Investors drawn to Geelong’s Ritz.

Investors are flocking to Geelong’s first upscale 4.5-star accommodation being built at the neglected Ritz site.

Investors are zeroing in on the site from all over the country, including Sydney, Perth, Melbourne and regional Victoria.

Such is the demand that they have already secured 80 per cent of the 110 hotel apartments.

The draw card is the strong net rental yield.

An apartment in the complex is expected to fetch a net rental yield, after all expenses are taken out, of 6-8 per cent.

Compare that to the CoreLogic data which shows the gross rental yield, before expenses are taken out, for a unit in Geelong was 3.5 per cent. The median asking rent for a unit in Geelong was $350 per week.

The Ritz is now being transformed by Melbourne developer Integrated Development Solutions.

The abandoned and derelict building will be turned into a $30.8 million nine-level tower on the corner of Bellerine and Corio St.

Integrated Development Solutions Director Phillip Petch says a lot of his buyers have seen the way Newcastle in New South Wales has been revitalised and they see the same thing happening in Geelong.

“People outside of Geelong see the upside more than Geelong residents,” Mr Petch told realcommercial. com.au.

“They look at the prices and the apartment and go ‘crikey it just makes sense’.”

According to Petch, one-bedroom apartments start at $455,000.

That would include a furniture package worth $23,000 and all costs relating to the sale. The result: a total amount of about $508,000 with an estimated gross rental yield of $53,000.

There have been increasing numbers of overnight visitation to Geelong with a 15 per cent spike in the year to September, 2017.

As a result, Petch says demand would be high.

“There is huge growth in people staying overnight in Geelong but it hasn’t been met by any supply,” Petch told realcommercial.com.au.

Leon Getler 27th March 2018.