Meriton puts serviced apartments on ice as COVID-19 bites

Meriton founder Harry Triguboff in his office. Picture: John Appleyard
Meriton founder Harry Triguboff in his office. Picture: John Appleyard

Multi-billionaire Harry Triguboff says apartment sales are still substantial, but the rental income from his vast portfolio of residential units has plummeted at least 10%.

The Meriton founder also revealed on Monday that he has been forced to temporarily shut another four of his serviced apartment towers on the eastern seaboard because of the lack of tourists due to COVID-19.

Triguboff has now closed nearly half of the 20 serviced apartment towers he owns and operates in Brisbane, the Gold Coast and the Sydney CBD.

He is not alone, with Accor’s chief operating officer Simon McGrath conceding last Friday that the French-owned accommodation behemoth had temporarily shut 60 hotels of its 400-strong portfolio of accommodation in Australia and New Zealand.

Across the board hotel and resort occupancies have fallen below 10%.

“Serviced apartments are very weak. I told you I closed four (serviced apartment towers down); I am going to close another four down. I have 5000 serviced apartments, probably 3000 are open and 2000 are empty.”

READ MORE: Commercial Property Coronavirus News

Triguboff blamed a lack of foreign tourists and the fact that big gatherings had ceased in Sydney and the Gold Coast.

“We are suffering in the hotels and serviced apartments. The government is stopping people from using hotels. How can we survive?

“People want to use serviced apartments. No one got the virus from the hotels.

“We must allow people to go interstate and we must allow them to become our constant clients again.

“We are still far away from bringing in tourists but we should allow people to enjoy our serviced apartments as soon as possible.”

On the sales front, the Meriton Apartments founder said Asians were still buying his apartments.

“So far sales are OK,” Triguboff said in an interview with The Australian. “The Chinese are buying … I just do the prices according to what they want to pay. I have sales everywhere. I have no problem. I sell in (Sydney’s) Parramatta, North Ryde, Rosebery, and in Queensland’s Surfers Paradise. We make sure there are buyers for everything.”

On the rental front, the Meriton founder is leasing out 5000 apartments, predominantly in Sydney, and while he says it is relatively easy to find occupants, they are demanding cheaper rents.

“There is no trouble leasing them, but they can’t pay as much.

“Residential rents are falling by 10%. They are falling because people have no work. We can still lease them but rent is falling.”

He said rents would probably be reduced for the newly unemployed but would be looked at on a “case-by-case” basis.

The acquisitive Meriton founder said he was not looking to buy more sites at present but revealed he has amassed sufficient sites to build another 15,000 apartments on the eastern seaboard.

“It will be a long time before I buy; if they (apartment buyers) don’t work, do you think they can buy an apartment? I have enough sites to build 12,000 apartments,” said Triguboff, adding that he has sites in Sydney’s Little Bay, Pagewood, Epping, Parramatta and at Surfers Paradise in Queensland. He is also starting a sales department in Melbourne.

Meanwhile, Meriton’s construction division is powering ahead, building 2000 new units.

“Construction is going very well,” Triguboff said.

However, at Sydney’s Macquarie Park, where Meriton has approvals for at least three projects, Mr Triguboff said it would be two years before he started work on the largest of the three sites.

“I am building one apartment tower at Macquarie Park now, and I have another one to build. It will be two years before I build the big one.”

He believes international students will be the first foreigners to return to Australia.

“Students are my tenants. These students are good for everybody — good for the university, good for me — and they do a lot of casual work.

“The government suggests that the first people to come (back) will be students and that is definitely correct. Students will come quickly. Universities will prosper and they will fill our flats. We will then be less scared of allowing others.”

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