25 Sep 2024
Words Marissa von Stieglitz Informer

Tasmania? She’s Apples.

Interstate buyers are hungry to take a bite of the Apple Isle, writes our Tasmanian specialist broker Marissa von Stieglitz.

I last took readers through a spin of my home state in Q1 FY22 (Informer 104). We were just emerging from Covid then, and a lot has happened in the last three years, so a revisit is due.

Interstate buyers have always wanted a slice of the Apple Isle, but this has intensified in the past three years. Some 87% of buyer enquiries on my Tasmanian listings are from interstate. For some properties, it’s even more.

LIFESTYLE BUYS

So, why is the Apple Isle the apple of interstate buyers’ eyes? Well, there’s the sheer beauty of the place, of course. But Covid, interest rates and cost of living have also played a factor. Individual buyers, often a two-person management team couple, are now far more likely to consider a ‘lifestyle buy’ so they can swap the grimy urban jungle for Tasmania’s gorgeous wilderness where the environment is healthier, the cost of living is cheaper, and the locals are friendlier. Call me biased!

Many of my recent sales fall into this category. I sold the lease to Low Head Tourist Park on Tasmania’s north coast to a Sydney couple looking to escape the rat race and find a more conducive environment for their special needs daughter to thrive in. The couple, aged in their 50s, were first-time accommodation operators. How are they enjoying it? Their only regret is they didn’t do it sooner.

Another Sydney couple bought the freehold going concern of Cradle Mountain Highlanders, a 10-acre property of 16 boutique cottages in one of the most sublime alpine environments in the world. They’d previously visited Cradle Mountain and fell in love with the place, as most visitors do.

M&G Hotel Group recently settled the sale of the lease of Sunrise Devonport (my hometown). M&G own a dozen or so motels in South Australia and were looking to diversify interstate.

A lease on Wintersun Gardens Motel in Bicheno was purchased by moteliers out of Sydney, a brother and sister team who already operate a motel apiece in Orange and Dubbo. They, too, were looking for diversification and probably would consider another leasehold motel in Tasmania.

A helicopter pilot out of South Australia looking for a career change bought the lease to Scamander Sanctuary Holiday Park.

Strahan Beach Tourist Park I sold to a family from the NSW south coast who’ve always managed big tourist parks. They saw an opportunity to further enhance the park in Strahan so took on the lease.

I sold the freehold going concern of Franklin Manor in Strahan to a Queensland investor who saw the opportunity to develop it into a boutique high-end hotel.

INDIVIDUAL BUYERS WANT LEASES

Though I’ve sold some freeholds to individual buyers, this buyer group is predominantly looking at leaseholds. Leases provide affordable entry points for most of the buyers in this group.

The other major drawcard is the manager’s residence that oftens comes with the sale of a leasehold business. The housing and affordability crisis has highlighted the appeal of buying a motel or caravan park where the manager’s residence is included with the property.

In short, you’re buying yourself a business and a place to live. Leaseholds offer tax benefits for onsite living, making them highly attractive to buyers. It’s no surprise that in FY24 ResortBrokers saw unprecedented buyer enquiries in our leasehold listings, not just in Tasmania but across the board.

CORPORATE BUYERS WANT FREEHOLDS

Large corporate groups on the other hand are looking for predominantly large-scale freehold assets.

The likes of Tasman Holiday Parks, Discovery Parks and NRMA Parks and Resorts, all want a presence in Tasmania and are increasingly looking at motels, hotels and even luxury resorts beyond their traditional asset base of caravan and holiday parks. NRMA owns the historic Pumphouse Point as well as Freycinet Lodge, both high-end accommodation offerings.

Parks are also becoming harder to acquire, so these big players are looking to diversify into other accommodation.

They’re after scale, surplus land they can develop, or are looking to corner the accommodation market in a particular location. Large corporates will sometimes buy motels near one of their parks to give them market dominance in that area. If you have a motel near a park owned by a large corporate group, you may be sitting pretty when it comes time to sell.

SEIZE THE DAY

A quirk about Tasmania’s accommodation property market is that it’s very tightly held. I’m not entirely sure why. Tassie moves at a slower pace than the rest of the country (one of its many attractions) and perhaps this explains why accommodation assets here change hands so infrequently.

So, when these rare opportunities arise, buyers need to seize the day. And expect to face fierce competition. Because everyone wants a slice of the Apple Isle. END