ASIAN INVESTORS SNAPPING UP BIG HOTELS
Harshit Sinha | On 20, May 2015
For those of you who have been wondering like us if there is any end to the rise of property prices in Australia, here is fresh evidence that the end is not in sight yet. Asian investors are turning their pockets over for high-end hotels in Melbourne and Sydney. Read on for more details.
The boom in Australia’s residential properties seems to have bubbled over into commercial property territory too, with a bunch of high-end Sydney and Melbourne hotels in the recent past being sold at attractive valuations to cash buyers from Asia.
One of the latest deals in this category was the sale of the Sydney Hilton, which was sold to Singapore-based Asian investment house Bright Ruby for a $442 million on a leaseback arrangement. The Park Hyatt hotel in Melbourne was also sold at $135 million to China’s Fu Wah International Group.
There was also a landmark two-hotel deal in Sydney worth $135 million to the Hong Kong based Ovolo Group which included the sale of Oaks on Lonsdale. But the biggest deal of last year saw Sydney’s Sheraton on the Park bought by China’s Sunshine Insurance Group for a whopping price of $463 million.
This renewed interest in commercial hotels from Asian buyers is par for the course in an economy that is experiencing a bull market, say analysts. There appear to be strong fundamentals under Australia’s growth too, with a marked increase in tourism predicted over the next decade, positioning hotels as a great investment from a revenue standpoint.
Also, there is significant cash surplus on the balance sheets of countries such as China and Singapore, and there is capital looking to exit those countries and enter ‘the west’, such as Australia. The next decade in Australian property markets promises to be fun and roller-coaster-like for these twin reasons.
The preferred destination for Chinese investors is Sydney, both for residential and for commercial investment, with Melbourne and the Gold Coast coming in second and third place. There is also more money than deals available at present, which means that there is a significant chance for prices to go even higher, hard as that is to believe for those of us who have seen the property boom at close quarters and wondered.
In all, 146 hotel deals were completed in the Asia-Pacific region during the last calendar year, and all of them have been sold to Asian buyers. The sum total of these deals came to $US 7.5 billion.