07 Nov 2016
Words Catie Langdon
Victoria Heeds Lesson in Management Rights
The trend has been highlighted by the recent launch of Geelong’s smart new Devlin Apartments run by a team who bought its management rights from developer Phil Petch of IDS through Resort Brokers Australia.
Devlin Apartments, which just earned IDS a National Trust heritage award for its sensitive revival of the once derelict Gordon Junior Technical College, is operated by The Devlin Five, associated with John and Jennie Kenworthy and on-site managers Garry and Cathy Henderson.
Resort Brokers’ Victorian state manager, Jim Chapman, says developers who understand and adopt the management rights model not only create new business opportunities for accommodation operators but improve investment value and security for unit buyers.
IDS is among a growing number of Victorian developers taking a leaf out of Queensland’s management rights book.
Melbourne’s high profile Tim Gurner, whose company GURNERTM is developing some 4,000 apartments worth $2.5 billion across Victoria and Queensland, is also adopting the model.
GURNERTM recently appointed Resort Brokers Australia to handle the sale of the rights to its $600 million three-tower FV project in Brisbane and is preparing to do the same at the 241-unit Ikebana luxury apartment development in West Melbourne.
“Understanding management rights is more important than ever for unit developers following rapid growth of the serviced apartments segment of the accommodation market and rising interest by major hotel groups,” said Resort Brokers national off-the-plan management rights specialist, Tim Crooks.
“There is a growing acknowledgement by hotel groups and major accommodation operators, both residential and short term, that management rights is a market they need to be in.
“Recognition of the management rights model as an appealing and strongly-performing asset class is a significant development in Australia’s maturing accommodation market,” he said.
Management rights – the business of on-site caretaking and letting of units within a strata or group titled development – benefit all stakeholders, including developer, operator and unit owners, Resort Brokers Australia says.
The concept had its genesis on the Gold Coast more than 40 years ago, devised because so many units were in the hands of absentee owners, and it has developed to serve the needs of both holiday and residential unit owners.
The value of the management rights industry in Queensland is now estimated to be greater than $5 billion, with some 3,000 businesses generating annual sales upwards of $600 million.
“It has proven so successful, there are now very few community titled residential and resort developments in Queensland that don’t have management rights in place,” Mr Chapman said.
“There are now several hundred in place in New South Wales but, so far, possibly fewer than 40 in Victoria,” Jim Chapman said.
“Devlin buyer John Kenworthy is actually a former Resort Brokers colleague who worked with me on introducing management rights in Victoria, so he well understood the opportunity presented by this fine new accommodation offering in Geelong.”
Mr Chapman said there was no reason why Queensland should have a monopoly on management rights.
“It benefits investor lot owners by ensuring the property is properly managed and yields are maximised, which is increasingly important in our low interest rate environment.
“It is essential, however, to find the right buyer for the management rights and ensure you achieve the right commercial balance between operator and apartment owner.
“We worked closely with the developer throughout the early design process to ensure the end product would suit the future accommodation manager and guests.
“In the end, it’s a win-win for everyone because you have good, experienced operators running the accommodation and protecting and enhancing its value and reputation,” he said.
Mr Kenworthy, who worked for 18 years as a business broker and also has motel interests at Corowa and Port Macquarie in New South Wales, says the new Devlin Apartments offer Geelong’s only 4.5-star AAA-rated accommodation in what was until 2014 a derelict school.
Named after former student Stuart Devlin, who became a famed gold and silversmith, designer of Australia’s decimal currency and jeweller to the Queen, the property features 28 boutique apartments in distinctive architectural styles sympathetic to the historic college.