31 Jan 2023
Words Debbie Cooper, Greg James, Miguel Bonzia, Jacqueline Featherby Informer 105

Regional Spotlight - New South Wales Part 2

Following on from our last edition of Informer, we continue our two-part series where we speak to some of our New South Wales brokers about some of the diverse challenges and opportunities in the Premier State.

Debbie Cooper  |  Broker, South-West NSW

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

While some operators struggled to hang on in uncertain times and decided to sell as soon as they could, others took the time to renovate and wait it out. Although I am seeing some exhausted faces most are glad that they waited and are now reaping the rewards and/or going to market with a beautifully presented property. 

Most popular asset classes?

There is an increase in demand in the NSW southern region for freehold going concerns in both motels and caravan parks. Family-owned caravan parks are becoming harder and harder to source so demand remains robust and is keeping prices high. Leasehold parks remain an affordable purchase for first time operators or others looking to top up their portfolio.

Greg James & Miguel Bonzia   |  Brokers Northern NSW

What was your biggest/best sale in recent times and why?

Colonial Tweed was a hugely successful campaign. We ran an EOI that received 13 submissions, and ended up getting the vendor over $2 million more than their expectations at $13 million. For a park of that size, it also achieved a record yield of 6.8 per cent.

Mantra Quayside was another great deal. It was complex as it was half freehold and half management rights, but we achieved great results for the vendor at $9.5 million.

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

It doesn’t seem to be slowing down. The word from vendors is that they are all at high occupancy, the domestic tourist boom is still kicking on and they believe it will continue for at least three years with many not returning to overseas travel. 

What’s driving this?

A domestic tourism marketing push urging Aussies to spend their tourist bucks here. Also, a weak Australian dollar is making overseas travel unaffordable for Australians while at the same time making Australia attractive to foreign tourists.

Most popular asset classes?

Retro and beachside motels are still looking very popular. Those enquiring really want ‘cheaper’ boutique properties that they can DIY renovate with simple updates to reposition the asset.

Challenges? Opportunities?

Challenges to these retro type motels are that some are really in dire need of major works. Unfortunately, due to rising costs and limited availability of materials, we are seeing people walk away from deals in cases where more than a simple lick of paint and touch up is required.

Jacqueline Featherby  |  Broker, Central Coast

What is your biggest/best sale in recent times and why?

Oceanside at Hawks Nest. This was such a prime location only 70 metres from Bennetts Beach in Hawks Nest, a popular holiday destination on the coast of NSW. With 31 keys, ample upside and high demand for accommodation, this was a great investment for a buyer and we had fierce competition from multiple parties. 

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

Despite interest rate rises and inflation it is still going quite strong, but for how long we don’t know. I am receiving a high level of enquiry on properties and banks are still keen to lend. However, valuers and buyers are spending a lot more time analysing what they believe the sustainable long-term earnings will be.

What’s driving this?

A variety of factors, people wanting a change from what they were doing before COVID and the drive for a sea change, still relatively low interest rates so better ROI on their money. Yields for motels and caravan parks have definitely tightened but still show good returns. Management rights have continued to be a great model as operators get the first clip of the ticket and the salary is guaranteed.

 Most popular asset classes? 

Most popular at this point would definitely be freehold motels and caravan parks. The Central Coast is performing very well here — I’m seeing solid interest in these assets.