Forget to throw another hot shrimp on the barbie.
With Australia’s international tourism gateway rapidly opening after nearly two years, CBRE wayne Bunz busy planning a real estate investment party.
The veteran trader hints that the big bucks from abroad will be back on the table and will be betting big on Australia as a destination.
“Absolutely, that’s why I’m going to Singapore to do our first international tour in two years,” he says.
As the first post-pandemic foreign visitors devour Australian attractions, Bunz will serve more than half a billion dollars of its tourism and hotel assets to hungry foreign investors.
“Australia has always been a hot spot, especially for Asian, American and European money,” he says.
“It’s been somewhat toned down over the last two years because there were so many unknowns and people were taking a wait-and-see approach…many businesses cut costs and reinvested in their existing properties.
“But now that the international borders are opening up, Australia will be an important focus point for those overseas investors because we’re politically and economically secure and, arguably, we’ve managed covid better than most other countries.
Some of them have already taken a well calculated punt and started placing their bets.
▲ Travelodge mirambeena Resort Darwin was among the properties sold under the registration agreement.
Last year, deep in the land blockages and travel restrictions, Singapore sovereign wealth fund GIC and Swiss-based global private equity firm Partners Group have teamed up with Melbourne-based fund manager Salter Brothers to buy the Travelodge portfolio for a record $620 million.
The deal – comprising 11 hotels with over 2,000 rooms – was the largest hotel deal in Australian history.
“Internationals want exposure to Australia,” says McVayReal Sam Domain Managing Partner McVaywho negotiated the Travelodge OK.
“They had been looking for two years. Since the start of covidour inquiries have been on the rise.
“But they want big purchases. Let them come in and make a $50 million purchase… it’s not worth their time.
“They want to come to Australia and they want to invest in something that really gives them scale. They make a bet on Australia and they want to place an appropriate bet.
McVay says many international groups now looking to gain exposure to Australian tourism and hospitality assets are strategically changing their investment outlook with a long-term view.
“A lot of these companies have traditionally invested a lot of money in China and Hong Kong, but they don’t anymore. They are nervous about the United States and yields in Japan and Singapore are very tight.
“So on a risk-adjusted basis Australia is looking really good… and for the first time we’ve seen every continent across every buyer group run hard on Australian property.
“We are preparing for a great period of investment ahead of us. It’s happening and it’s going to be pretty exciting.
According to the Colliers 2022 Hotels Investment Review, transaction volumes in the Australian hotel market have gained momentum over the past year despite the disruption of shutdowns and border closures.
A total of $2.87 million in assets – the second highest year on record in terms of total volumes sold – was traded in 60 transactions, representing more than 7,000 rooms.
In a marked move, investment capital was predominantly domestic, accounting for 55.8 percent of total deal volume.
▲ Twiggy Forrest added Lizard Island to its portfolio last year.
Among the top national tourism and hospitality pieces, Australian mining billionaire Andrew “Twiggy” Forrest’s Tattarang lost more than $80 million on acquisitions of Lizard Island off the north Queensland coast, the boutique Gaia Retreat and Spa in Byron Bay and the Cape Lodge Hotel in Margaret River in Western Australia.
Also, Sydney-based Oscars Hotel Group, owned and operated by brothers Bill and Mario Gravanis– spent a total of $75m on a riverside hotel in Brisbane Oak wood Hotel and apartments plus two resort properties on Long Island in the Whitsundays of Queensland.
“There has been a lot of demand from Australian domestic investors who are rediscovering Australia and taking advantage of the lack of overseas investors here,” said Bunzwho negotiated a number of transactions.
“And I certainly think that will continue… there is a bit of prestige and ego in owning hotel and tourism assets, there is no doubt about that. Some of these people have never invested in the hospitality industry before.
“But not only are we seeing new investors, we’re also seeing early-stage developers investing in hospitality.”
Another mining billionaire, Gina, Australia’s richest person Rinehartis still on the verge of acquiring Great Keppel Island for around $50 million with plans to redevelop it.
McVay says the preference of offshore investors, especially given Australia’s inflated construction costs, is to buy existing assets.
“But if they can’t get what they want, they will build it and that’s what some of them are considering right now.
“Going forward, I think they’ll start to come in and invest in new build, so you’ll have this new wave of development coming in, which is great for Australia,” he says.
▲ Australia’s handling of the pandemic is seen as positive by potential visitors.
The latest Tourism and Hospitality Market Outlook from Deloitte Access Economics shows around 3,700 rooms were added to the Australian hotel market in 2021, with most coming from projects that were in development before the pandemic.
It also forecasts that there is potential for an additional 15,000 new rooms – 5,000 of which are expected to open this year – to be added to the country’s hotel stock in the coming years.
“There is obviously a very positive view of investment in Australian hotels at the moment,” says Craig Hooley, chief operating officer of Thailand-based Minor Hotels International, which operates a number of brands including Oaks. Hotels and Resorts.
“Each time there is a further easing of restrictions, it frees up the market more.
“And so with the reopening of the international border, we will definitely see more activity coming into the country.
“We are already receiving applications from international investors and we already have a number of partnerships that we have established and we are starting to look at projects in South Australia, the New South Wales region, Queensland and in some of the offshore islands. North Queensland.
▲ Although the signs are positive, there is no guarantee that the rebound in tourism will meet expectations.
US timeshare giant Wyndham Destination’s president and managing director of international operations, Barry Robinson, said the company was working on a number of acquisitions and that during the pandemic it had also accelerated its development.
“There seems to be money there and there will be deals to come,” he says.
“But from a tourism point of view, it’s still a bit hectic and even if the borders are opening up, I don’t think we’re completely out of the woods yet.
“There are a number of issues and economic factors that are kind of being left out at the moment. You have the situation in Ukraine, high inflation approaching, interest rates starting to rise in various jurisdictions.
“So it really depends on how this all plays out and for international investors there’s also the question ‘is there another market more attractive than Australia?’.”
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