southeast Queensland (SEQ), we’ve seen heightened interest, as demonstrated by our recent campaigns for the Mantra Terrace Hotel in Brisbane and the Runaway Bay Motor Inn on the Gold Coast. These assets cater to distinct buyer pools, yet both have garnered significant attention. From there, let’s talk about sentiment - presumably the level of interest rate stability that we’ve seen in 2024 has had a net positive impact on demand, how have you & the team witnessed this affect in the trading performance of assets. Sentiment in the hotel market has been largely positive in 2024, influenced by the stability of interest rates. We are seeing sustained growth in
WAYNE BUNZ
102 – October / November 2024
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