05 Mar 2024
Words Hotel Conversation

Regional Queensland accommodation continues to outperform other asset classes

Regional Queensland motel/hotel freehold investments continue to offer higher returns against non-accommodation asset classes, says ResortBrokers, Managing Director Trudy Crooks and ResortBrokers Central Queensland agent Nathan Benjamin.

Recent sales of accommodation freeholds underpinned by leasehold tenancies have transacted through ResortBrokers at yields between approximately 7.5% to 8.5%, compared to lower yields in the office, retail and industrial sectors.

Last month, ResortBrokers settled the sale of Gladstone Downtown Central, comprising 37 strata titled lots, to an interstate buyer for a yield of 8.02%.

ResortBrokers’ previous regional Queensland freehold passives transactions include the December 2023 sale of the 31-room Emerald Inn for an 8% yield, the September 2023 sale of the 34-room Townsville City Motel for a 7.59% yield and the August 2022 sale of the 25-room Biloela Palms Motor Inn for an 8.45% yield.

Quest Townsville on Eyre is being offered to market through ResortBrokers at a superior yield to other comparable asset classes. The 85-apartment hotel is the only Quest property in Townsville and has a net rental after outgoings of approximately $1.46 million based on an annual 4% increase the investor will enjoy from April 2024.

“This is an extremely attractive offering,” says ResortBrokers Central Queensland agent Nathan Benjamin, who is handling the sale. “Yields for passive Quest freeholds routinely range from 7.5% to 9%, depending on the timing of refurbishment clauses and overall age, condition, scale and location of the asset.”

A Q4 2023 Colliers report found yields of 5-6% in non-accommodation asset classes across all state and territory capitals excluding Hobart and Darwin. The industrial sector returned yields of 5.83% on average, with retail at 6.44% and offices at 6.09%.

“There’s a reason the smart money is moving into accommodation, particularly leased assets,” says ResortBrokers Managing Director Trudy Crooks. “They are very secure given the demand for short-term accommodation across the country, which makes the lessee successful and the rental income very secure. Unlike other tenancies, accommodation typically has longer tenure and goodwill meaning your tenant has real skin in the game.”

“Investors are also chasing higher returns than metropolitan areas, which is why we’re continuing to see a huge amount of interest in regional accommodation assets.”

“We’ve seen an influx of new money from both small-scale and large-scale investors in the accommodation space. Higher yields are driving demand.

“ResortBrokers has always adopted the investment philosophy of ‘Coast for show, regions for dough,’ and recent sales in regional Queensland gives us no reason to doubt that this will continue to be the case for some time to come.”

View Quest Townsville on Eyre listing here.

Trudy Crooks, Managing Director
0477 882 210
trudy@resortbrokers.com.au

Nathan Benjamin, Broker Central Queensland
0459 955 649
nathanb@resortbrokers.com.au