16 Nov 2022
Words Christine Retschlag Informer 104

A Capital Idea

It’s been nothing if not interesting in Australia’s capital cities during the past few years. A ride as bumpy as a Luna Park rollercoaster, as murky as a Brisbane River flood, and at times as chaotic as a Melbourne laneway. 

But, as Christine Retschlag discovers, the east coast capitals are making a comeback and there’s plenty of reasons to rejoice and reinvest. 

Crowded House may have had Melbourne on its mind when it penned the lyrics to Four Seasons In One Day, but it was a North Face jacket-wearing Premier who became the symbol of its season of discontent. The Victorian capital may have caught a cold, but the rest of the east coast capitals shivered along in sympathy. And the nation’s tourism industry shuddered.

Fast forward to 2022 and the lights are flickering back on in Australia’s capital cities. And it’s a power surge worth celebrating. In an article in the Australian Financial Review, PwC Australia Integrated Infrastructure Partner Janice Lee says fears that Australian CBDs are “dead” in a new era of hybrid work models, are unfounded.

“Through lockdowns and border closures, Australia’s commercial property markets have shown surprising resilience,” Ms Lee says.

“PwC analysis found that investment volumes in 2021 rebounded in the first three quarters of the year to USD24.8 billion – up 106 per cent on the year and 21 per cent higher than the 2015 to 2019 average.

“The question is what can we do now to address the uneven nature of the recovery within our CBDs. Developing the strategic planning for world-class precincts in health, advanced manufacturing and emerging industries, is a global pitch to investors and to the best and brightest talent to come to our CBDs and business hubs.

“Darling Square and Barangaroo entertainment and hospitality precincts in Sydney are prime examples. They have been designed for walkability and to activate local businesses, with winding, vibrant laneways that have been abuzz with activity post-pandemic. 

“Australia has a rare window of opportunity to shape our cities for the future.”

NSW Minister for Tourism Stuart Ayre says Vivid 2022 “smashed” attendance records, with visitor numbers up 7.5 per cent on pre-pandemic 2019 to 2.58 million.

“Beyond the good vibes and bright lights, there were also very strong economic benefits from the festival. More than 100,000 Vivid Sydney travel packages alone were sold during the event,” he says. 

“Vivid Sydney also drew millions of patrons to livemusic venues, restaurants, bars and hotels. More than two million visitors enjoyed a sit-down or take-away meal at the festival, with the number of people dining in restaurants up 24 per cent on 2019.” 

A by Adina Sydney Hotel General Manager Jay Hore, whose new central “hotel living” style CBD property opened in the middle of the COVID pandemic, says travellers are returning to the harbourside city. 

“We are hopeful that this positive momentum continues into the second half of 2022 as international border restrictions ease and consumers continue to support the tourism and hospitality sectors,” he says.

Shane Jolly, General Manager of Sydney’s five-star Langham Hotel, says they’ve bounced back to surpass 2019 figures, by focusing on fewer guests and higher room rates, in a surprise tactic which is working.

“We tried putting our room rates as low as the could go, and as high as they could go until we found that sweet spot. Over the past two years we’ve added $200 to our average room rate due to demand and being able to provide people with a value proposition,” he says.

“We are making sure that when people walk through the door they think ‘this is expensive’ but when they walk out the door they say ‘that was expensive, but you have got to stay there’.” 

Meanwhile, the Sydney Morning Herald (SMH) reports a flurry of international commercial property investors into Australia and in particular capital cities, citing the $2 billion plus sale of the Southern Cross Towers in Melbourne.

The SMH reports 862 applications to invest in a combined $82 billion in Australian commercial property in a trend which leans heavily towards Sydney and Melbourne across all sectors, particularly office space.

Visit Victoria says tourism recovery in Melbourne is gaining momentum as restrictions ease and confidence builds, citing new hotels opening since January 2022 including AC by Marriott, Lyf Collingwood, Voco Melbourne Central, Courtyard by Marriott, Holiday Inn Express Little Collins and a major multi-million-dollar refurbishment of Sofitel Melbourne.

Still in the pipeline for 2022 are 388 Williams Street, Veriu Queen Victoria Market, Meriton Suites, Le Meridien and the much-anticipated Ritz-Carlton with more than 2100 additional rooms predicted to come online this year.

“In Melbourne this year, Formula One’s 2022 Australian Grand Prix set a new attendance record for an event held at Albert Park in Melbourne, with an estimated attendance of 419,114 over the four-day weekend,” Visit Victoria says.

“This was the biggest sporting weekend on record for Melbourne, aside from the 2006 Commonwealth Games and 1956 Olympics, with more than 580,000 fans. CBD hotel occupancy sat around 90 per cent for the duration of the weekend, a strong signal of events leading the recovery of the country’s sporting and cultural capital.”

While Brisbane was largely regarded as bulletproof during the past few years with few lockdowns, prolonged Queensland border closures posed their own challenges, as did the city’s early 2022 floods.

Arguably, Brisbane is currently flavour of the month, with its sights set on the 2032 Olympics and more than $30 billion worth of major infrastructure projects planned or underway.

But if history has taught Australians anything, never rule out the powerhouses that are Sydney and Melbourne who could well borrow from the somewhat prophetic song of local Brissie band The Go Betweens who released Streets Of Your Town in 1988. 

Their catchy lyrics “round and round, up and down” pretty much sum up the pandemic state of play for Australia’s commercial property sector. But in an industry which is prone to swings and roundabouts, for now, it’s a case of being on the up and up. And that’s something to sing about whether you are on the banks of Brisbane’s recovering river, staring at Sydney’s sparkling harbour or gazing at graffiti along those lovely laneways of Melbourne. END

The RevPAR Performance Snapshot shows the Australian capitals have all rebounded with increases in revenue per available room in the Calendar Year 2021 – YTD Jun 2022 v YTD Jun 2021.