Hotel sales set to surpass $300m this year
Amanda Cropp
Hotel sales are likely to set new records this year, and the pandemic has not dampened prices, according to Colliers International.
The real estate company tracks sales of hotels with more than 50 rooms, and national director hotels Dean Humphries said that sales to date were already well above the $120 million for the whole of last year.
With a number of large hotel deals due to go through in the last quarter, there was a good chance total sales for the year would surpass $300 million, the highest volume of hotel transactions on record.
Humphries said demand was such that properties were selling privately without being publicly listed, mostly to domestic buyers who were a mix of established operators seeking to expand, and new investors.
Most activity was in the lower band of properties going for under $20m, which reflected the fact that international buyers, who typically had more to spend, were shut out by the border closure.
In the past they made up half of all hotel purchasers, but were understandably reluctant to commit without being able to get into New Zealand to inspect properties in person, added to which, many large hotels with MIQ contracts were inaccessible, said Humphries.
‘‘When you buy a very large hotel asset you need to visit the property to see it and do due diligence.’’
There were a significant number of non-traditional investors showing an interest in motels and hotels, because government contracts for MIQ and emergency housing provided guaranteed income.
‘‘When borders do reopen, they can see what’s happened in the US and Europe where the market rebounded very quickly.’’
Bargain hunters may be disappointed. Some owners wanting to retire or rebalance their portfolios were opting to sell if a buyer made a fair offer, Humphries said, and there was no evidence of ‘‘distressed sales’’.
The Christchurch market has been particularly busy.
CPG Group, which already owns two Canterbury hotels, Terrace Downs and Hanmer Springs Hotel, bought the Rendezvous Hotel with plans for a major refurbishment and rebranding as a five star Fable Hotel.
Christchurch developer Lilly Cooper has sold the boutique Hotel Montreal to the Patterson family, owners of the Commodore Airport Hotel, currently providing MIQ accommodation, and the Queenstown Park Boutique Hotel.
The 88-room Cosa, New Zealand’s first modular hotel, also changed hands last month.
Bayleys national hotel director Wayne Keene confirmed it sold to an overseas buyer for about $19m, and would operate as the Carnmore after undergoing its third name change since opening almost two years ago as the Arden Hotel.
Keene said small to medium hotels were ‘‘doing fine’’, and low bank interest rates were driving cashed-up investors to look for opportunities that offered a better return.
Early on in the pandemic, there were concerns that motel lessees would end up walking away from businesses decimated by the border closure.
But that had not proved to be the case, Keene said, in part because of the level of domestic tourism, and because motels that won government contracts for emergency or transitional housing, pushed more custom to those catering for Kiwi travellers.
Older hotel and motel properties sitting on big parcels of land are also attracting attention from buyers who can see potential for future residential developments, particularly in light of sweeping changes to permit housing intensification.
The medium density changes will allow landowners in Auckland, Hamilton, Wellington, and Christchurch to build up to three storeys and on up to 50 per cent of their land without resource consent.
Colliers is marketing the 6433-square-metre Christchurch Airport Motel as a future residential development site because of its proximity to the airport, Burnside High School and the Russley Golf Club.
Humphries said older dilapidated motel units in other areas could eventually be ‘‘bowled’’ to make way for housing.
‘‘In Auckland there are hotels sitting on two to three hectares of freehold land in prime areas, and half-acre motel blocks zoned medium to high density.’’
Business
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2021-10-24T07:00:00.0000000Z
2021-10-24T07:00:00.0000000Z
https://fairfaxmedia.pressreader.com/article/282793539611466
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