06 Oct 2015
Words Peter Mullins

Tourism boosts sales

Investment in accommodation property in the Cairns region is continuing to climb on the back of strong tourism demand, favourable exchange rates and rising property market confidence.

The investment appetite demonstrated by recent large hotel sales is repeated across the wider accommodation property market.

Recent notable sales including The Hotel Cairns, Pullman Cairns International and Pacific Hotel Cairns are indicative of strong activity across the market spectrum, from smaller motels and holiday parks to major resorts and apartment complexes.

We settled 20 accommodation property sales in the 2014-15 financial year for a total of more than $35 million.

They ranged from a $150,000 Cardwell motel lease to an inner Cairns hotel that sold for $7.5 m.

There is a strong chance of doubling this year’s sales result this financial year. Already we have six properties under contract, with upcoming settlements worth more than $7m and guaranteed sales in the pipeline worth another $10m-plus.

We look like having 12 properties sold and settled by October-November.

The accommodation investment growth recorded by Resort Brokers Australia in Far North Queensland reflects market trends across the country. Transaction volume in the national hotel investment market reached $1.9 billion in the first half of 2015 and looks set to far outstrip the 2014 annual total of $2.5b, according to the latest JLL hotels report.

Tourism and Events Queensland figures show domestic visitation to Tropical North Queensland increased 5.6 per cent in the year to December 2014, while international travel to the region rose 7.8 per cent.

Expenditure by domestic overnight visitors rose 1.3 per cent to $1.7b in the period, and international visitor spending was up by 10.2 per cent to $924 million.

Recent figures also show Cairns recorded the highest revenue per available room (RevPAR) growth in Australia in the 12 months to July, along with improved demand and occupancy.

“Confidence is being fuelled by impressive tourism market growth plus the region’s $21 billion-plus pipeline of major private and public development, such as stage one of Aspial Corp’s $550 million, seven tower Nova project in the Cairns City centre, the $50m Cairns Aquarium, $45m Adventure Water Park in Smithfield and $1b redevelopment of Cairns Airport.

We are seeing exceptionally high levels of inquiry from buyers in all market segments, including from domestic owners and operators, overseas investors primarily out of China and Singapore, and hotel groups.

They’re keen to look at all opportunities and operational models, including hotels, motels, leasehold, freehold and management rights.

In addition to leisure market growth, projects like the $456m Cairns Hospital redevelopment, $2b, 50,000ha farm at Etheridge and numerous mining and energy infrastructure projects are driving the corporate visitor market.