For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Hotel Market

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The Old Bank, the historic Mittagong property in the Southern Highlands, has been listed for sale after its decade long restoration.
The <a href="https://www.realestate.com.au/property-house-nsw-mittagong-130730858" target="_blank">property at 83 Main Street</a> has been acting as The Old Bank Hotel, but is now being offered as the potential to become a grand family residence.
Some 80 years after the settlement of Mittagong in the 1820s, the Southern Highlands town became home to many industries.
Following the 1867 completion of the railway line from Sydney, Mittagong became a gateway to the southern area and beyond, leading to the development of a tourist trade with inns, hotels, guest houses and shops becoming prevalent. 
The Commercial Banking Company occupied Waratah Cottage in the 1880s before relocating to Victoria House, some 500 metres away, before moving to the current property that was to be known as The Old Bank.
<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/2019/3/28/Mitt2.jpg" alt="">
It was built in the late 1880s at a construction cost of around £2,840 on land purchased from John Hilder for £373. It opened its doors in 1891.
A complete restoration came following its $990,000 trade in 2009 when The Old Bank was bought as a hotel. CHECK.
Local craftsmen transformed the slate roofed and stone walled building which was falling into disrepair.
The main residence comprises six heritage-style bedrooms, which each have names stemming from xxxx. All complete with ensuite, the bedrooms are dubbed Clocktower, Gibraltar, Albert, Victoria and Alexandra.
<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/2019/3/28/Mitt3.jpg" alt="">
They sit on the second level. The ground floor comprises an entry hall with reception and lounge, a private dining room, a library and a wine cellar.
The wine cellar was previously the original bank vault, which is to this day secured with a 1,000 kilogram door cast in London in 1852.
On the 1,095 sqm Main Street parcel are two freestanding buildings, the sandstock cottage and original coach house, both of which have been restored and now home self-contained accomodation. 
The Old Bank is being offered by Andrew de Montemas at W.M.Carpenter &amp; Associates Bowral.
He has a guide of $4 million.
 
 
 
 
 
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jrobinson-rf4aSBido9

Mittagong's The Old Bank for sale as grand family home

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Australia remains a favoured hotel investment market due to its economic performance, stability, transparency and governance, Gus Moors, Colliers International’s Head of Hotels, says.
“With more than $1 billion worth of hotel assets currently being marketed or in play, we expect transaction activity to increase in FYE2019.”
Colliers International’s Capital Markets Hotel Investment Review found Australian hotel transaction activity slowed in FYE2018, with volumes easing to $1.34billion after a record three years.
Deal flow increased, however, with 35 transactions above $10 million concluding throughout the year. This compares to 30 transactions in FYE2017. In New South Wales, $350 million worth of hotel assets changed hands, followed by Queensland ($347 million) and Victoria ($343 million).
Australian investors accounted for 63.7% of asset trades in FYE2018, considerably higher than the 16.5% recorded in FYE2017.
Investors from Mainland China fell behind the rest of Asia as one of the more dominant sources of inbound capital, accounting for only 1% of transactions over the year, as capital restrictions continued to bite.
“This trend is likely to continue, with South East Asian investors dominating the offshore investment landscape driven by renewed interest in diversification, both in terms of location and product,” Mr Moors said. “
Colliers International found that for the first time for more than a decade, the number of rooms opening throughout the year surpassed the number traded with investors focused on the development of new rooms.
In FYE2018, almost 6,500 new rooms came on line in the ten major markets with an estimated value of more than $2 billion.
Colliers International estimates there is a weighted accommodation pipeline of around 27,000 rooms across Australia, with almost half of these new rooms currently under construction and 7,000 rooms proposed.
These are thought likely to commence construction in the next six months or are government mandated projects.
“All markets, except for Darwin and the Gold Coast, are seeing an accelerated pipeline with openings expected to peak in 2019 and 2020,” Ms Wales said.
“Development activity is greatest in Hobart, Melbourne, Adelaide and Perth with increases set to expand the existing supply base by more than one third.”
Mr Moors said tourism was becoming increasingly important as Australia transitions to a more diversified service-based economy, and had the potential to be Australia’s fastest growing industry.
“Globally, travel continues to take a larger share of consumer spending and visitor expenditure in Australia is projected to continue to grow at a strong rate,” he said.
“The influence of demographics presents new opportunities for the hotel sector, as developers and brands seek to remain ahead of the curve in catering to both established and emerging generations of corporate employees and leisure travelers.
He concluded by noting, "strong growth in inbound tourism, particularly from China, increased leisure travel by wealthy retiring baby boomers and catering to Millennials as the largest segment of the workforce are all factors which investors should consider over the coming year.”
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Investment in Australian hotels on the rise in 2018: Colliers International

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The Melbourne Luxury Hotel market is out-performing virtually all other markets in Australia, driven by record international and domestic tourist numbers, with significant further domestic and international inbound growth forecast, according to Tourism Research Australia (TRA).
Melbourne developer Argo Group has appointed Savills to market the turnkey opportunity of a brand new 93-room lifestyle hotel situated at 230 Toorak Road, South Yarra, one of Melbourne’s oldest and most affluent inner-city suburbs.
The listing comes with approved planning permit, with opening of the hotel proposed for mid-2019.
The Hotel is ideally positioned in the heart of the bustling suburb of South Yarra, on Toorak Road, at its intersection with the famous retail and leisure district of Chapel Street.
Designed by award-winning architects Woods Bagot, the lifestyle hotel will comprise 93 hotel rooms ranging in size from 26 sqm to 32 sqm across ground and six levels, as well as a signature ground floor bar and restaurant.
Delivery of the Hotel will be overseen by experienced project managers Construction Assignments, who have overseen numerous leading hotel projects across Australia, with leading Melbourne based construction firm Hickory being retained to build the hotel.
Michael Simpson and Tom Shadbolt of Savills Australia are marketing the property. They said this is an outstanding opportunity to acquire a highly coveted freehold title to a new lifestyle hotel that will outshine its rivals in design, technological advancement and customer experience.
“Melbourne has been independently voted as the world’s most liveable city for seven consecutive years," Simpson said.
"Combine this with a global reputation for design, fine dining, retail and leisure and the city has propelled itself to a ‘must-go’ destination for international travellers.
“Argo Group is offering to market an exclusive opportunity to gain exposure to Australia’s most desirable, most tightly held and most coveted hotel market, and the flexibility to appoint a preferred hotel operator with control over branding, market positioning and management terms.
“The design-led boutique Hotel will immediately appeal to discerning customers seeking high quality accommodation in the lively South Yarra district” Simpson concluded.
Savills have released their quarterly update on the hotel market. It can be <a href="http://www.savills.com.au/publications-pdf/savills-hotels-quarterly-update-september-2017.pdf?utm_source=PropertyObserver&amp;utm_medium=DigitalAdvert&amp;utm_campaign=CPOeNewsletterBanner-HotelsUpdate-22Nov2017&amp;utm_source=Property+Observer+List&amp;utm_campaign=3fe0087e5e-Commercial_Property_15_November_2017&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-3fe0087e5e-245386345" target="_blank">found here.</a>
 
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Melbourne Luxury Hotel market is out-performing virtually all other markets in Australia

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Hotels are hot property for investors at the moment, outperforming all other property classes in Australia, says a recent report by Savills.
With international and domestic visitors growing 11.5 percent and 5 percent respectively in CY 2016, the hotel industry has not seen growth at this level since the Sydney 2000 Olympics, according to Savills Australia’s Hotels market report. 
Sydney and Melbourne are the standout performers, with their strong market KPI’s against a backdrop of compressing yields.
Chinese tourists take the lead in international visitors, growing at 22 percent, helped by more flights between the two countries and a relatively low Australian dollar making the country a more affordable destination, says Michael Simpson, Savills managing director of Hotels. 
“In a very positive sign for the depth of the market, the outstanding international inbound growth has been experienced across a wide range of markets, with inbound visitor growth from many established Asian markets, as well as the US, above 15 percent,” said Simpson.
In further proof of the strength of the market, Tourism Research Australia’s 10-year forecast expects international visitor nights and domestic visitor nights to grow at 5.6 percent and 3.1 percent annually respectively. Australia can expect to see increased room night demand nationally for the foreseeable future.
The Australia-wide market achieved a ‘revenue per available room’ (RevPAR) for CY 2016 of $139, which represented YOY growth of 2.2 percent.
All Australian cities posted RevPAR growth except Perth, Brisbane and Darwin with RevPAR declining in those cities by 9.3 percent, 8.7 percent and 9.6 percent respectively. The decline in performance of these markets is primarily due to the impact of the end of Australia’s resource boom, and rise in room supply.
For the remaining markets, Savills says growth in market KPI’s can be attributed to an increase in leisure demand from domestic and international markets, stimulated by a lower Australian dollar and stronger economic activity underpinned by construction and infrastructure projects.
<a href="https://www.propertyobserver.com.au/images/2017/03/28/SavillsHotels.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/28/SavillsHotels.png" alt="">
China is the engine room for visitor night growth in Australia right now, says Simpson. 
Australia received more than 7.4 million international visitors (up 11.5 percent) and 251 million international visitor nights (up 3.8 percent) for the year ended September 30, 2016.
Tourism Research Australia recently released international visitor numbers for CY 2016 which totalled 8.3 million, representing a healthy year-on-year (YOY) growth of 11 percent. 
The New Zealand market continues to contribute the highest number of visitors to Australia. However, the China visitor market recorded YOY growth of 21.9 percent, enabling it to exceed 1 million visitors, who more importantly spend an average of 40 nights in Australia when touring Down Under. 
As a result, China produced 43 million room nights representing almost three times the volume produced by New Zealand. The Chinese visitors also tend to spend more per capita compared to other visitors.
<a href="https://www.propertyobserver.com.au/images/2017/03/28/SavillsHotelDeals.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/28/SavillsHotelDeals.png" alt="">
Simpson went on to say that Sydney’s strong performance is set to continue with occupancies reaching capacity during peak holiday and corporate activity periods, providing the opportunity for hoteliers to grow ADR.
“Sydney’s Luxury segment capitalised on the strength of the market achieving an occupancy of 85.9%, and ADR of $339 (up 7 percent), delivering a RevPAR of $291 (up 5.7 percent), which exceeded Melbourne’s Luxury segment RevPAR of $271.
“The key factors underpinning Sydney’s current and expected future performance are a combination of buoyant economic metrics, strength in banking, finance, insurance, professional services and construction/ infrastructure projects, which are collectively fuelling a tsunami of economic activity and room night demand in Sydney.
“For the next 10 years, Sydney occupancy will remain in the 80th percentile,” said Simpson.
Melbourne was the second highest performing market in CY 2016 with an increase in occupancy for the fourth consecutive year. Conversely, Average Daily Rate (ADR) declined marginally, suggesting that while occupancy remained strong, hoteliers were unable to grow rate during non-peak periods. As a result RevPAR remained relatively stable in CY 2016, when compared to CY 2015.
Simpson said the inability to significantly grow ADR in CY 2016 is also demonstrated by Melbourne’s Luxury segment which reflected steady YOY market KPI’s, achieving an occupancy of 89.5 percent, ADR of $302 and delivering a static RevPAR of $271.
“Melbourne’s construction boom of residential apartments, commercial space and continuing development of Docklands, has also encompassed new hotel development,” he said.
“Despite the strength and enduring nature of Melbourne’s events calendar and symbiotic corporate activity Melbourne enjoys with Sydney, we anticipate that Melbourne market KPI’s will be under pressure to match Sydney’s performance in coming years given the relative challenge of delivering new supply in Sydney.” 
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Hotels become Australia’s highest returning real estate asset class: Savills 

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GUEST OBSERVER
Q3/2016 registered US$2.26 billion worth of investment transactions, representing a 15.0 percent increase over Q3/2015 (US$1.96 billion).
The number of transactions was also significantly lower.
Forty transactions were closed this quarter, while 46 transactions were recorded over the same quarter the previous year. The average transaction price was US$56.4 million, which was signi cantly higher than the US$42.6 million in Q3 a year ago. Japan commanded the largest share of total sales volume in the region this quarter, and all 13 transacted assets were acquired by Japanese investors. We expect growth of transaction volumes for the region for full-year 2016 to be subdued, mainly due to the lack of opportunities in core markets.
Eastern Asia
Japan continued to be one of the most active markets in APAC. Despite a quarter-to-quarter decline in sales volume of 32.1 percent, the total volume of JPY88.2 billion (US$865.5 million) was still the highest in the region. The hotel investment market has seen a series of large transactions in 2016, even as other sectors of Japan’s real estate market have retrenched.
Japan’s explosive growth in inbound tourism and its chronic lack of room supply have created a real interest in the hotel market, and players are leaping to take advantage. The Real Estate Investor Survey by the Japan Real Estate Institute (JREI) reports that expected cap rates on economy hotels in prime Tokyo locations have compressed from 5.4% to 5.0% since 1H/2015.
Hotel transactions frequently occur outside the nation’s capital, however – only seven transactions occurred in Tokyo in 1H/2016, according to Real Capital Analytics – resulting in a wide range of cap rates. We assume actual transaction cap rates to be much lower than JREI’s surveyed gure of 5.0 percent, because winning bidders tend to expect aggressive increases in ADR.
The largest buyer of the quarter was Japan Hotel REIT Investment Corporation (JHR) with the purchase of three hotels – Hotel Vista Grande Osaka, Hilton Nagoya and Hotel Ascent Fukuoka. The total sale was worth approximately JPY47.1 billion. Hotel Vista Grand Osaka will be rebranded into Holiday Inn Osaka Namba by the end of 2016, according to a JHR press release. Hotel Vista Grande Osaka was the largest transaction in Japan, sold by GK Apollo for JPY27.0 billion (US$267.3 million), or JPY85.9 million (US$851,275) per key. This was followed by Hilton Nagoya which was acquired at JPY15.2 billion (US$150.9 million), or JPY33.1 million (US$328,207) per key.
In June, Japan's Land, Infrastructure, Transport and Tourism Ministry announced a plan to relax the oor area ratio of buildings by 1.5 times, or up to an additional 300 percent for hotel constructions. The new standards are expected to substantially increase accommodation capacity following Japan`s continuous increase in foreign visitors and the upcoming 2020 Tokyo Olympics. Although based on this relaxed regulation, each local government is required to decide on their regional floor area ratios under the City Planning Law, and therefore the price of the land for hotel usage in major cities is expected to increase.
In China, sellers’ expectations remained high, and the continued lack of debt nancing for hotel projects has led major Chinese hotel investors to continue to look overseas for either tourism-related investments or refocus into investing in commercial assets or companies in other industries with high growth potential.
Chinese investors’ interest in Australian assets was evident in this quarter, concluding ve transactions there with a total of A$474.7 million (US$352.8 million), representing 15.6% of total volume in the quarter.
Hong Kong’s rst transaction of 2016 was closed this quarter, with the sale of A3 Hotel in Temple Street at HK$108 million (US$13.9 million), or HK$2.4 million (US$309,400) per key.
Southeast Asia
There were only two transactions in Southeast Asia this quarter. The Renaissance Kuala Lumpur Hotel changed hands between IGB and S. Alam Group for MYR765 million (US$187.4 million), or MYR840,659 (US$205,890) per key.
There was no transaction in the same period the previous year. Malaysia has suffered from the sharp fall in international tourist arrivals, particularly those from China, since the airline disasters of two years ago. This quarter, however, the Malaysian Inbound Tourism Association reported that the Chinese source market had shown some signs of recovery. According to Tourism Malaysia, international visitor numbers for 1H/2016 grew 3.7 percent, with remarkable increases from China and Thailand at 32.1 percent each and Laos at 26.8 percent. 
The Singapore hotel investment market remained inactive this quarter, due mainly to the lack of suitably priced assets and the tightened control of room stock by the Urban Redevelopment Authority. In Q2 and Q3, some 2,200 new rooms were added, mostly outside the central area, and 66 percent of the total was in the midscale category. Room nights sold for 1H/2016 rose 6.4 percent year-on-year, according to the Singapore Tourism Board. As of July 2016, the city state registered an increase of 11.5 percent year- to-date (YTD) for inbound international visitors. The Chinese source market jumped remarkably by 49.2 percent, followed by Thailand at 14.9 percent. This upward trend, however, is likely to be impacted to a certain extent by the Zika outbreak in August which has prompted a few countries to issue advisories warning travellers of the dangers of the mosquito-transmitted disease.
Australia and New Zealand
There were 17 transactions in Australia, totalling approximately A$943.2 million (US$716.4 million) this quarter, compared to 16 in the same period last year. In terms of volume, however, there was a remarkable increase from A$381.2 million (US$282.3 million) recorded in Q3/2015 compared to this quarter.
One recent notable sale was that of Novotel Melbourne on Collins from LaSalle Investment to Singapore- listed Frasers Hospitality Trust for A$237 million (US$ 178.7 million), or A$623,684 (US$470,290) per key. The purchase was part of the Trust’s plan to grow its hotel portfolio. Melbourne’s hospitality sector has been given the boost to grow, driven by the completion of Melbourne Airport’s Terminal 4, the expansion of the Melbourne Convention and Exhibition Centre, and development of several projects such as the Docklands and Fishermans’ Bend. Tourism Australia expects total visitor nights in the state of Victoria to grow at an average of between 4.0% and 4.6 percent for the next three years.
So far this year, the Australia market has been resilient and attractive for overseas investors due to its currency uctuations which has led to an increase in inbound travellers and, consequently, hotel performance.
New Zealand has captured a fair amount of interest from investors so far this year. Investment volume for the rst three quarters of this year totalled NZ$236.4 million from 11 transactions. New Zealand Trade and Enterprise released a report this year pointing out the shortage of hotel rooms in the country and highlighted investment opportunities to cope with this shortfall, especially in key cities such as Auckland, Queenstown, Rotorua and Christchurch. It also reported that in 2015, Auckland and Queenstown had consistently high occupancy rates of above 80 percent throughout the year, while Rotorua and Christchurch had seasonal peaks of also above 80%. Based on historical preferences, upscale and luxury rooms are expected to have a strong demand.
In recent years, New Zealand has seen remarkable growth in international visitor arrivals, rising 9.6 percent for full-year 2015; growth for the eight years prior to this did not rise above 6.0 percent. For 2016 YTD July, international visitor arrivals grew an impressive 11.2 percent. 
 
Simon Smith is senior director, Research and Consultancy, Hong Kong Savills and can be contacted <a href="https://www.savills.com.au" target="_blank">here</a>.
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Australian hotel market resilient, attractive for overseas investors: Savills

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SPONSORED POST 
Visitors add an average of 3 percent to a city’s population every night, posing significant opportunities for hotel, leisure and retail operators, according to the latest <a href="https://pdf.euro.savills.co.uk/global-research/12-cities-h2-2016---visitors.pdf" target="_blank">Savills 12 Cities Report H2/2016</a>. 
The report found that around 901 million domestic and overseas visitors were attracted to the twelve cities examined during 2015. They spent a total of 1.05 billion nights in hotels or other guest accommodation. In some cases, such as New York and London, the visitor populations were equivalent of another city.
<a href="/images/2016/11/14/The%20size%20of%20the%20visitor%20city.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/14/The%20size%20of%20the%20visitor%20city.jpg" alt="">
 
Visitor breakdown – who is visiting and why? According to the report, the split between domestic and overseas visitors varies widely between cities. In most, especially those with vast hinterlands such as USA, China, Australia and Russia, more visitors come from the home country. With a relatively high number of domestic visitors (9.20 million), Sydney is also experiencing a growth in international visitors (3.75 million) underpinned by strong holiday and education segments. London, with a relatively small UK hinterland, has the highest number of overseas overnight visitors (20 million) but fewer domestic visitors (13 million). View the full domestic/international visitor breakdown in the <a href="https://pdf.euro.savills.co.uk/global-research/12-cities-h2-2016---visitors.pdf" target="_blank">Savills 12 Cities Report</a>. 
It’s easy to assume that the attraction of global cities is all the history, buildings, culture, entertainment, lifestyle and leisure that they offer, and that it is tourists who make up most of their visitors. On average, 77 percent of international visitors to the cities in the Savills 12 Cities Report are there for leisure, tourism and reasons other than business, such as meeting up with friends and relatives.
Shanghai has a large percentage of international business visitors (55 percent) as it is not a prominent international leisure destination, especially compared to cities such as Rio de Janeiro and Sydney, which have a large proportion of tourists and other types of visitors seeking sunshine and lifestyle experiences. 
<a href="/images/2016/11/14/thumbnail_International%20Overnight%20Visitors.jpg" target="_blank">Click to enlarge</a>
 <img src="/images/2016/11/14/thumbnail_International%20Overnight%20Visitors.jpg" alt=""> 
Impact on the hotel, leisure and retail industries
Across Savills 12 cities, international overnight visitors spend a total of US$132.6 billion a year when they visit, 30 percent of it on accommodation. In this way, city visitors are participating in the real estate markets of cities every time they pay their hotel bill. This is also true of retail, food and beverage spend, which helps create demand for space and to pay the rent on these premises. They also support industries outside of the hospitality sector, such as airports.
George Nicholas, Global Head of Hotels at Savills, comments: “As global tourism continues to rise, demand for bed space in many city markets is now outstripping supply. For example, Tokyo has had an influx of tourists from China following the relaxation of Visa requirements and the city now has a chronic shortage of rooms, while in London, the fall in the value of the Sterling is attracting visitors who previously thought the UK’s capital too expensive. The net result of this is that we’re seeing a shift in where investor appetite for hotel assets and platforms stems from, with Asian capital in particular coming to the fore in Europe over the past twelve months.” Yolande Barnes, Director of Savills World Research, adds: “It’s not just the market for hotels and hotel land upon which international visitors have an impact. Across nine top global cities including New York, London and Paris, annual food and beverage spend by international visitors totals at least US$21 billion a year and shopping accounts for US$38 billion. Restaurants, bars, cafes and shops are significantly impacted by these revenue inflows, so ensuring that there is enough space to accommodate visitors is therefore not just imperative for the hotels sector, but also for the wider city economy.”
To learn more about the latest trends in world real estate, visitor cities and economic outlook, view <a href="https://pdf.euro.savills.co.uk/global-research/12-cities-h2-2016---visitors.pdf" target="_blank">Savills 12 Cities Report H2/2016</a>.
Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. To learn more about Savills, visit <a href="https://www.savills.com.au" target="_blank">savills.com.au</a>.
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Swelling visitor numbers pose opportunities for global cities

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Hoteliers the Grove family have bought back The Indian Ocean Hotel in Western Australia’s Scarborough from the receivers, shortly after it was put up for sale.
The family acquired it for an undisclosed sum, but it had been offered for about $18 million on a 7 percent yield when first put on the market more than a year ago, according to a report in The Australian Financial Review. 
The 59-room, 3.5-star hotel on Hastings Street in the city's north-western suburbs was being marketed by CBRE Hotels’ Ryan McGinnity and David Kennedy under instruction from the receivers and managers appointed, HLB Mann Judd (Insolvency WA). 
The marketing campaign closed on May 12.
The five-level, 59-room hotel includes Indi Bar and Bistro, and has hosted some of Perth’s best live music over the past two decades, including Rolling Stones, The Waifs, John Butler and Dave Hole.  
The hotel, built in 1972, was placed in the hands of receivers in April after the death of majority owner Bill Grove, said the AFR report. 
It was originally called the White Sands Hotel. The Grove family took over as managers in 1985 and renamed it the Indian Ocean Hotel in 1990.
Hotel owner Andrew Grove and CBRE’s selling agents declined comment to the AFR, but the paper cited a source close to the family as saying that "The property and business is now back in the hands of the family who have owned the property for over 30 years” and they are “excited to be in control of the business and property again”.
Located within the Metropolitan Redevelopment Authorities’ $57.4 million Scarborough Redevelopment Area, the Indian Ocean Hotel offers potential for future development, with a residential 160 zoning and additional special use as hotel. 
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