Queenstown took the lead during New Zealand’s most buoyant period of hotel transactions in a decade, notching up the both largest sales volume and the biggest individual transaction
Colliers International’s hotel sales survey has found more than $500 million of hotel inventory changed hands in 2015/16, the strongest period on record since 2005/06.
Queenstown accounted for just over 30 per cent of the total sales volume, with nine sales over the 24 month period totalling some $173m.
The booming tourist hot spot also notched up the largest single hotel transaction of the last decade, with the 273-room Novotel Lakeside Queenstown changing hands for $91m.
Wellington was second in total sales volume, with five transactions worth $133m accounting for 26 per cent of the total. Auckland came in third with $94m of sales, followed by Christchurch with $78m.
Dean Humphries, national director of hotels at Colliers International, says the strong figures reflect high levels of confidence in New Zealand’s hotel sector.
“Investors are clearly recognising the huge economic benefits of New Zealand’s tourism boom,” he says.
“There was a record 3.5 million visitors to New Zealand last year, and the government is forecasting 4.5 million annual visitors by 2022.
“That growth has driven record trading numbers in gateway cities like Auckland and tourist hot spots like Queenstown. As a result, investors are benefiting from strengthening investment yields.”
Humphries says yields have compressed in the order of 100 to 200 basis points across the five main tourism markets, with the strongest yields being achieved in Auckland and Queenstown.
Almost two thirds (65 per cent) of hotel transactions were completed via public marketing campaigns, with Colliers International brokering over 90 per cent of those deals.
New Zealand-based investors bought about $200m of hotel assets in 2015/16, accounting for just under 40 per cent of transactions by value.
The biggest source of foreign capital was Hong Kong, accounting for 30 per cent of the total sales by value, followed by Singapore, with 18 per cent of total sales.
Humphries says investors shouldn’t expect the market’s buoyancy to continue this year.
“We anticipate sales activity will be significantly reduced as investors choose to hold onto assets to take advantage of the strong trading conditions,” he says.
“There will still be investment opportunities, however, particularly as we expect hotel development activity to increase.”
Humphries says new development opportunities will be driven by the tourism boom and a projected shortfall of 4500 hotel rooms across the country’s five largest tourism markets by 2025.
“We expect the majority of development activity will occur in Auckland, Christchurch, Queenstown and Wellington,” he predicts.
“We’re already seeing new opportunities arise, such as the One Market Square development at Auckland’s Viaduct Harbour.”
Viaduct Harbour Holdings Limited has appointed Colliers International to undertake a global search for a world-class development partner to build a 165-room luxury hotel on the site, which was previously occupied by the Simunovich Fisheries building.
Other major, publically announced Auckland hotel projects include:
- Four Points By Sheraton, a 255-room hotel in a refurbished 21-level office tower on Queen St
- Sebel Hotel, a new 152-room, six-level hotel on Lakewood Court, Manukau
- SO Sofitel, a 130-room hotel on the former Reserve Bank site on Customs St East
- Park Hyatt, a new 190-room hotel on the former Team New Zealand site in Wynyard Quarter
- Ritz-Carlton, a new 300-room hotel to be located on Albert Street
- Pullman Hotel, a new 250-room hotel to be built beside the Novotel at Auckland International Airport.
