21 Jun 2019
Words Trudy Crooks Issue 94
ENCOURAGING MARKET SIGNALS
In some respects, it could have seemed circumstances were conspiring against our market this year. But we’ve seen the accommodation property sector remain strong regardless. It’s a good sign for the financial year ahead.
Two things weighed on the business environment in the first six months of 2018 – the banking royal commission and political uncertainty.
The revelations of the banking enquiry resulted in credit tightening, as the banks acted to mend their ways. At the same time, we knew a federal election was looming, we just didn’t know exactly when. Finally, after the budget was delivered, the date was announced.
Traditionally, a looming election and the prospect of a change in government prompt a market slowdown, as people mark time, waiting for an outcome.
Perhaps it’s a sign everyone just wanted to get on with it, that we’ve seen a less pronounced market impact this time. ResortBrokers has handled higher transaction volumes than we might usually expect in the months approaching an election.
Throw in the banking royal commission, and it could have been a real market dampener. But again, not so. Sure, deals have been taking longer to get across the line, as financiers apply more rigorous lending scrutiny. But the deals are still being done.
So I can only say, given these signs of confidence and resilience, the outlook for the new financial year has to be positive.
The election is done and dusted, a new government installed in Canberra. And the banks, with new policies and practices up and running, are keen to move forward.
We’ve also see some savvy players making counter-cyclical investments during this period. Clearly, we’re not the only ones expecting the market to march ahead with renewed confidence. So, bring on FY19. We’re all keen to get on with the normal rhythm of things.
Some of the activity I refer to has flown under the radar. ResortBrokers has made some quite significant sales off-market, for vendors wanting to take a discreet approach when their high profile properties are changing hands.
A case in point has been the rationalisation of a major portfolio of seven management rights in various locations across the country. We have been working on selling the collection, either in one line, or as individual properties.
While I quite obviously can’t go into detail, I can say we’ve drawn healthy demand from active buyers on our database. The interest has been particularly strong in rebounding regional centres.
As we go to press, some in the collection have sold, and others are under offer. Ultimately, this is a portfolio is worth close $20 million, and we are well on the way to realising that.
Also offered off-market has been an 80-key, 4-star hotel in a major regional city on Queensland’s central coast. Again, interest has been solid and we are close to the pointy end of a deal.
Further north, in stunning Port Douglas, the management rights to a high-performing boutique hotel are also being offered discretely off-market. This is a very rare, adults only operation generating an outstanding net income of close to $1.2 million per annum.
It boasts beachfront location with unrivalled beach and ocean views and is just steps away from the cosmopolitan village of Port Douglas.
What all this really highlights is that, if you are in the market for an accommodation property or business, you can’t just sit patiently watching and waiting for advertisements to appear.
The gem you are waiting for may never be advertised – offered and sold without you ever knowing. You must register your interest with us, outlining your buying criteria, so you are among the first know when a suitable property becomes available, on or off-market.
MELBOURNE MARKET COMES OF AGE
Melbourne and management rights, not so long ago, were relative strangers. Now, thanks in a big way to ResortBrokers’ advocacy, the Australia’s southern cultural capital is emerging as a real management rights hotspot.
During the last few years, ResortBrokers has worked very closely with major apartment developers educating them about the value of putting management rights in place on their large-scale residential projects.
Because a management rights structure needs to be established early, before any lots are sold in a development, it has taken a while for new opportunities arise. But now, the market is really seeing some strong activity and keen demand from operators for short-term, permanent residential and mixed-use buildings.
The demand is not surprising, given Melbourne’s surging visitor economy, famed ‘liveability’ status, strong population growth, and the scale and quality of new management rights now on offer.
ResortBrokers has already been involved in the sale of the rights at iconic inner city developments, Avant in the CBD and the towering Australia 108 skyscraper, as well as operations in projects by high profile developers, Gurner and The Deague Group.
Geelong too is making its mark in management rights. There we’ve sold a number of properties, including a recent new inner city hotel.
Currently, ResortBrokers is marketing a number of large-scale management rights, including stunning new landmarks – the Deague’s elegant Melbourne Village twin-towers at West Melbourne (529 apartments), the 440-unit Sky One at Box Hill, and premium Collins House in the city’s most sought-after CBD boulevard, Collins Street.