Regional tourism and leisure assets attracting buyer interest

There is increasing buyer interest in regional tourism and leisure properties as Australians holiday at home during the coronavirus pandemic.

While Australia’s tourism industry has been hit hard by international and state border closures, property agents say there is rising demand for tourism and leisure assets in regional areas as people holiday within their own state or interstate.

REA Group economic analyst Anne Flaherty said regional tourism is outperforming CBD markets.

“The reduction in international tourists and corporate travel have coincided with an increase in domestic travel, leading to a two-speed economy in the CBD and regional tourism sectors,” Ms Flaherty said.

“The collapse of international tourism and business travel has been a major blow to CBD hotels, however regional tourism is benefitting from local interstate and intrastate travellers.

“Occupancy rates are still below pre-pandemic levels but have risen over the last six months across Australia.”

COVID hit the tourism industry hard, but regional tourism is faring better than the CBDs. Picture: realcommercial.com.au/sold

Ms Flaherty said the tourism industry has been one of the sectors hit hardest by COVID-19 and will likely take years to recover.

She said the pandemic has driven up risk across most tourism assets, although some investors may see buying opportunities.

“For investors who are in a position to weather the higher risk in the sector over the next few years, now could be a good time to purchase tourism assets at a discount,” she said.

Regional tourism assets in demand

Commenting on the sale of the Cleveland Winery in Victoria’s Macedon Ranges, JLL Hotels & Hospitality Group vice president Will Connolly noted 2021 is seeing a surge in intrastate travel after the easing of COVID restrictions.

“Our agency team are already fielding a significant increase in buyer demand for ‘drive-to’ tourism and leisure assets, which has now only been heightened given the uncertainty surrounding state border closures,” Mr Connolly said.

Demand has increased for tourism and leisure assets, like Cleveland Winery, in ‘drive-to’ locations. Picture: realcommercial.com.au/sold

There were eight offers for the Cleveland Winery, a 40.3ha vineyard, accommodation and hospitality operation that was sold to boutique hotel specialist Lancemore Group.

“We feel that Cleveland Winery has some outstanding repositioning potential and our intention is to refurbish the property and operate it for generations to come,” Lancemore Group CEO Julian Clark said.

Hong Kong-listed Hang Tai Yue Group said it sold the winery for $3 million and the business and assets for $1 million, noting the pandemic had created tremendous challenges for its Victorian resorts.

The company, which also sold the Bellinzona Resort in Hepburn Springs last year to new owners who announced a multimillion-dollar refurbishment, said it planned to concentrate on the development of its remaining resort in the Yarra Valley.

This Hepburn Springs resort was sold a few months into the COVID pandemic last year.
Picture: realcommercial.com.au/sold

The retiring owners of the Yarra Valley Estate are also hoping to capitalise on the area’s popularity and its proximity to Melbourne’s CBD, with the sustainability-focused corporate, wedding and event venue for sale for a reported $6-8 million.

The sale is being managed by agents at CBRE, who are again marketing the CountryPlace Conference and Function Centre in Victoria’s Dandenong Ranges.

After putting the sale on hold during last year’s COVID lockdown, the owners have again listed the conference, weddings, events and accommodation business they have run for 30 years.

Luxury regional accommodation also in demand

Agents have also reported strong interest in luxury regional accommodation properties.

HTL Property had more than 100 enquiries and multiple offers for Raffertys Resort on the  shores of NSW’s Lake Macquarie before it was sold to development and hospitality group Iris Capital.

Regional accommodation is in demand, as shown by the sale of Raffertys Resort. Picture: realcommercial.com.au/sold

“Publicity and determined consumer activity regarding the domestic travel surge has created clear demand for A-grade regional accommodation offerings,” HTL director Nic Simarro said.

Mr Simarro said competition for investment opportunities had increased significantly with traditional and new-entrant investors seeking quality accommodation properties in regional areas, in particular those within two hours of airport facilities.

HTL Property, along with Ray White, is also marketing Campbell Point House, a luxury private hotel and reception venue on Victoria’s Bellarine Peninsula.

The high-end accommodation, wedding and event venue is back on the market with a $16-18 million price guide.

Campbell Point House is back on the market. Picture: realcommercial.com.au/buy

“Given the fact the property is located within one hour of the Melbourne CBD/airport and is only 30 minutes from Avalon Airport, we anticipate both strong domestic and offshore interest in the asset as international border restrictions continue and the demand for luxury regional accommodation increases,” Mr Simarro said.

Regional hotels hit the market

While some hotels changed hands last year including a $180 million deal for 17 city and regional hotels, Ms Flaherty said hotel sales plummeted during 2020 and the sector would continue to be impacted by the lack of international visitors.

She said despite positive news on the vaccine front, the International Air Transport Association was not forecasting a full recovery in global passenger traffic until 2024.

“Because of this, investing in hotels has become riskier, and there has been a resulting correction in hotel prices,” she said.

“Unfavourable market conditions mean hotel owners who may have been planning to sell their assets have instead continued to hold them, rather than sell at a discount.”

Some hotel owners are now hoping to capitalise on the rising investor interest in regional and leisure hotel markets.

A private Australian family has put the Ibis Styles hotels in Tamworth in northern NSW – said to be the southern hemisphere’s longest motel – and Cairns in far north Queensland on the market.

The southern hemisphere’s longest motel, the Ibis Styles Tamworth, is on the market. Picture: realcommercial.com.au/buy

“Hotels in regional and leisure locations have certainly been the beneficiary of strong domestic travel, especially in drive-to locations,” CBRE Hotels’ Wayne Bunz said.

CBRE’s Hayley Manvell expected the assets to be highly sought-after given the scarcity of hotel stock on the market and record low interest rates.

“The hotels will be sold well below replacement cost and will be viewed as strong counter-cyclical opportunities ahead of a rebound in tourism and regional corporate travel,” Ms Manvell said.

CBRE Hotels is also marketing The Quest serviced apartment hotel in the NSW regional city of Dubbo, while Savills Hotels is handling a development opportunity for a 241-room hotel in the coastal city of Wollongong.

HTL Property said it expected strong demand from local and national developers looking to take advantage of a surging regional market with the sale of an approved hotel development site in Wagga Wagga, NSW’s largest inland city.