While 2016 was a slow deal year for major transactions, there was significant activity involving regional and
leisure assets.
Looking ahead, new supply will be a concern in many major markets in 2017.
In Melbourne, it will be hard to drive room rate growth given continued new supply. Strong occupancies are
still being achieved but rate growth will be moderate.
In Sydney, the average daily rate will continue to be strong with limited new supply and the new Sydney
Exhibition Centre coming on line. This will make Sydney the number one performing hotel market for the next
three to five years.
In Brisbane, rates and occupancy levels will remain under pressure given the level of new supply and the lack
of major new demand generators. However, with head works starting and road closures now in place for the
start of works on the Queens Wharf Redevelopment, the announcement of the $20b Adani Coal Mine and
recovering coal and iron ore pricing, we expect that the Queensland hotel market will begin to recover from
2018 onwards.
Counter cyclical opportunities will arise for astute investors in areas such as Brisbane and Perth. However, we
expect that most deals done in these markets will be off market deals rather than on market.
Cairns, the Gold Coast and the Whitsunday Island regions will continue to experience a strong recovery in
room rates and occupancies as inbound tourism arrivals numbers continue to grow with the lower Australian
dollar.
However, until the mining industry fully recovers there may be distressed sales occurring in some areas of
Australia as valuations of properties are ordered by the banks. Areas that will be affected will be the sub
regional markets like Mackay, Townsville and Gladstone and regional areas of WA in towns that were once
thriving due to the mining boom. If one bank moves on owners in these regions other banks will be sure to
follow suit.
- Wayne Bunz, National Director, CBRE Hotels