Developer <a href="https://www.apartments.com.au/developers/bottega-property-group">Bottega House</a> has secured council approval for its first Brisbane project - a $270 million luxury residential development on an absolute riverfront site in leafy St Lucia.&nbsp;

The 15-storey project, known as <a href="https://www.apartments.com.au/new-apartments/st-lucia-by-bottega-house-180-macquarie-street-st-lucia-qld-4067">St Lucia by Bottega House</a> , will occupy a prime north-facing site at 178-180 Macquarie Street, directly fronting the Brisbane River in the established inner-west suburb known for its rowing clubs, golf courses and sprawling University of Queensland campus.&nbsp;

St Lucia by Bottega House will feature a suite of amenities including dedicated wellness spaces, a mineral pool and cold plunge. The project has been positioned to attract affluent owner-occupiers seeking high-quality, house-sized apartments.&nbsp;

Bottega House has been set up by co-directors Nick Malloch, Louis Mennes and Craig Marsh.

Malloch said the project drew inspiration from its Brisbane River setting and leafy inner-west surrounds, while responding to the demands of discerning locals looking to transition from freestanding homes into apartment living.&nbsp;

"With an expansive river frontage and lush green surrounds, we knew we had to create something special that reflects the natural beauty of the location while offering residents masterfully crafted homes," said Malloch.&nbsp;

"Our intent was to complement the project's quiet, private setting by introducing residences that offer a calm retreat and sanctuary from the everyday. The result is a harmonious blend of architecture, interiors and amenity that emphasises wellbeing, comfort and beauty without excess."&nbsp;

Malloch added that project consultants had been carefully selected in alignment with Bottega House's commitment to care, quality and attention to detail. The design team includes architects <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>, interiors practice <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and landscaping by <a href="https://www.apartments.com.au/architects/urbis">Urbis</a>.&nbsp;

Three-bedroom apartments are expected to start around $5 millio. Selling agents Keenan &amp; Byrne said the pricing strategy for the project was anticipated to achieve upwards of $25,500 per square metre.&nbsp;

The project's development approval this week follows the success of Bottega House's inaugural Queensland project - a 22-storey collection of full-floor sky homes at Broadbeach on the Gold Coast which included the sale of a two-storey penthouse at a record price for a beachside residence.&nbsp;

St Lucia by Bottega House is expected to launch to market in November, with construction anticipated to be completed mid 2029.

[smartcode_project_cta:default project_id=151826]

Joel Robinson

Bottega House to make Brisbane debut with St Lucia riverfront apartment development

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> is advancing its affordable apartment model into Brisbane with the acquisition of another site at Cordelia Street in South Brisbane for $27 million.

Sherpa, which has a $1.7 billion pipeline across Southeast Queensland, intends to bring a cohort of apartments exclusively for first homebuyers into its proposed 186-apartment project to be built at 2 Cordelia Street.

The Sherpa model has already been incredibly well received from their Gold Coast projects, where Sherpa Group set aside a number of apartments exclusively for first homebuyers.

The new $320 million project marks Sherpa Group's second development in Brisbane, following its $255 million Symphony project, also on Cordelia Street, which is currently under construction.

Symphony will deliver 146 apartments across 28 levels, offering a mix of one, two and three-bedroom apartments. With 114 already sold, construction by <a href="https://www.apartments.com.au/builders/lps-group">LPS Group</a> is scheduled for completion in 2028.

[smartcode_project:default project_id=7574 project_image_fid=351654]

Sherpa Founder, Christie Leet, said the company was excited to be venturing into Brisbane for its second residential project.

“We’re big believers in the future of Brisbane as we lead into the 2032 Olympics and beyond,” Leet said.

“The success of Symphony has guided us into what will be our second project and we look forward to submitting our plans with council soon so we can deliver yet another quality project to the inner city residential market.

“Our Flourish model has been very well received both in Brisbane and the Gold Coast, and we’re excited to be able to offer some of these apartments again exclusively to first homebuyers to help get them into the property market.

“The model has been extraordinarily well received in our previous projects and it is something we are committed to moving forward.”

2 Cordelia Street will be designed by <a href="https://www.apartments.com.au/architects/hal-architects">HAL Architects</a> &amp; Finegrain and will include Sherpa’s signature residential amenities including pool, gym, recreation, wellness and work from home spaces.

The project will feature ground-floor commercial space, creating a vibrant amenity for residents and the surrounding community.

A development application will be lodged with Brisbane City Council in August on the code compliant site and will be launched to the market early 2027.

Sherpa acquires new site for second Brisbane apartment tower

One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.

Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.

The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" />

Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.

Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.

The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.

Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.

The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.

That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.

The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.

"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" />

Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.

The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.

The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.

According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.

The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.

A significant component of the proposal is the revitalisation of Blue Street Plaza.

The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.

Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.

Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.

Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.

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fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.

Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.

The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.

Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.

&nbsp;

FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.

Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.

Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.

First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.

The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.

The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.

The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.

<img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" />

The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;

PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.

The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.

Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.

"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.

Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.

A major focus of the design has been the public domain.

The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.

The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.

Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.

Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.

Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.

Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a>

Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.

[smartcode_project:default project_id=30959 project_image_fid=292863]

It has since quietly assembled its next wave of projects.

Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.

[smartcode_project:default project_id=152095 project_image_fid=373685]

The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.

Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a> 
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.

At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.

The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.

[smartcode_project:default project_id=152022 project_image_fid=375528]

Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.

The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.

"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.

[smartcode_project:default project_id=152022 project_image_fid=375531]

The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.

The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.

[smartcode_project:default project_id=152022 project_image_fid=375524]

Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.

Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.

[smartcode_project:default project_id=152022 project_image_fid=375530]

The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.

The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.

The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.

"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.

"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."

Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.

[smartcode_project_cta:default project_id=152022]

Otello launches wellness-focused Flowe Bowden with Adelaide-first mass timber apartment design

Hotel Industry

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Hilton is set to return to Melbourne with a 600-room flagship five-star offering set to open in 2022.
There will be a five-year gap in the presence of one of the world's most famous hotel brands. 
The hotel will be at OSK's Melbourne Square Southbank, not far from the hotel group's former South Wharf site, which was rebranded as the Pan Pacific Melbourne in 2017.
Melbourne went from three Hilton properties to zero in a relatively short space of time, with only having DoubleTree representation.
The Airport Hilton is now the Parkroyal and Hilton on the Park is now the Pullman.
The new Hilton Melbourne Square have around 600 rooms in Tower Five of the six-tower $2.8 billion development.
It will be designed by Cox Architecture.
 
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j.ballantyne1990-6AQqhLzZaK

Hilton set to return to Melbourne in 2022

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Entrepreneur Martyn Barnes has signed an agreement with InterContinental Hotels Group (IHG) to bring its new hotel brand, voco, to Victoria’s Yarra Valley.
The 170-room new-build hotel, to be known as voco Yarra Valley, will open in 2021 and marks the second signing for the brand in Australia.
The hotel will feature touches such as an on-site gin distillery, a lavender farm, mirrored maze, an amphitheatre cut from natural ground and a provedore.
The voco brand was launched by IHG in June of this year with the rebranding of the Gold Coast’s Watermark Hotel &amp; Spa.
Abhijay Sandilya, IHG’s Senior Director of Development – Australasia, said the signing is a further step forward for the company which currently has 48 hotels operating under four brands in Australasia.
“IHG launched voco in June with the first signing for the brand in Australia, and we are so pleased to see the brand momentum continue here with the second signing,” Sandilya said.
“voco delivers a guest experience that stands out, with touches of charm and memorable, distinctive and dependable hallmarks, so we can’t think of a better partner for this new hotel than Martyn Barnes.
“The signing of voco Yarra Valley continues IHG’s ambition to take our brands into regional markets, including suburban micro-markets close to Australian capital cities.”
The hotel will try and offer guests a different kind of experience, said Martyn Barnes, Managing Director at Barnes Capital.
“As one of Australia’s premier wine regions, the last thing people want when they arrive in Yarra Valley is a vanilla experience,” he said.
“That’s why voco is the perfect fit, giving business and leisure guests a great, globally-branded, upscale hotel that guests can depend on, but that’s different enough to be fun.”
“I’m excited to work with IHG to open voco Yarra Valley, building on our partnership that will also see us opening Holiday Inn Melbourne Coburg in 2020.
“Watch this space, because we have more to come.”
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jonathanchancellor-7SQnKwU6yx

IHG teams up with Martyn Barnes for voco Yarra Valley hotel

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GUEST OBSERVER
While hotels in Sydney and Melbourne are experiencing unprecedented trading performance, there was a relative dearth of sales activity in 2017 with national transaction values down 35% compared to the 2016 calendar year.
There were no significant hotel sales recorded in Sydney’s core CBD and only a small number of investment grade hotel transactions in Melbourne’s CBD.
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/19/transactions.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/19/transactions.jpg" alt="">
Since the peak of transaction sales set in CY 2015, there has been a precipitous decline in the total dollar- value of hotels transacted across Australia. Many owners seem to be opting to hold their hotels for fear of being cashed up without the ability to re-enter the market; which is becoming a self-fulfilling prophecy.
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/19/transactions2014.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/19/transactions2014.jpg" alt="">
In 2018, we anticipate that Sydney and Melbourne markets will continue their strong trading performance given record international and domestic tourist numbers and visitor spend, and relatively muted supply growth.
There continues to be a fairly substantial (and apparently growing) price gap between Buyers and Sellers. This “gap” is accentuated in Perth and Brisbane where Sellers consider Sydney and Melbourne cap rates as being applicable to their markets.
We see counter cyclical opportunities in 2018 in Brisbane, which we consider has bottomed and will bene t from the Commonwealth Games and activities associated with the Queens Wharf development, as well as a number of other signi cant public infrastructure projects and large scale private developments. Conversely, Perth has additional new supply still to enter an already soft market, which in the short term will lead to further downward pressure on both occupancy and room rate. Likewise, this should give rise to buying opportunities for well capitalised counter-cyclical investors.
We are expecting developers in Sydney and Melbourne to exit their hotels to take advantage of robust capital values, lack of availability of existing investment grade hotels, and to capture the ubiquitous and deep pools of capital still searching for hotels in these key markets. The Developers exit point will be either a site sale with associated DA, turnkey sale with fund through obligations or project take out at completion.
Yield compression continues as the dearth of opportunities drives up pricing and leads to tighter yields (refer Graph 1):
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/19/savills1.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/19/savills1.jpg" alt="">
This lends weight to Savills Hotels often quoted notion of a global synchronisation of real estate investment yields, particularly in gateway markets like Sydney and Melbourne.
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/19/yield.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/19/yield.jpg" alt="">
With the evolving situation regarding Australian Prudential Regulation Authority regulations, the spotlight on international bank capital adequacy ratios and the implementation of the so called “Basel IV” accord (arguably just a completion of the Basel III reforms), bank lenders in the Australian market will continue to scrutinise more carefully hotel assets, forecast cash flows and borrowers for the strength of their covenant. 
The likely effects include:
1. Assets or development projects which are not showing generous returns (and in the case of developments, a strong positive delta between total development cost and on completion value), adequate security (in essence, more modest loan to value ratios), serviceability and interest coverage will be rejected by Australian trading banks
2. Borrowers themselves will be heavily scrutinised – those with experience in hotel investment and ownership in the market, as well as healthy balance sheet positions, will obviously be preferred by traditional lenders and are therefore more likely to re-emerge as the most active buyers
3. Non-bank lenders will have an opportunity to supplant themselves over Australian banks and provide a range of debt products from ordinary senior debt to a range of structured debt solutions. This in itself should assist with a further maturation of the Australian hotel investment market
Direct overseas buyers and overseas equity (managed by local Australian funds) from mainland China, Hong Kong, Japan and Singapore continue to be the main sources of capital scouring the Australian market for hotel opportunities; however, local investors should not be disregarded and have been active players in the market, particularly in the second half of
We also foresee a return of traditional US, UK and European private equity and fund managers as active players in the local hotel investment landscape in 2018 and beyond.
Michael Simpson is the managing director of Savills Hotels.
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jrobinson-rf4aSBido9

Lack of Australian hotel sales in 2017 mask opportunities in 2018: Savills

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The hospitality sector continued its growth trajectory in 2017, according to recent data from Savills.
Revenue per available room Australia-wide increased 2.3% for the year-to-date till September, according to Savills Hotels recent quarterly update.
Sydney continued to outperform Australian markets with a RevPAR gap of $40+ over the next best market performer, Melbourne.
Perth was the worst performer, with RevPAR down down 13.3%.
The best growth markets were Canberra (up 11.8%), Cairns (up 9.4%) and Sydney (up 6.2%).   
<a href="https://www.propertyobserver.com.au/images/2017/11/27/RevPARmain.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/11/27/RevPARmain.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2017/11/27/RevPAR2.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/11/27/RevPAR2.png" alt="">
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Sydney outperforms rest of Australia in hotel room rates: Savills

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Sydney and Melbourne retain the first and second ranks respectively in terms of revenue per available room (revPAR), according to Colliers International’s latest figures.
Sydney’s revPar grew 9.3 percent for the year up to July. The city also leads Melbourne in occupancy rate with nearly 90 percent occupancy rate, while the Victorian capital was in the high 80s.
Sydney also tops in the average daily rate, followed by Melbourne and the Gold Coast.
The hotel market snapshot also noted that Perth took the biggest fall in rankings, from third to sixth place.
Canberra was the biggest mover, from sixth to fourth.
<a href="https://www.propertyobserver.com.au/images/2017/09/11/HotelSnapshot.jpg" target="_blank">Click to enlarge</a>
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Sydney keeps up strong growth in hotel sector: Colliers 

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Savills office in Vietnam has merged with Alternaty, a leading hotel advisory in Indochina, as part of its efforts to tap into the growing hospitality markets of the Asia Pacific, particularly South East Asia. 
Alternaty’s employees will join the hotel business at Savills and will be based in Savills’ Ho Chi Minh City office. 
Savills Hotel Asia Pacific, led by Raymond Clement, consists of individuals with experience and a strong track record across the tourism and hospitality sector. Mauro Gasparotti and Rudolf Hever will both take the role of director, Hotels, Savills Asia Pacific, driving business in Vietnam and South East Asia. 
On the team from Alternaty, Savills Vietnam managing director Neil MacGregor said: “The Alternaty team, led by Mauro and Rudolf, are well known as market leaders in hospitality in the IndoChina region. Their capabilities will add depth to establish a robust platform, offering a complete suite of services for the hotel development lifecycle.”
The merger will help Savills get a platform to tap into IndoChina’s rapidly growing hospitality markets, with Vietnam itself seeing a 26% increase in foreign arrivals in 2016.  
With a growing number of investors actively seeking hotel and resort assets, this will consolidate Savills’ investment brokerage platform.
The Hotel Advisory Services in Vietnam will provide hotel and resort market research including feasibility studies, operator selection, asset management and investment brokerage.
“We are delighted to become part of the Savills family and to leverage Savills’ extensive operation, sales and marketing platform in the region,” said Mauro Gasparotti, executive director at Alternaty.
Rudolf Hever, director of Hotels, Savills Asia Pacific said more players were entering Vietnam’s growing market with total hotel transaction volumes at nearly $500 million in the last 24 months. The number of five-star hotel rooms in 2015 soared by 37% year-on-year to reach 24,000 units, he added. 
This growing trend in hotel development can be seen across hotel segments with an estimated 15%-20% growth in total hotel supply in the short term. Besides the key cities of HCMC and Hanoi, up and coming markets such as Phu Quoc, Danang and Nha Trang are also catching investor attention. 
Alternaty is a boutique real estate consultancy which was founded in 2012. It is known for its contacts and track record in commercial property, hotel and resort advisory throughout the IndoChina region. 
The Savills Hotels team valued and advised on US$9.1 billion worth of hotel assets in Asia Pacific in 2016. Most recently, it has led the sale of the Anantara Ubud Bali, the Duxton Hotel Saigon and the Hyatt Regency Osaka.
 
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Savills Vietnam merges with hotel advisory firm

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From hip lobbies with a coffee shop ambiance to shared living spaces linking guest rooms, more hotels are turning their focus to providing inviting community areas.
For corporate travellers, it may mean sending a few emails from a co-working alcove complete with power and USB outlets, while leisure visitors may linger around tables stacked with board games or post photos to social media from the lounging zones.
“Today’s travelers often place greater value on convenience, sense of place and community than they do on the traditional luxuries offered by hotels,” says David A. Black, Americas Hotels Lead, JLL Project and Development Services. “That’s one reason why hotel companies are developing so many soft brands that have an emphasis on communal areas with spaces and experiences that bring people together in new ways.” 
The forthcoming Tru by Hilton is just one of the growing number of hotel brands encouraging its guests to spend less time in their rooms and more in specially designed communal areas. Aimed at Millennials — or people with a “Millennial mindset” — who want to connect with other travelers, the hotel’s innovative space called “The Hive” embodies the brand. Instead of a traditional lobby, guests have access to four zones — work, play, lounge, and eat — all designed for interaction and engagement.
Moxy Hotels, Marriott’s new boutique hotel brand, offers an industrial-style lobby with fun games on hand, along with coffee and full-service bars. And while not everyone will fancy the hotel’s signature feature, a communal ironing nook, Moxy Hotels is banking on Millennials appreciating its fresh approach.
“Some of this communal space is nothing new,” says Lauro Ferroni, JLL’s Global Head of Hotels &amp; Hospitality Research. “Hotels have always had lobbies, pools, bars and restaurants. But now the design and features of these communal spaces are being driven by hotels wanting to appeal to younger travelers.”
Going beyond the idea of a pool and sun-loungers as an outdoor communal space, one New Jersey hotel, The Asbury, has created a perennial backyard barbecue zone with Ping-Pong tables, live music, craft beer (served from a converted VW van), and food trucks.
<h2>Getting travelers together</h2>
The growing popularity of home rental platforms, such as Airbnb and HomeAway, and boutique hostels is also driving hotels to find new ways to accommodate larger groups of friends and families traveling together.
Marriott’s mid-range brand Element, which is aimed at guests staying beyond a few nights, is testing blocks of private rooms built around a communal kitchen and living room. “Really it’s about a much more shared economy these days. It’s much more about socializing and a sense of community when you travel,” says Toni Stoeckl, a Global Brand Leader at Marriott, in an interview with KTLA earlier this year.
The challenge for hotels is designing their communal areas in a way that appeals to their target guests – and provides them the requisite amount of privacy.
“Although there has been a growing focus on the Millennial traveler, hotel brands can’t afford to ignore their more “seasoned” travelers,” says Black. “That’s why design solutions must be flexible enough to provide both communal spaces which appeal to the co-working, co-living generation as well as spaces which appeal to baby boomers.  It’s not a one size fits all approach.”
In addition, people traveling in a group have different needs and expectations to those traveling in a couple.
“When you’re traveling, the communal experiences could turn out to be the most memorable part of the trip,” says Ferroni. “Yet you’re also going to have a lot of people who will say right off the bat that they have no interest in trying something like this, whether they’re business travelers who need their own space to get the job done or leisure travelers who want some time on their own.”
<h2>Is communal the way forward?</h2>
With the concepts of co-living and co-working taking off, bigger and more innovative social areas in hotels could well be in the cards – especially for brands targeting younger segments of the market.
Within the U.S., Ferroni believes it’s a concept that will take root in the bigger cities.
“I think it’s going to gain traction in large gateway markets like New York, Miami, or San Francisco where you have a large share of people coming from Europe who might be more comfortable with this concept,” he says.
Hotel executives might not be sure whether this is the next big thing, speculates Ferroni, but he says that it would be foolish for them not to give it a try. “They’re looking at it from a trial-and-error standpoint. Large hotel companies that want to be innovative can’t afford to ignore the potential of shared spaces – even if Millennials are not their key audience.”
This article by Laura Agadoni was featured in <a href="https://www.jllrealviews.com/industries/hotels-take-a-fresh-look-at-communal-spaces/" target="_blank">JLL Real Views</a>.
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Hotels take a fresh look at communal spaces

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Newly formed management company, Crystalbrook Collection, will invest $370 million into the development of three hotels in Cairns. 
The timeline for the projects will see a 5+ star hotel become operational each year for the next three years.
Crystalbrook Collection CEO Mark Davie said the investment was in response to the expected spurt in tourism in Cairns.
“We believe that Cairns is in need of high quality hotels. Our developments are set to respond to anticipated growth in tourism as highlighted by recent Smith Travel Research reports,” he said.
Statistics compiled by Smith Travel Research for the 12 months to January 2016 showed a 74.7% occupancy rates in Cairns, up by 8.6% and double digit growth in revenue per room available, with growth figures coming in at 15.1%.
Cairns developer Prime Group will develop the hotels from concept to conception. The project pipeline includes:
137 Esplanade — A 264-room hotel, previously operating as Rydges Tradewinds, will be redeveloped to create a 311-room hotel tower with a 12-storey tower built alongside. The Great Barrier Reef inspired development will play host to a rooftop bar and lounge. Beginning construction in 2017, the property is set to be operational by July 2018.
163 Abbott Street, Cairns — A 4,000 sqm greenfield block located in the city centre will hold two towers, the first being a 222-room hotel with function rooms, restaurants and bars. The second would be a 110-room apartment complex that will be released on the market. Development will begin mid 2017 with completion expected February 2019.
85 Esplanade (Bellview) — A waterfront esplanade location will hold a new hotel (constructed on the site of a previously existing hotel and office suite). Construction on the 300-room hotel will begin late 2018 with operations expected to begin October 2019.
<img src="https://www.urban.com.au/images/2017/03/06/Cairns2.png" alt="">
Each development will have a minimum $100 million invested with the overall project expected to inject $900 million into the economy. 
Davie said the collection would be self-managed, turning down offers from major luxury hotel chains to manage the assets. 
“We held significant discussions regarding management with several brands, both leading luxury operators and white-label groups, however for a growing brand focused on authenticity, self-management was determined the best option.”
Once operational, the hotels will join Crystalbrook Collection’s recently acquired portfolio of tourism entities - Crystalbrook Lodge, a lodge experience in Northern Queensland and M.V Bahama, a 28-million luxury charter yacht based in Port Douglas. 
The company also has investments within the Queensland pastoral industry, owing an 85,000acre working cattle station, with a recent announcement indicating a further $20 million-dollar pastoral industry investment in the immediate future. 
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Three 5-star hotels planned for Cairns

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Performance in 2017 will differ markedly across the major cities throughout Australia as further divergence will occur in the hotel sector, according to CBRE’s latest report.
Some markets struggling to cope with unfavourable trading conditions and increases in supply.
However, the star performers of 2016 – Cairns, the Gold Coast, Hobart – will continue their rise off the back of renewed interest in their locale by both foreign and domestic tourists.
Figure 14 illustrates Sydney’s continued strong revenue per available room (RevPAR) growth off the back of favourable trading conditions in 2015.
<a href="https://www.propertyobserver.com.au/images/2017/02/17/Figure%2014.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/17/Figure%2014.jpg" alt="">
In particular attracting a good mix of corporate and leisure tourists that enabled operators to increase room rates.
With the International Convention Centre opening in early 2017 Sydney room rates are expected to continue to climb off the back of increased corporate travel, albeit at a more moderate pace due to increases in supply.
Despite Melbourne’s strong start to the year there are signs that the market is struggling to cope with the increases in supply entering the market.
Melbourne’s strong performance historically has been largely driven by occupancy rather than room rate growth so any sign of occupancy pressure will see rates decline somewhat in 2017 before stabilising in 2018.
The resource markets of Brisbane and Perth continue to lag the rest of the nation; both saw revenue per available room (RevPAR) declines in the double digits.
The downturn in mining coincided with significant increases in supply in Brisbane which exacerbated the decline in performance.
A problem that Perth will have to contend with in the coming years as it nears the peak of the development cycle in 2018-19.
The more leisure-based destinations of Cairns, the Gold Coast and Hobart have been the star performers in the market as they continue to attract large volumes of both domestic and international visitors.
Admittedly these three markets are coming off a low base as a result of tough trading conditions pre and post GFC.
However 2016’s performance has still been impressive and is set to continue in the coming years as all three benefit from limited supply pipelines coupled with renewed tourist interest.
The year ahead will see increases in supply for the majority of key markets including Melbourne, Sydney, Brisbane and Perth.
However, they will all cope in different ways with Perth and Brisbane forecast to see further declines in hotel performance.
Whilst Sydney is expected to cope well with this increased supply, Melbourne will likely see small falls in room rates and occupancy levels.
Cairns and the Gold Coast have limited pipeline with no major new supply coming into the market in 2017.
“However, such is the interest in these regions we can expect to see developers announcing plans to enter the market, particularly the Gold Coast,” the report stated.
What will be of interest is the style of hotels that are announced in 2017 as recent trends reflect a shift towards greater tailoring of guest experiences such as Accor’s Mama Shelter or IHG’s EVEN Hotels.
In order to stand out from the crowd operators are offering unique experiences to pique interest and capture market share, particularly from the millennial generation, so we will see further announcements regarding these lifestyle brands coming to Australia.
The investment market has been dominated by overseas capital in the last three years and 2017 will likely be no different.
The current capital flight from China should continue to unfold and be the dominant source of capital in 2017 as investors seek safe-havens and long-term income generating assets.
Due to the tightly held nature of CBD markets investors will continue to look at fringe-CBD hotels as well as those in more regional locations such as Cairns and the Gold Coast.
Investors keen to move further up the risk curve will start to look at assets in Brisbane and Perth for potential counter-cyclical investment opportunities.
These markets have seen limited transaction activity over the last few years but such is the dearth of quality stock available in Sydney and Melbourne CBDs that investors may start to turn their attention back to these resource states.
<div>
Office to residential conversions have been popular with investors and developers alike over the last few years, particularly in Melbourne and Sydney.
But with the residential market showing signs of cooling, the potential for conversions earmarked for residential to change to hotels is increasing.
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Hotel market reporting struggles with supply increase and unfavourable conditions: CBRE

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One of the main determining factors of the overall strong hotel performance is the recent surge in the number of international and domestic tourists, according to CBRE’s latest report.
Australia has seen a steady increase in international visitors over the last decade, but in the last few years there has been rapid expansion, particularly from Asia.
Since 2009 the number of international visitors has increased by 44 percent, recently surpassing seven million annually and is forecast by Tourism Research Australia (TRA) to surpass ten million in 2020.
New Zealand remains the largest source of international visitors at over one million annually, but 2017 will see this group replaced by China as the number one source.
Chinese visitors already account for the largest share of international visitor nights at over 17%.
The domestic market has seen strong growth since 2013 – particularly in the leisure category – as a result of a weakened Australian dollar, but with recent gains against some major currencies, 2017 will likely see this rate of growth slow.
However, a mitigating factor will be corporate travel, particularly in states with strong growth in business activity and the broader economy.
Figure 15 illustrates the historical growth of a selection of major international sources of visitors over the last decade, and the shaded area is how TRA expects these countries to grow over the next decade.
China is by far-and-away the strongest growing market, with an average growth rate of 13% until 2025 when it is expected that over three million Chinese will visit Australia per year.
<a href="https://www.propertyobserver.com.au/images/2017/02/17/Figure%2015.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/17/Figure%2015.png" alt="">
Driving this growth of Chinese tourists will be the continued establishing of new airline routes which will be the key to harnessing the massive tourist potential of China.
This would be such as China Southern’s new route to Adelaide which is expected to bring in an over $20 million to the state economy annually.
The Chinese and Australian governments declared 2017 to be the “China-Australia Year of Tourism” with the objective to increase tourism between the two nations and also bilateral relations.
All Chinese airlines that currently fly directly to Australia have pledged support to the scheme and are opening up more routes outside of the major hubs of Beijing and Shanghai.
This will give Australians greater choice when visiting China, but more importantly for the hotel industry within Australia it will open up new resources of Chinese visitors.
Currently less than 2 percent of Chinese tourists visit Australia, and already we have seen how big an impact they have had on the hotel industry.
So if this number does double in the next 5-10 years then the hotel market will continue to see strong growth for the foreseeable future.
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