CBD squeeze piquing hotelier interest in regional Australia

CBD squeeze piquing hotelier interest in regional Australia

A trend is growing in the Australian hotel market as investors forgo expensive assets in capital cities to favour a more regional approach.

CBRE Hotels' Andrew Jackson says buyers are becoming more attracted to the diversity of regional assets, especially as they are being edged out of capitals due to expensive pricing and lack of asset availability.

"With limited opportunities to enter Australia's hotel market in major capital cities, investors are shifting their focus to regional assets," says Jackson.

"Pricing and scarcity of assets in tightly held CBD markets is forcing investors to look further afield into regional locations in order to secure hotels at attractive yields." 

Underpinning the trend is the recent sale of Quest Apartment Hotel in Griffith, New South Wales.

Regional developer Railway Street Holdings sold the freehold property to a domestic hotel investor in a deal worth $15.25 million, representing a yield of 7.5 per cent.

According to Jackson, the property was popular among both Australian and Asian investors.

"This property, which is only 12 months old, attracted strong buyer interest given its operation under Quest, Australia's largest serviced apartment operator," says Jackson.

"Quest's confidence in this regional market sparked huge investor interest throughout the campaign."

"We received several enquiries from the broader investment community, including those who haven't previously invested in the hotel sector but are now looking at diversifying their interests in other commercial asset classes."

Located in the centre of Griffith, the Quest Apartment Hotel is a 4.5-star property located on a 3,393sqm site.

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