Buying a pub: the other great Australia property ownership dream

Sydney’s residential real estate market may be treading water, but the pub market is booming. And there’s plenty of reasons why.

Pubs are in high demand across NSW.

It’s the other great Australian dream.

Sydney’s residential real estate market may be treading water, but the pub market is booming.

It seems every other week that an iconic watering hole is being snapped up for tens of millions by a Laundy, Hemmes or Gallagher as the Harbour City’s big hotel players seek to expand their footprint.

In the last week alone, Lane Cove’s iconic Longueville Hotel sold off market for a reported $50 million after being owned and operated by the Campion family for 93 years.

Just days later the Republic Hotel in Sydney’s CBD was listed after last trading for $35 million in 2019.

Mick Bain and his partners sold the Royal Albert hotel in Surry Hills earlier this year for around $10m Picture: Dylan Robinson

Also in August, Chippendale’s Bar Broadway was purchased by former Wallaby prop Bill Young for about $36 million and the popular Lord Roberts Hotel in Darlinghurst traded for $22.5 million.

JLL’s Hotel and Hospitality Group has handled the bulk of the big pub sales in 2022 and the firm’s senior vice president Ben McDonald said he has never seen the market so strong.

“The last calendar year was the strongest on record, with over $2 billion in transactions and we’re on track to better it this year,” Mr McDonald said.

“Over the last seven weeks we have had over $300 million worth of sales alone. This financial year has started very strongly and I don’t see that slowing down.

“There are some big assets in the market, some big transactions going on and no shortage of buyers.”

Former Wallabies prop Bill Young recently bought Bar Broadway for around $36m.

BUYING A PUB: THE OTHER GREAT AUSTRALIAN DREAM

Those assets don’t get any bigger than Neutral Bay’s famed The Oaks Hotel, which hit the market recently with price hopes of $175 million. Expressions of interest are scheduled to close this week and JLL has been busy talking to potential buyers.

“We’ve been meeting with some parties in Singapore and some investment funds,” Mr McDonald said. “Then you’ve got the top 1 per cent of hoteliers in the country looking at it too, high net worth individuals and real estate trophy hunters … It’s been the busiest campaign I’ve been involved in.”

Mr McDonald said strong land values in Sydney have played a part, but that profitability has been the key factor driving the recent surge of interest in hotel listings.

“You’re talking about very resilient, high cashflow businesses,” he said.

“Outside of Sydney, look at the Windsor Castle in East Maitland. It sold for $51 million, but it was making $4 million a year.

Club Hotel Emmaville. Regional pubs can also turn a handy profit.

“And that comes down to the Australian love of going to the pub. We’re still seeing people that want to get out and about after two years being locked up at home.”

Price tags of $50 million or more will be bad news for the regular Aussies out there dreaming of owning their own watering hole one day, but there is an entry level to the market.

HTL Property group has sold a number of pubs in regional areas for more reasonable sums this year.

The Belmore Hotel in Scone was purchased for $4.85 million in May by established regional hotelier Rod “Ned” Kelly of Kelly Hotels, while Inverell’s Imperial Hotel went for $4.9 million. Gunnedah’s Parkview Hotel fetched $5.5 million in July.

HTL Property’s Xavier Plunkett said successful regional sales were often underpinned by tourism, or diverse, strong local economies and attractive price points, while

HTL property director Blake Edwards said trading conditions were “excellent”.

“We are finding that pub sale prices continue to defy both expectations and some challenges being met by other property indexed asset classes,” Mr Edwards said.