Bounce Backpackers sells for $18.3 million
Hotels and backpacker hostels are the target of investors as they get a foothold into the improving tourism sector.
Demand for the properties is also being fed by students who stay in the hotels while they find permanent accommodation for their university studies.
One of the recent deals was the purchase of Bounce Backpackers in the Sydney central business district by a private Chinese investor for $18.3 million.
It was the latest in a tranche of sub $25 million transactions to offshore buyers.
The five-star Bounce Backpackers is a five level site at 28 Chalmers Street with 190 beds over three levels, a ground floor tavern/bar area and top floor featuring kitchen facilities and outdoor common areas.
CBRE Hotels' Andrew Jackson, who negotiated the sale said Australia's hotel sector continues to fly high on the radar of Asian investors, with its relative proximity, economic stability and high growth returns, key fundamentals attracting buyers.
"Offshore investors have been traditionally focused on five-star CBD hotel assets, however, a lack of available stock in the top end, coupled with a greater appreciation for the fundamentals Australia provides, has led to increased appetite levels for mid-tier assets."
Mr Jackson said offshore investors are also looking beyond the traditional city-based hotels with a renewed interest on the regional and suburban market, which was once dominated by the domestic investment community.
The lower Australian dollar has enticed inbound visitors leading to a rise in occupancy rates for hotels across all sectors. In turn, investors are snapping up the bricks and mortar as well as the management.
According to agents there has been more than $2.5 billion in transactions completed in the first half of 2015, the second largest transaction pipeline across the Asia Pacific region.
CBRE's 2015 Asia Pacific Hotel MarketView report shows robust appetite for hotel property across the country, with Australia ranking second behind Hong Kong in terms of transaction activity.
Earlier this month, an offshore Chinese buyer scooped the Pensione Hotel in Melbourne for circa $26 million, while a number of other sales are preparing to conclude over the coming weeks, including the 225-room Tune Hotel in Melbourne, the Wyndham TRYP Hotel in Brisbane's Fortitude Valley, the Ibis Styles Cairns and the Crowne Plaza Terrigal.
Source: The Sydney Morning Herald, Carolyn Cummins, 30th September 2015
Originally published as: Bounce Backpackers sells for $18.3 million
