VIC MARKET OVERVIEW
VICTORIA
Peter Harper - Managing Director – Head of Investment Sales Australasia JLL Hotels & Hospitality Group
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. Interest rates and the cost of debt has hurt the entire capital markets sector and had a significant impact on underwriting which leads, in many instances to a bid-ask spread, and thus subdued activity. However, interest rate cuts next year should lead to a pick-up in transaction activity. Other markets are more advanced in their recovery and cash rate/pricing cycle, which has seen a number of geographic agnostic investors prioritise other markets over Australia to this point. This is evident with the recent Federal Reserve rate cuts and rate rises in Japan out of a negative interest rate environment. Other macroeconomic factors that currently at the forefront of the hotel & hospitality industry include a shift in traveller patterns post-COVID, and an increased focus on sustainability and technology. 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. Overall, there has been a distinct lack of major transactions this year, owing to a limited number of opportunities coming to market and/or owner’s pricing expectations sitting above that of the market, and with no pressure or urgency to divest. This however is changing with several major deals to be announced over Q4. Positively, deals are taking place in every corner of Australia, with Perth and Queensland being the two standout markets in 2024. JLL have undertaken transactions right across the country including; The Sebel Ringwood in Victoria, which was sold by Amber Property Group to Serene Capital for A$32 million, Great Eastern and Flag Motor Lodge in Western Australia, transacting for A$40 million and A$17 million, respectively, and Rydges Hobart in Tasmania, which was sold by EVT Limited to a Singaporean investor. All three deals attracted significant level of enquiry, given each assets’ strong fundamentals, however some took longer than others, which isn’t unecpedted in the current environment. In terms of deal flow, what have been the major trends or themes that you’ve observed over the past three or so quarters.
PETER HARPER
52 – October / November 2024
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