12 Oct 2022
Words Russell Rogers, Chris Kelly, Tim Mayoh Informer 104

Regional Spotlight - New South Wales Part 1

Measuring four times the size of the United Kingdom, it’s easy to see why there’s not a one-size-fits-all approach when it comes to selling property in New South Wales. In the first of this two-part series, we speak to some of our brokers covering this dynamic state. 

Russell Rogers  |  Broker, South Coast

What’s been your biggest/best sale in recent times and why?

Mollymook Surfbeach Motel & Apartments part of the Golden Triangle, bought off-market by Knox Developments who are spending a huge amount of money upgrading it to a top-shelf luxury offering. This is a good example of the conversion of coastal motels being bought for redevelopment. 

What is the market doing and where do you see it going?

Over the past 10 years we have seen a steady increase in the market. The past 12 months have by far been the best, even though we are seeing a downward trend in the residential market. With the talk of $3 trillion in Australian super funds, and the amount of corporate money we are seeing chasing motels and caravan parks, we are confident of another very strong year.

What’s driving this?

Supply and demand. We still have more buyers than sellers. We have a large number of developers who have now entered our market space. People are buying coastal motels and taking them to an extremely high four-star level and doubling tariffs.

Most popular asset classes?

Freehold motels both coastal and regional as well as coastal caravan parks and larger caravan parks which continue to go from strength to strength.

Challenges? Opportunities?

We believe the challenge this year is getting enough good listings. The market is strong with qualified cashed up buyers. There are a number of corporate buyers in serious acquisition mode.

Chris Kelly  |  Broker, Central West

What’s been your biggest/best sale in recent times and why?

I’d have to say the Quality Inn Bathurst now Mantra Bathurst. This was a silent listing and the vendor owned one motel and 30 service stations. He had very limited financial records that had to be forensically investigated to see how it was trading. The vendor didn’t have a fire safety schedule or any fire safety certificates. This took a lot of investigating to find out if it could still actually be trading and correspondence with NSW Fair Trading, Bathurst Council and independent investigations into the structural issues of compliance of the building.

New commercial buyers are happy to pay top dollar for good assets, however they do also want to ensure that everything is in perfect order. We were able to achieve a good sale and the vendor called me after the completion to thank me as they had almost doubled the trade it had done in the past.

What is the market doing and where do you see it going?

There are so many variables with fuel prices and the flow on for cost of operating as well as a massive shortage in staffing. Following COVID lockdowns, all venues are enjoying professionals and travellers again, but the rising cash and interest rate is slowing down enquiry. If rates go up and occupancy goes back to what it was, or down as the cost of living goes up, then we about-face and will have people looking to cash in on the past year of trading figures meaning there will be some great opportunities for astute buyers.

Most popular asset classes?

Leaseholds are starting to be looked at again due to their high returns which protect against interest rate hikes but they need to be experienced buyers to satisfy the lenders.

Tim Mayoh  |  Broker, Greater Sydney

What is the market doing and where do you see it going?

Sydney’s market is steadily improving and the worst is behind us. According to STR preliminary May data for Sydney, occupancy was at 65.1 per cent and ADR at $233.96 which is a steady improvement on recent times. Tuesday and Wednesday nights fetched occupancies between 65 and 75 per cent which suggests corporate travel has strengthened. The question is, during a slowing economy, will accommodation asset divestment increase in a traditionally tightly held city? We believe so and expect to see an increase in institutional and private savvy investor confidence in the robust Sydney market which will always be strong and the buyers will be ready. 

Most popular asset classes?

Larger high-end hotels in Sydney will always be extremely attractive for both domestic and global investment firms and the world’s leading management groups to strategically include in their portfolio. Sydney-wide and particularly the surrounds, the smaller economy to mid-scale classes are always particularly popular assets for domestic investment. Two key reasons: strong historical results and confidence around capital gains, and the abundance of properties in the metropolitan surrounds that are prime candidates for experienced operators to aesthetically improve and drive strong results. 

Challenges? Opportunities?

The reduced employee pool and higher operational costs are a significant challenge for owners and the government needs to ensure foreign workers including students are encouraged back to our shores. The greatest opportunity I see are long held family assets coming to market that have weathered the pandemic storm and are ready for a new direction. END