02 Aug 2023
Words
Glenn Millar Informer 107
Sunshine Coast Regional Spotlight
We’re biased of course, but there’s so much to love about the Sunshine Coast.
Gorgeous beaches, a lush hinterland, award-winning restaurants, chic bars and a thriving cafe scene. Our ‘rival’, the Gold Coast, has all this too, of course. But our key point of difference (other than our better beaches) is that we have mostly low-rise resorts. Holidaymakers who prefer the Sunshine Coast over the Gold Coast like coming back because they don’t feel they’re having a break from the city by coming to... another city.
The other point of difference is that the Sunshine Coast still has so much untapped potential. We both feel the Sunshine Coast is where the Gold Coast was 30 years ago.
Don’t get us wrong, the Sunshine Coast is already a very mature accommodation market but there’s enormous potential for growth.
Take Mooloolaba, for instance. Mooloolaba and Noosa are as close as we get to matching Surfers Paradise in terms of nightlife. While Noosa is highly sophisticated, Mooloolaba is still very basic. That’s all set to change, and we feel Mooloolaba is nicely poised to be “the next Noosa.”
Come 2025, Minor Hotels will roll out the carpet on its 180-key Avani Mooloolaba Beach Hotel. It will be the group’s first Australian property under its Avani Hotels brand (there are several Avani Residences dotted around the country but no Avani Hotels). Its location on the corner of Brisbane Road and First Avenue, right across from the Mooloolaba beach foreshore, couldn’t be better.
Calile Malouf Investments, the group behind The Calile Brisbane, has announced plans for a luxury resort on the Sunshine Coast. Currently awaiting council approval, the resort will occupy a 2.4 ha site at 3-7 Serenity Close in Noosa Heads, which will feature 178 rooms, 12 suites and 15 villas.
Both projects are a major show of confidence in the development potential of the Sunshine Coast.
As far as management rights goes, it’s worth noting that management rights businesses on the Sunshine Coast provide approximately 90 per cent of short-term letting options. Unlike the Gold Coast, the Sunshine Coast has only a handful of full-service freehold hotels.
On that front, we’ve got the likes of Prestige Residential, operators such as Ross Lynch at Noosa Pacific Resort (see sidebox), and Seabreeze Resorts investing in the Sunshine Coast.
These are smart and sophisticated management rights operators, which should reassure smaller players about the strength of our management rights market.
That’s not all to say it’s all plain sailing. Real estate prices have skyrocketed on the Sunshine Coast. No more so than Sunshine Beach, which is now the second most expensive suburb in Australia. While this is great news for people who own apartments on the Sunshine Coast, it’s proving a bit of a challenge in management rights because it’s driven up the prices of managers’ units which are routinely part of the management rights package.
Most people who’ve been in the management rights market long enough understand that when you buy a manager’s unit you usually pay a 10 per cent premium, precisely because it is a manager’s unit.
Now, it’s the reverse.
To purchase a management rights business, the usual ratio for the sale price is around 60 per cent for the business and 40 per cent for the manager’s unit. But now we’re dealing with sometimes 70 to 80 per cent of the purchase price being the unit.
Something’s got to give.
We’re having a bit of a battle at the moment convincing vendors that although their unit may be worth, say, $1m if it wasn’t attached to the management rights, it will now attract a lesser value precisely because it’s tied to the management rights.
This isn’t so much of a problem where the management rights agreement doesn’t require the manager to live on-site. In those cases, the business and the apartment can be decoupled, and the manager can monetise their apartment by letting it out just like any other apartment in the holiday pool.
All that said, the Sunshine Coast is still the best place to buy a management rights business. Good assets will sell at the right price. We’re still turning over properties, particularly high-end properties, with very healthy multipliers and at a volume and rate of any market in the country, except perhaps the Gold Coast.
But we’re hot on its heels. END
Management Rights Operator Profile
Ross Lynch, Noosa Pacific Resort
After working as a field service engineer for a decade, Ross Lynch was contemplating a major lifestyle change. Like many other Melburnians, the Lynchs were regular Noosa holidaymakers and were taken by its laid-back lifestyle.
Having previously lived in Maroochydore in the 1990s and having developed a love for the Sunshine Coast, the Lynchs decided to take a chance on management rights.
“We thought we’d give it a go,” says the 55-year-old. “Noosa is a wonderful natural beauty, with great beaches, a fantastic national park and stunning river.
It has something for everyone, from relaxing to thrilling, with great restaurants and cafes.”
Starting with the 20-key La Mer in Sunshine Beach, which they managed with great success for four years, the Lynchs eventually made the decision to upgrade to the 51-key Noosa Pacific Resort located on a stunning inlet of the Noosa River.
Since taking on the management rights in August last year, the Lynchs have focused on transforming Noosa Pacific Resort into a premier destination.
One of their key initiatives is the introduction of a luxurious pontoon boat available for guests to rent.
Unlike other pontoons in Noosa, the Lynchs’ pontoon is the first of the luxury kind and doesn’t require a boat license, allowing any adult to drive it during daylight hours.
