Low dollar attracts offshore hotel investors
by Leon Gettler
A weaker than parity Australian dollar is drawing more foreign investors looking to buy hotel properties at bargain basement prices.
According to Jones Land La Salle, Australian hotel real estate could attract $4 billion of investment this year.
The speculation in the market is that investors are now eyeing the Four Points by Sheraton with views of Sydney’s Darling Harbour, and the Hilton hotel overlooking the Yarra River next to Melbourne’s convention centre. And that’s just the start.
All of this has been made possible by the 19 per cent slump in the Australian dollar which has allowed foreign buyers to shrug off concerns about over-capacity.
“The currency weakness, supported by favourable financing markets, is creating a perfect match for willing buyers and willing sellers,” Martin Siah, head of Asia real estate, gaming and leisure at Bank of America Corp., told Bloomberg in an interview in Hong Kong. “There could be significant changes of ownership in Australian hotels this year.”
“It’s a good time for owners to consider selling given relatively high transacted prices and as they may see further downside of the Australian dollar. Buyers, on the other hand, may see current Australian dollar as a low point for entry.”
Data compiled by Bloomberg shows that foreign takeovers of Australian companies rose 75 percent in 2015 to $38 billion.
At the same time, prices are coming down with more than 2500 new hotel rooms due to be completed in the Sydney city centre over the next three years, according to JLL’s senior vice president and head of Asia-Pacific research at JLL’s hotel and hospitality group Frank Sorgiovanni.
Australian hotels are now also more profitable with high occupancy rates and peak business performance.
JLL data shows hotels’ average daily rate rose 6.6 percent last year to $243.
3rd March 2016
