22 Oct 2024
Words
Alex Cook
Market Outlook: Brisbane Management Rights
A management rights specialist broker since 2011, Alex is the 2023 REIQ Commercial Salesperson of the Year, and a short-listed nominee for the upcoming 2024 awards, as well as ARAMA’s 2023 Broker of the Year.
Alex focusses on large transactions nationwide, with particular attention to the development/off-the-plan projects and the short-stay/hotel sector.
Read his market outlook below.
Brisbane’s permanent management rights market has always been extremely resilient throughout my entire career, even during Covid.
The issue of the moment is declining letting pools. Operators aren’t losing appointments to outside agents. Rather, lot owners are making the most of Brisbane’s rocketing real estate market. An apartment worth $500,000 three or four years ago is now worth $800,000. Investors are cashing in, and we’re finding they’re selling predominantly to owner-occupiers.
Sellers’ accountants are including all income the seller has made for the last 12 months in P&Ls. But buyers’ accountants are removing income made from units lost permanently from the letting pool. They’re very rarely ‘verifying up.’ We’re almost inevitably finding we’re having to renegotiate sale price as a result.
As for short-stay management rights, the Brisbane market is very tightly held. Many of these assets are owned by corporates who are long-term holders. We don’t expect many to transact for a while having seen a heavy period of selling in the last 12 to 18 months once properties had 12 months clear trading from Covid. Those who had been waiting to sell during Covid were able to sell, often with excellent returns.
I’ve had a good year selling large-scale short-stay management rights as a result. Annexe Apartments, an 81-apartment complex in Bowen Hills, which sold for $8.3 million, was the first large-scale short-let management rights to settle in Brisbane since Covid. This sale was eclipsed by Gabba Central Apartments, a 272-apartment complex in inner-Brisbane, which sold to a private syndicate for more than $10 million. Atrio Apartments and The Miro, MacArthur Chambers Apartments and The Manor Apartment Hotel are some other large transactions of mine in the post-Covid era.
In terms of new buyers, the larger, glitzier, high-end management rights are increasingly going to syndicates and long-established private operators rather than corporates like Minor or Accor (Mantra).
Prices, too, have shifted. If you go back even four or five years, a management rights business netting $500,000 was considered large. Now, $500,000 is considered medium. With the growth of the market, interest rate rises and ongoing corporatisation, a large management rights business is now considered to be around $700,00 to $800,000 or more before corporates or syndicates will look at it.
We continue to transact management rights netting sub-$500,000. It is an important part of ResortBrokers’ overall business.
Undoubtedly, our most high-profile management rights listing at the moment is Queen’s Wharf Residences, which is part of the $3.6 billion Queen’s Wharf Brisbane integrated resort, the largest private construction project ever undertaken in Queensland. My fellow director Tim Crooks is lead agent on that listing supported by Brisbane broker Jessie Shi. I’m occasionally assisting with certain aspects of the sale.
