'Centre stage': With borders shut, buyers head to the regions for pubs and motels
When the bidding started on a landmark hotel in Albury, close to the NSW border with Victoria, broker Leonard Bongiovanni had his fingers crossed.
He was convinced Soden’s Australia Hotel was an excellent property on a good landholding with valuable gaming machine entitlements, but he was hoping it would meet the price guide of $4 million.
Then, with multiple parties bidding, it crept past that mark and went higher and higher until the hammer finally came down on the historic 1857 hotel at $5.45 million.
It was the latest in a rush of hotels, motels and liquor stores that have sold for record prices.
“We’re seeing a very buoyant market at the moment in the regions and, with overseas travel off the table for a while yet, Australia’s hospitality and accommodation sector is definitely centre stage,” said Mr Bongiovanni of Manenti Quinlan and Associates.
“We’ve got a lot of people visiting venues all over the country, and people can see the long-term value in these properties and are paying the price for them. There’s been a real shift in the mindset and we’re currently getting so many inquiries, and so much interest, in these hospitality assets in country areas, and up and down the coast.”
Such a handsome hotel sale was the topping on a stunning three weeks for his company, with $35 million worth of property sold.
Among the swag of assets snapped up over the past couple of months were the Woodenbong Hotel in Woodenbong, in the Kyogle Shire of northern NSW 10 kilometres south of the Queensland border, the Royal Hotel, Taree, the Marina Resort in Nelson Bay, The Peninsula Nelson Bay Motel & Apartments and the John Hunter Motel, Muswellbrook.
“We’re seeing a generational change in the way people are working and travelling and don’t need to be in a city workplace any more,” said Mr Bongiovanni, who sold the Australia Hotel in conjunction with D.J. May Real Estate. “People aren’t going overseas and are realising how beautiful this country is instead.
“People are now wanting to get out of city corporate life and are looking for new opportunities in the country or on the coast. If they buy a business, they can run it too, so they’ll still have an income.”
The buyer of the Woodenbong Hotel, for instance, heeded that call to the country. He believes the regional areas are a hotspot now for the hospitality industry.
John Hayden bought the hotel and says it’s already doing more business than he even hoped.
“Rural and regional Australia is going to be the leading commerce in the next 10 years,” he said. “The food boom is just starting, and it’s going to make the mining boom look like peanuts.
“We have a lot of beef cattle producers around here, and they’re getting big money, there’s so much money going into the roads and when the roads are improved, more people follow. We’re already seeing so many day-trippers and tourists and locals out and about. It’s exceeding all our expectations.”
The same is being seen in central NSW, where the Milestone Hotel in Dubbo has changed hands for about $15 million, according to the Australian Financial Review.
Sydney-based Harvest Hotels bought the pub, with their growing stable of assets including Brady’s Railway Hotel in Albury, and the newly refurbished Courthouse Hotel in Tamworth.
“The acquisition further highlights the ongoing confidence in the regional pub market,” said JLL Hotels’ vice-president Kate MacDonald who, alongside Knight Frank’s Mike Wheatley, sold the Dubbo hotel.
Regional Victoria is also going well, with Merivale hospitality group owner Justin Hemmes purchasing The Lorne Hotel on the Great Ocean Road for $38 million.
At Colliers International Ballarat, Travis Hurst is feeling buoyant too. “The market here in regional Victoria is very strong at the moment,” said Mr Hurst, who’s currently selling the pub Pratty’s Patch, on 6500 square metres of land in Maiden Gully, with its liquor licence for 180 patrons, for $3.5 million.
“It’s being driven by the sea-changers and tree-changers and retirees moving out of Melbourne and going regional. There’s also been lots of young families wanting to enjoy all the benefits of the regional lifestyle and more affordable housing, without having to commute every day to an office in the city.”
Back in NSW, Bruce Styles of Styles Real Estate, in the Hunter Valley, believes regional commercial property still has a way to go to catch up on the boom in regional residential. Much depends on the actual location of the asset, somewhere in the regions where people want to go.
“People are going through a tree change, but while a lot of them might like the idea of owning a regional hotel, they do involve a lot of work,” said Mr Styles, who’s selling a country hotel on nearly 6000 square metres at Quirindi, southwest of Tamworth on the Liverpool Plains, for $1.25 million.
“There’s certainly been some high prices reported but we’re still not seeing the full strength of inquiry yet. But I do think there will be a flow-through from the regional residential market at some point as you’ve still got to have the population to service these properties.”
The two-storey Soden’s Hotel in Albury was a particularly promising prospect, however, with a big population living in the catchment area, plenty of visitors passing through and lots of newcomers. It also has an annual net rental of $277,000 plus GST, outgoings and gaming turnover rent from $3.5 million worth of gaming entitlements.
“With this kind of backdrop, and a domestic tourism industry that is set to accelerate as borders stay closed, it’s easy to see why properties like the Albury hotel are considered good investments,” said Mr Bongiovanni. “And as more people migrate from cities to regional areas, we’ll see even more interest generally in the purchase of pubs, clubs and restaurants and accommodation in regional areas.”
