By Vanessa Cavasinni, editor Australian Hotelier
After a strong year for the hotel real estate market in 2015, analysts from Colliers International, JLL Hotels & Hospitality Group and Ray White, are predicting that 2016 will be another robust year for Australian hotels.
Colliers International has released its ‘Property Outlook’ forecasting guide, and the projections are good for hotel investors. John Kenny, CEO Australia and New Zealand at Colliers International suggests that strong consumer confidence has induced investor confidence, resulting in a flurry of hotel real estate activity in the last 12 months that is set to continue into 2016.
“We have experienced a sustained increase in business confidence over the past 12 months,” Kenny stated. “This confidence is having a positive impact across the property sector, and this optimism is starting to flow through to several of our occupier markets, as businesses become more confident.”
According to Stephen Burt, managing director of Hotels – Asia Pacific for Colliers International, another contributing factor to the strong hotel market is the depreciation of the Australian dollar, which has boosted tourism. Overseas visitors increased by 6.6 per cent in 2014-15 to record levels, and with the Australian dollar projected to remain stable over the next 12 months, both domestic and international tourism are expected to remain strong.
While the bulk of hotel real estate activity in 2015 has been in the Sydney market, Burt proposes that in 2016, most activity will take place in the Melbourne market and other Australian capital cities.
"An increase in the supply pipeline is expected in the Brisbane, Adelaide and Melbourne markets through to 2019, with limited new supply expected in the Sydney market. Although not all proposed developments are likely to proceed, there will be pressure on existing inventory to refurbish in order to remain competitive.”
This prediction is backed by the Hotel Investor Sentiment Survey undertaken by JLL Hotels & Hospitality, which suggests offshore capital investment – mainly from China – will be largest in Melbourne for the Australasian region.
Andrew Jolliffe of Ray White, whose sales in 2015 have included such illustrious hotels as The Newport Arms, The Buena Vista Hotel and the Four In Hand, believes the combination of these factors make for a 2016 that will be as strong for the hotel market as 2015.
"The fundamentals remain so positive. Legislative headwinds are comparatively benign, consumer sentiment is high, debt both cheap and liquid, and the depressed Australian dollar is stimulating inbound visitation rates for our capital cities and tourism precincts across the country. When all distilled, there's little surprise we have a weight of equity and management ability chasing what, in reality, is a disproportionately small number of A-grade investment properties."
Want to know more about the outlook for the hotel investment market in 2016? Respected hotel operators and real estate agents will be giving us their predictions and insight for 2016 at the Pub Leaders Summit on 21 March in Sydney. Grab your ticket now at www.publeaders.com.au