Far North in the eye of southern commercial property investors
With Far North tourism bouncing back after Covid, Asian and interstate investors are competing for a slice of the Far North accommodation market.
Cairns
Don't miss out on the headlines from Cairns. Followed categories will be added to My News.
INVESTORS are set to check in to the Far North with interest building in hotels and resorts amid a post-Covid resurgence in travel.
With new data this week revealing record-breaking visitor spending in the region, Tourism Tropical North Queensland chief executive Mark Olsen said the numbers are “without a doubt” what drives businesses to look at investing.
“There is a real confidence in tourism in Australia, and destinations like Cairns are the sort of place that will always attract visitors from around the world but it is now an enormous attraction for domestic travellers in their own backyard,” Mr Olsen said.
“From an investor’s perspective, Cairns maintains that it is good quality as a destination for businesses. All destinations need to refresh and adapt for consumers, but Cairns has led Australia’s recovery through the pandemic to the point where we’ve had an additional $710m in expenditure this year compared to figures from March 2019.
“These figures show a turn towards the regions at the cost of capital cities but it also proves that Aussies have fallen in love with Cairns.”
Renewed enthusiasm for the sector comes off the back of Christian Ainsworth selling Gilligan’s in Grafton St for a whopping $56m last August to Sydney-based Adam Tilley.
The Sunshine Tower Hotel in Sheridan St sold for $10.7m and has been substantially upgraded.
Eco Village at Mission Beach sold for $2.7m and Tropical Heritage in Minnie St is under contract – it had a price guide of $5 to $6m.
JLL Hotels and Hospitality Group senior vice president Gareth Closter said well-located accommodation assets were hot, with buyers circling in hope of nabbing properties they could potentially reposition in the market and operate themselves.
“Local buyers seem to have relatively fixed views on values but buyers from Brisbane, Sydney, Canberra and Melbourne are much more optimistic and can see potential upside in the destination,” Mr Closter said.
“There is also interest coming from Asia, mainly Singapore, as this is the hub for hotel investment in the Asia Pacific region.”
Colliers agent Tom Quaid said perceptions had changed.
“There’s been a few weekends lately where you could not get accommodation anywhere in Cairns – those accommodation assets seen as a liability during Covid, when we didn’t know when there would be another lockdown, are now full, and it’s mostly domestic-based tourism,” he said.
“Room rates are going back up again and hotels are turning into a business model that people want to get back into.”
During the pandemic, Cairns businessman Adam Adams defied the gloom to snap up the old Rydges Plaza Hotel and redevelop it as the boutique Benson Hotel.
Prior to Covid, the massive investment of Ghassan Aboud led to the rollout of Riley, Bailey and Flynn hotels – raising the standard of accommodation in Cairns.
Mr Closter said the Far North had really caught the eye of investors because with borders closed during the pandemic more Australians visited the region instead of going to traditional holiday destinations like Bali and Thailand.
“A significant number of buyers believe it is good value and they are showing this with their wallets,” Mr Closter said.
“The addition of the Crystalbrook hotels to the Cairns market has certainly upped the game and increased the potential rates that hotels can achieve, which helps drive investment.”
He said there was evidence travellers were increasing their spend on accommodation and seeking luxury.
“There is also significant investment coming the eco-sustainable sector, cultural travel, and travellers are also looking for nature and wildlife experiences,” Mr Closter said.
He said the upside of Covid was high inbound domestic traffic to Cairns, giving Australians a taste of the region.
“The key to Cairns moving forward, in my mind, is to get these Australians to come back, or tell their friends to come, and capitalise on this while the international travellers return.”
Mr Closter said cashed up southern investors were able to add value to a building, with many Cairns hotels and motels built in the 1980s and 1990s and in need of a revamp.
“The recent refurbishment of the Sunshine Tower Hotel is a great example of bringing an older building back to its former glory and reaping the benefits,” Mr Closter said.
“I’m sure there will be more activity in this space in the next six to 12 months.”
On the Cassowary Coast, Castaways at Mission Beach is also on the market.
Sam and Kerrie-Ann Charlton, who own Bedarra Island, have bought Elandra resort at Mission Beach for about $5m and intend to refurbish it.
The Charltons bought Bedarra Island in 2011, in the wake of Cyclone Yasi, and renovated it.
Castaways at Mission Beach is on the market with a price guide of $12m and the Tully Banana Barracks is for sale with a price guide of $5m.
More Coverage
Originally published as Far North in the eye of southern commercial property investors
Who was the pilot? How did it happen? What we know about Cairns chopper crash
The helicopter crash in Queensland’s Far North shocked the nation. This is everything we know so far.
Fatal chopper crash pilot ‘affected by alcohol’, investigation finds
A 23-year-old Cairns man who crashed a Nautilus Aviation helicopter into a city hotel was affected by alcohol during the fatal flight after a night out with mates, an investigation has found.