High insurance premiums may deter Hamilton Island buyers

There aren’t many with deep enough pockets to buy the luxury Queensland resort island currently being shopped around by Sydney’s Oatley family, and those that do have some issues.

Sailing around Hamilton Island.

Destructive cyclones, skyrocketing insurance premiums and the sheer size of Hamilton Island’s infrastructure has put many a potential buyer off purchasing the resort, which is being peddled around the market by Sydney’s Oatley family.

“There’s probably not a lot of people who would be likely to buy something worth one billion dollars,” says one Asian heavy hitter when it comes to the potential purchase of Hamilton Island.

Multi-billionaire pub and hotel baron Arthur Laundy says he would not be interested in Hamilton Island off Queensland’s Airlie Beach given the Sunshine State’s islands are hostage to significant weather events such as the severe Cyclone Debbie which struck the island in 2017 causing significant damage including the closure of its five-star qualia resort.

“The weather patterns would concern us with what has happened in the past five years,” Mr Laundy told The Australian in an exclusive interview on Tuesday.

The pub baron, who owns more than 90 hotels on the eastern seaboard, recently purchased the Sheraton Grand Mirage on the Gold Coast with his joint venture partner the Karedis family for $192m.

Sailing around Hamilton Island.

Others mention the huge insurance premiums island owners particularly in Queensland are hostage too, given the destruction caused by storms such as Cyclone Yasi in 2011 and Cyclone Debbie in 2017 have rained down on the Sunshine State devastating not just Hamilton but other islands such as Lindeman and South Molle Island which is currently on the market.

But other potential suitors are more upbeat about island ownership – particularly Malaysian conglomerate Mulpha – which owns Hayman Island in the Whitsundays and said its Intercontinental Resort operations are performing well as international tourists return to Australian shores.

“Given our detailed understanding of island resorts and complex operations, we would be a logical partner for someone looking at the (Hamilton Island) asset,” says Mulpha International chief executive Greg Shaw.

“We do a lot of joint ventures on the real estate development side,” Mr Shaw said.

“Increasingly we are being approached by large institutional capital partners who are looking for on the ground expertise in the Australian market in real estate investment or hospitality sectors.”

Mulpha boss Greg Shaw. Picture: Hollie Adams

But other tourism and infrastructure groups such as bus and ferry operator ASX-listed Adelaide-based Kelsian Group, previously known as Sealink, who are holding their board meeting on nearby Airlie Beach this week, say Hamilton Island is just too big.

“We wouldn’t look at Hamilton Island, it doesn’t fit our investment profile,” said sources close to the company, which has just paid $500m for the All Aboard America!, the fourth-largest bus group in the US.

However, Kelsian purchased two island resorts, Kingfisher Bay Resort and the Eurong Beach Resort as well as the Fraser Island Ferry business on K’gari - previously known as Fraser Island - in 2019 paying $43m.

Balmoral Capital’s chief financial officer Nick Dowling, who runs the Oatley family office, refused to comment when contacted by The Australian earlier this week.

Since the visionary Bob Oatley, who passed in 2016, purchased Hamilton Island back in 2003, the island has been developed to include an international runway and the prestige qualia resort.

The Oatley family recently confirmed they were looking to offload the island. In a statement they told The Australian: “(We) have put in place a new leadership and approach and (are) conducting a review with the assistance of (our) advisors, to explore opportunities for growth and future prosperity.”